Finance after COP29

A decade following the adoption of the Paris Agreement, the aspiration for a just and equitable global climate regime faces continuous scrutiny. The United Nations Climate Change Conference in Baku (COP29) was charged with the critical task of establishing a New Collective Quantified Goal (NCQG) on climate finance, intended to supersede the previous target of $100 billion annually by 2020. After weeks of negotiation, developed countries ultimately committed to mobilizing $300 billion per year by 2035. This stands in stark contrast to Group of 77 and China, representing the majority of developing nations, which had demanded a substantially higher figure of $1.3 trillion annually by 2030.

This significant disparity is not merely a numerical divergence but raises a question over the enduring relevance of Common but Differentiated Responsibilities (CBDR), the foundational equity principle of international environmental law. While developed states increasingly conceive climate finance as a shared political aspiration, developing countries firmly assert it as a binding legal obligation rooted in principles of equity and historical responsibility.

This blog post contends that the outcomes of COP29 brings to light both the inherent vulnerability and adaptability of CBDR within the contemporary Paris Agreement framework. CBDR remains indispensable as a normative compass, however, its interpretation must evolve to accommodate shifting global economic realities and the escalating urgency of climate action.

The Paris Agreement’s Finance Architecture and the CBDR Principle

The climate change mitigation and adaptation investments are already entrenched as the building blocks of the global climate structure through the Paris Agreement. Under Article 9(1) of the Agreement, developed countries “shall provide” financial resources to assist developing countries with mitigation and adaptation efforts. Conversely, Art. 9(2) states that other parties “are encouraged” to provide such support voluntarily. This deliberate phrasing reflects the delicate compromise achieved in Paris, while the rigid Annex I/non-Annex I categorization of the UNFCCC was abandoned, differentiation persisted through legally binding obligations for developed countries and softer expectations of others.

Crucially, Art. 2(2) further mandates that the Agreement’s implementation must “reflect equity and the principle of common but differentiated responsibilities and respective capabilities, in the light of different national circumstances”. Against this backdrop, the COP29 decision concerning the NCQG is particularly revealing. The decision appears to reduce the practical application of the CBDR principle and the core equity promise of the Paris Agreement by delaying any significant scaling up of financing to 2035. This raises the crucial question of whether the compliance and implementation of this obligation have been reinterpreted through a political lens. The COP29 outcome thus marks a shift from treating climate finance as an enforceable legal duty rooted in historical responsibility to viewing it as a discretionary political commitment shaped by donor priorities and fiscal constraints.

Evaluating the COP29 Outcome

Supporters of the COP29 outcome present it as a pragmatic compromise that reflects current political and economic realities. Developed countries face acute fiscal pressures in the aftermath of the COVID 19 pandemic, the Russia-Ukraine conflict and its energy spillovers and widespread domestic economic instability. Against this backdrop the prospect of mobilising $1.3 trillion annually by 2030 appears politically and fiscally unachievable. For many, securing consensus on a $300 billion commitment by 2035, however modest, was preferable to the paralysis of prolonged deadlock that could have jeopardised the credibility of the climate regime itself.

The evolving global economic landscape further complicates the debate. When the UNFCCC was adopted in the early 1990s, OECD states bore overwhelming responsibility for emissions and held the greatest financial resources. Today, emerging economies such as China, India, Brazil and the Gulf states contribute substantially to global emissions and command significant wealth. Proponents therefore argue that a broader donor base (consistent with Art. 2(2) of the Paris Agreement) offers a fairer and more sustainable model of climate finance. Complementing this shift is the growing reliance on private and market based finance. Mechanisms under Article 6, blended finance schemes and multilateral development banks are expected to mobilise trillions, positioning public transfers from North to South as catalytic rather than primary.

However, concerns about adequacy and equity collide with these justifications. According to the Intergovernmental Panel on Climate Change, developing countries would subsequently need an even greater amount of over $5 trillion a year by 2030 on climate change adaptation and mitigation. In comparison, the $300 billion pledged for 2035 sounds like a negligible amount, raising questions about developed countries’ commitment and sense of urgency. Furthermore, the finance structure and the increasing dependence on either loans or personal capital worsens the burden of debt, leaving essential adaptation measures chronically underfunded.

Equity concerns extend to the broader credibility of the regime. Although the developed countries had formerly intended to deliver $100 billion by 2020, yet they were only able to fulfil the goal in 2022. By deferring a meaningful scale up until 2035, COP29 risks perpetuating a cycle of broken promises that corrodes trust between the Global North and South. The various critics of CBDR also highlight that the transfer of the burden to the developing countries or outsourcing to independent actors effectively sidelines the principle of historical responsibility. The implementation of the Paris framework risks erasing the historic debt that industrialised states owe due to several decades of unrestricted emissions and threatens shifting the burden down the chain on those who were the least responsible for the climate crisis.

Is CBDR Still Relevant?

The debates surrounding COP29 have reignited the fundamental question of CBDR’s contemporary relevance. Advocates of CBDR maintain that without CBDR, international climate governance risks devolving into a technocratic exercise that ignores persistent structural inequalities and historical injustice.

On the contrary, others argue that today’s global economy defies the old Annex I/non-Annex I division. As China now emits the most greenhouse gases annually and India ranks third based on absolute emissions, continuing to exempt them from significant obligations would undermine credibility and impede negotiations. However, these critiques persist under the Paris Agreement because, despite its flexible design, implementation has not fully realized proportional differentiation across all major emitters.

However, a truce between them is beginning to emerge. Some scholars argue that there should be a structure of dynamic differentiation whereby the obligations of the governments evolve over time based on the states’ changing responsibilities. This approach does not redefine CBDR but represents a consistent and adaptive application of its framework under the Paris framework. It enables emerging economies to assume proportional roles while preserving the primary burden of historical emitters, thus maintaining CBDR’s normative strength in contemporary conditions.

In my opinion, even though reimagining CBDR would require significant reconsideration, CBDR remains indispensable to international climate laws. To begin with, the developed countries need to stop perceiving climate funding as a sign of discretionary charity and start addressing it as a legally binding obligation. The NCQG should be frontloaded by 2030 itself instead of being postponed to 2035 and rather than being debt-financed, it should be done by grants.

Moreover, large emerging economies cannot continue to shelter behind the label of being a developing nation especially given their rising economic power and emission rates. Their differentiated obligations should extend to contributing to South-South finance initiatives and facilitating technology transfer, even if it is at a scale proportional to their capacities rather than equivalent to historically industrialized states.

Finally, CBDR must be understood as a developing and dynamic principle, capable of recognizing both historical responsibility and contemporary capability. If equity mechanisms under the Paris Agreement are diluted, its legitimacy and perceived justice could be undermined. Hence, CBDR must evolve beyond its 1992 formulation to balance historical justice with present-day realities.

Conclusion

The financial outcome and conclusion of COP 29 reveals that one of the most critical issues to international climate law is the North South division. While developing countries stand by their position regarding climate financing and its inherent legal nature founded on the principle of CBDR, it still remains a political aspiration among the developed nations. Unfortunately, the modest $300 billion goal by 2035 tragically falls far short of both the overwhelming scale of global climate need and the fundamental equity promise embedded within the Paris Agreement.

Therefore, CBDR remains relevant though its interpretation is still highly contested. Its success in the future will be determined by its ability to change strategically through dynamic differentiation, extend and proportionately binding responsibilities of all qualified states and the mostly grant-based and frontloaded funded responsibilities. To allow CBDR to carry any significance in the present-day world, it needs to adapt to the contemporary realities while continuing to embody its core principles of equity and justice. The credibility of international climate law, and its ability to respond to the accelerating climate crisis, ultimately depends on whether CBDR is reinterpreted for a new era rather than left behind as an outdated relic.