World leaders and negotiators at the UN climate conference are grappling with the challenge of setting a new climate finance target to meet the trillion-dollar costs of helping lower-income nations adapt to climate change.
As world leaders continue talks at COP29 in Baku, negotiators agree that substantial funding is needed to help lower-income countries adapt to climate change.
Divisions remain, however, over who should bear this financial responsibility. And the numbers for this new climate finance target are enormous.
Tackling the intensifying impacts of climate change requires trillions of dollars, a cost far beyond the reach of poorer nations, according to numerous experts and reports.
The new financing goal is intended to replace the annual $100 billion (€95 billion) target established in 2009, which was barely met in 2022, two years behind schedule.
According to a Climate Policy Initiative report, global climate finance approached $1.3 trillion (€1.2 trillion) a year on average in 2021/2022 compared to $653 billion (€619 billion) in 2019/2020.
Other organisationsput the number needed at $1 trillion (€948 billion) a year.
Some expert groups say the amount of climate finance needed is expected to rise to $9 trillion (€8.5 trillion) by 2030.
To meet these huge monetary requirements, governments worldwide are exploring various options, including wealth taxes, levies on shipping and addressing debt.
Supported by taxpayer funding, large international banks have become the biggest and fastest-growing providers of climate finance for developing nations.
These banks were a key reason why, in 2022, the world met the goal countries set in 2009 to supply developing nations with $100 billion annually to address climate change.
However, international development banks have been urged to act more swiftly and effectively.
Research group Climate Policy Initiative estimates the world needs about five times the current annual amount of climate financing to limit warming to 1.5 C.
The Independent High-Level Expert Group on Climate Finance estimates that by 2030, developing countries (excluding China) will require $2.4 trillion (€2.3 trillion) annually for climate investment.
The World Bank delivered $42.6 billion (€40.4 billion) in climate finance in its most recent fiscal year, a 10 per cent increase from the year before.
Developing nations are much more reliant on these banks for financing climate projects than industrialised countries.
According to the Climate Policy Initiative, commercial banks and corporations financed over half of climate-friendly projects in the US and Canada in 2022.
In contrast, private lenders contributed just 7 per cent of such funding in sub-Saharan Africa. This disparity arises from the difficulty developing countries face in accessing low-interest rates.
Developed nations, including the United States and the European Union, acknowledge that developing countries face climate investment needs totalling in the trillions. However, they have yet to set a specific target for international financial support.
In 2023, The European Union and its 27 member states contributed €28.6 billion from public sources and mobilised an additional €7.2 billion in private finance to support developing countries in combating climate change.
