COP29 (the “Finance COP”), held in Baku last month centered on one of the most pressing challenges of our time: mobilizing the financial resources needed to address the climate crisis. This article shares reflections from Metabolic’s Finance Team on the outcomes and explores how systemic solutions can drive equity and resilience.
Among the summit’s key objectives was the agreement of a “New Collective Quantified Goal“(NCQG), a key benchmark of the Paris Agreement for scaling climate finance to developing nations. The agreement to raise the current annual climate finance flow from $100 billion to $300 billion by 2035, drawing from diverse sources predominantly found in the private sector, represents a step forward. However, it must address the financial needs highlighted by developing countries in Baku, which collectively called for $1.3 trillion to be raised annually. The final agreement recognized the substantial gap in funding, with developing nations estimating $5.1–6.8 trillion needed by 2030—or $455–584 billion annually—for climate mitigation, including $215–387 billion each year specifically for adaptation.
COP29 highlighted systemic barriers that continue to hinder equitable climate finance, including complex application processes, high capital costs, reliance on loans over grants, unclear definitions of climate finance, disproportionate allocation favoring mitigation over adaptation, and limited inclusivity in decision-making. This year’s conference also raised key questions about how financial flows are structured, including how to scale public resources through multilateral funds and explore innovative new approaches like levies on polluting industries, as Germany and the EU proposed. These discussions offer an opportunity to rethink the systems behind climate finance and address persistent inefficiencies. At Metabolic, we see this as a chance to challenge outdated practices and design solutions that deliver deep systemic change.
Expanding the NCQG
One of COP29’s core objectives was formalizing the NCQG. Designed to replace the outdated $100 billion annual target set in 2009, the NCQG represents a step toward a more ambitious framework for climate finance.
However, the scale of the agreed $300 billion annual floor still needs to be increased. During the negotiations developing nations emphasized the importance of addressing their unique vulnerabilities such as rising sea levels, forest fires, and destructive weather events, through grants rather than loans. Proposals to secure specific allocations, such as $39 billion for Small Island Developing States (SIDS) and $220 billion for Least Developed Countries (LDCs), underscored the need for far greater equity. Yet, these demands were sidelined in favor of vague commitments to draw on “alternative sources” of funding, including private sector investments.
Discussions at COP29 raised concerns about the reliance on private finance to meet funding needs, with developing nations emphasizing the importance of public and grant-based resources to ensure equitable support for adaptation and loss-and-damage efforts, which are often underfunded. The debate also extended to the role of voluntary carbon markets, with some nations arguing that these mechanisms lack the integrity and accountability needed to ensure equitable outcomes. Addressing these imbalances requires more than financial pledges. It calls for systemic mechanisms that ensure resources are accessible, equitable, and aligned with climate goals. As COP29 demonstrated, the challenge is not only to harness the potential of private sector contributions but also to ensure public funding frameworks address the urgent needs of vulnerable nations. These frameworks must uphold principles of equity and resilience while holding historically high-emitting countries accountable for providing adequate support to those least responsible for climate change.
Ambiguity
A significant challenge highlighted at COP29 was the lack of clarity in defining climate finance. Without a common understanding of what qualifies as climate finance, countries risk diverting resources away from key climate priorities—such as reducing greenhouse gas emissions through renewable energy, building resilience through adaptation measures like disaster preparedness, and addressing loss and damage to support affected communities. Key points raised challenged whether climate finance should include concessional loans, voluntary carbon markets, or broader development aid. Developing nations argue for a definition that prioritizes resilience and mitigation while reducing dependency on high-cost capital. But progress has been slow. Workload constraints within the Standing Committee on Finance (SCF) have stalled efforts to formalize a definition, further complicating accountability.
At Metabolic, we believe that resolving this ambiguity is essential. A clear definition of climate finance should include mechanisms that empower vulnerable nations to build long-term resilience, such as capacity-building, locally led adaptation projects, and systemic changes to financial access.
Addressing access and innovation
COP29 highlighted systemic barriers that prevent developing nations from fully benefiting from climate finance. These include high capital costs, complex application processes, and stringent reporting requirements, all of which disproportionately affect LDCs and SIDS.
The agreements in Baku acknowledged the need to address these barriers by:
- Streamlining access: simplifying reporting requirements and application processes to make funds more accessible.
- Scaling successful projects: expanding proven initiatives to maximize impact, rather than focusing on fragmented new ones.
- Supporting local leadership: prioritizing locally led approaches that are adaptive to the unique needs of communities.
Another notable area of discussion at COP29 was the exploration of innovative financing mechanisms to bridge the gap between current financial flows and the substantial resources required by developing nations. Proposals such as levies on polluting industries, including shipping and aviation, gained traction as potential revenue streams that align with the polluter-pays principle. These mechanisms could create predictable and equitable sources of finance while incentivizing emissions reductions in high-impact sectors.
Developed countries also advocated for scaling multilateral climate funds, such as the Adaptation Fund and the Least Developed Countries Fund, aiming to triple annual outflows by 2030. This approach seeks to address systemic barriers like high capital costs and stringent co-financing requirements that have historically hindered access to funds.
However, the debates surrounding the role of voluntary carbon markets revealed persistent divides. Some nations argued that these markets lack the integrity and accountability needed to support equitable outcomes, while others emphasized their potential to mobilize additional finance. At the heart of these discussions is a need for clearer governance structures to ensure that innovative mechanisms prioritize adaptation, resilience, and loss-and-damage funding.
At Metabolic, we work to operationalize these ideas through systemic interventions, such as designing place-based transition funds. These funds are tailored financial mechanisms that pool resources from public and private stakeholders to support climate solutions specifically designed for the unique needs of a region. By focusing on localized challenges—whether it’s reducing emissions, restoring ecosystems, or building climate resilience—place-based transition funds ensure that investments are not only targeted but also deeply impactful. This approach bridges the gap between high-level climate goals and the on-the-ground actions needed to achieve them, fostering collaboration, unlocking regional potential, and driving meaningful change where it matters most.
From Baku to Belém: the need for systems thinking
As the world looks ahead to COP30 next year in Belém, Brazil, there is an opportunity to transform climate finance into a system that works for all. The “Baku to Belém Roadmap to $1.3 Trillion” offers a framework for scaling financial flows through grants, concessions, and other non-debt-based instruments. This roadmap emphasizes funding for:
- Supporting low-emissions development pathways.
- Building climate-resilient infrastructure.
- Implementing nationally determined contributions (NDCs).
However, realizing this vision will require a significant shift in approach. Financial mechanisms must prioritize equity, simplify access, and empower communities on the frontlines of climate impacts. At Metabolic, we see COP29 as a moment to reimagine climate finance—not just in terms of scale but in its very structure. The systemic challenges identified in Baku highlight the need for solutions that are:
- Equitable: Ensuring resources are directed to those most in need without creating new burdens.
- Transparent: Establishing clear definitions and metrics to track progress and ensure accountability.
- Collaborative: Cultivating partnerships between governments, businesses, and communities to drive impact at every level.
The path from Baku to Belém offers an opportunity to rethink how the global community approaches climate finance. By addressing root causes and systemic barriers, we can create a framework that not only meets immediate needs but also builds the resilience and sustainability required for the future. We will monitor the roadmap closely as the year progresses.
How Metabolic can help
With the publication of the COP29 final agreement text, the real challenge now begins: translating financial commitments into tangible outcomes for those most in need. At Metabolic, we are uniquely positioned to support this transition by leveraging our systems-thinking approach to climate finance.
1. Enabling locally-led climate solutions
The final agreement emphasizes the need for locally driven, context-specific approaches. We can provide critical support by helping develop and scale locally led initiatives, particularly for adaptation measures. Our expertise in systemic analysis enables us to align these efforts with long-term resilience and equity goals, ensuring that finance reaches the communities that need it most.
2. Expanding multi-year programmatic approaches
Fragmented, short-term projects often fail to address the systemic challenges of climate finance. Metabolic can assist stakeholders in transitioning to multi-year, programmatic approaches that maximize impact. By building on existing successful initiatives and tailoring them to specific regional needs, we help reduce inefficiencies and create scalable solutions.
3. Improving access and streamlining processes
The agreement calls for streamlining reporting requirements and simplifying access to funding. Metabolic’s experience in designing financial systems that are both efficient and equitable allows us to work with funders and recipients to reduce bureaucratic hurdles while maintaining transparency and accountability.
4. Driving innovation in financing mechanisms
Innovative finance remains a key area of opportunity. By advancing mechanisms like blended finance models, levies on polluting industries, and adaptive place-based transition funds, we can help unlock new streams of funding while ensuring they are distributed equitably and strategically.
Get in touch
At Metabolic, our mission is to drive systemic change by bridging the gap between ambition and implementation. If you are interested in understanding more about how we approach sustainable finance here, we encourage you to visit our dedicated webpage for further information or reach out to a consultant to learn more about place-based transition funds and collaborative opportunities.
