Nations set a historic new climate finance goal last year, pledging to deliver at least $300 billion annually to support climate action in developing countries by 2035. This “new collective quantified goal” (NCQG) also includes a broader target of mobilizing $1.3 trillion annually, reflecting the scale of resources actually needed to enable developing nations to adopt low-carbon technologies, safeguard against climate risks, and pursue sustainable development. The success of these investments is crucial not only for the countries receiving them but for global efforts to halt climate change and foster a safer, more prosperous future for all.
The recently published Baku-to-Belém Roadmap provides a first framework for implementing the NCQG, translating commitments into actionable steps, particularly ahead of COP30 in Belém, Brazil. While the $300 billion target represents the largest climate finance commitment to date and is achievable, it is only a down payment. The more ambitious $1.3 trillion goal better reflects the total resources developing countries will require by 2035, with the High Level Expert Group on Climate Finance estimating $2.7 trillion in annual spending is necessary, of which $1.3 trillion would come from international sources.
Achieving the $300 billion target is feasible despite political challenges. In 2022, developed countries delivered around $116 billion in climate finance to developing nations, surpassing the previous $100 billion goal. The sources of this finance include bilateral transfers, multilateral finance via development banks, and private finance mobilized by public funds. Alternative sources, such as international taxes and rechanneled IMF special drawing rights, are now also recognized as part of the NCQG.
Multilateral development banks (MDBs) remain a key contributor, providing the highest share of international climate finance. They committed at COP29 to double their climate finance to $120 billion annually by 2030, with potential growth to $240 billion if capital contributions increase. MDBs also aim to leverage private finance for climate action, potentially mobilizing between $91 billion and $130 billion annually. Multilateral climate funds, though smaller, offer direct access and grant-based support for developing countries, with plans to triple their disbursements by 2030.
Bilateral finance, while politically constrained, accounted for $41 billion in 2022. Depending on MDB contributions and private finance mobilization, bilateral funds may need to fill remaining gaps, potentially growing to around $53 billion or more by 2035. Private finance mobilized by bilateral funds, though currently modest, could contribute an additional $11–18 billion depending on growth and mobilization ratios. Alternative sources, including carbon taxes, wealth taxes, and rechanneled IMF special drawing rights, could introduce new funding streams to help meet the NCQG.
The way finance is delivered is as important as the total amount. Many developing countries cannot afford high-interest loans, making grants and highly concessional funding essential, particularly for adaptation and loss-and-damage responses. In 2022, grants made up 39% of bilateral and 9% of multilateral finance, primarily benefiting low-income countries. Maintaining and expanding this proportion will require deliberate policies as MDBs and private finance increasingly target middle-income countries.
Distribution of climate finance must prioritize vulnerable nations. While lower-middle income countries received nearly half of climate finance in 2022, low-income countries received only about 11%. The focus should be on ensuring that grants and highly concessional finance reach the most vulnerable countries to effectively address climate impacts.
Scaling finance from $300 billion to $1.3 trillion annually is the real challenge. This will require doubling the efforts of public and private finance, with half expected from cross-border private investment and the other half from international public funds. Mobilizing this level of finance demands increased ambition from wealthy nations, further capital contributions to MDBs, and innovative international mechanisms. Private finance must also expand through supportive policies, risk-sharing instruments, and development of investment opportunities aligned with green transitions.
Monitoring and transparency are critical. The NCQG will use the UNFCCC enhanced transparency framework to track progress, complemented by biennial reports from the UNFCCC Standing Committee on Finance. Additional oversight will be necessary for the broader $1.3 trillion goal, especially for funding streams not fully captured by the UNFCCC reporting system.
The NCQG represents a transformative step toward a sustainable future, but its success depends on timely, well-targeted implementation. Reaching $300 billion is within reach if MDBs and countries sustain their commitments, but the ultimate objective must be the $1.3 trillion target. This full ambition is essential to meet the true scale of global climate needs and demands urgent action starting now.
