Cop28, the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC), held in Dubai from November 30 to December 12, 2023, was a pivotal moment against the looming threat of climate change. It marked the conclusion of the first-ever Global Stocktake on Paris Agreement goals.The Stocktake is a process that takes place every five years. It assesses and updates the nations’ progress and collective efforts towards achieving their climate change goals in their Nationally Determined Contributions, thereby providing more transparency.

This article delves into the concrete outcomes achieved during the conference especially on the crucial front of climate finance, drawing lessons for the CoP29, scheduled to take place during November 11-22, 2024, in Baku, Azerbaijan. CoP28 aimed to set the stage, to tackle climate finance from different angles, address unfulfilled commitments, replenish the green climate fund and operationalise loss and damage fund, prioritise efforts to tackle adaptation finance gaps, pledge to contribute $100 billion to developing nations, mobilising private capital, and encouraging large corporations to direct finance to support SMEs climate action plans.

Adaptation received significant attention at CoP28, as it has a crucial role to play in addressing the impacts of climate change. Green Climate Fund was established at CoP26, after the agreement by developed nations to pool $100 billion by 2020 to support developing nations, to cope with climate change, at the 15th Conference of the Parties to the UNFCCC in 2009 (CoP15). It is a key to channel adaptation finance to the vulnerable developing nations.With unmet commitments by 2020, it was reaffirmed and extended by the Paris Agreement to 2025. The amount was asked to be delivered in 2023 at the New Global Financing Pact Summit held in Paris on June 22-23. Unfulfilled commitments led to the establishment of a New Collective Quantified Goal (NCQG), which raised the floor from a $100 billion annual goal, by considering the needs and priorities of the developing nations, before 2025.

At CoP28, several countries pledged new funding, thereby receiving a second replenishment to the Green Climate Fund surpassing $12.8 billion, which will further support investments in adaptation projects. Multilateral development banks and international financial institutions have a key role to play to unlock investment opportunities and to mobilise finance from private players and through own lending. The CoP28 president said, “The key to attracting more private finance and capital is simply lowering the risk. Radically raising the level of concession and funding is one of the keys to unlocking commercial investment, but we need to bring everyone to the table across the financial community, and use every tool in the shed.”

Another important milestone achieved is the operationalisation of the “Loss and Damage Fund” which was agreed upon during CoP27. This historic agreement has the main intention of helping developing countries, particularly the vulnerable nations, who are affected by permanent land loss, heatwaves, landslides, sea-level rise, wildfires and so on which are beyond that can be adapted to, in coping with climate change and the main responsibility to contribute to the fund lies with the developed nations. But since the fund is still under development, various details are yet to be determined, such as: Who are the primary contributors to the fund? Who are the receivers? How will the fund be managed? To develop recommendations for the fund’s operation and governance, a Transitional Committee has been established. Initial pledges to contribute to the fund have also been made by several countries including $100 million by UAE and Germany, £40 million to the fund and £20 million for other arrangements by the UK, $10 million by Japan, and $17.5 million by the U.S.

The UAE had launched at UAE CoP28 the Declaration on a Global Climate Finance Framework to support the developing nations, who bear the brunt of climate impacts, in propelling towards their climate action goals. The goals were to mobilise $100 billion annually by 2025, make climate finance more accessible and affordable, and ensure a just and equitable transition.

To mobilise private finance for adaptation and resilience, private stakeholders and several Parties, supported by High-Level Champions, a Call for Collaboration on Enhancement was issued. The UN, World Bank and other multilateral development banks, along with the support of Bloomberg Philanthropies aim to scale up climate finance with the new Global Capacity Building Coalition. Net Zero Export Credit Agencies Alliance (NZECA) was launched at CoP28, by the eight export credit agencies alongwith the Innovation and Knowledge Hub at the University of Oxford, Future of Climate Cooperation, and the UN Environment Programme Finance Initiative (UNEP FI), with the support of Glasgow Financial Alliance for Net Zero (GFANZ). The NZECA members have committed to Transition all operational and attributable greenhouse gas (GHG) emissions from business activities in alignment with the path to net zero by mid-century, or sooner, consistent with a maximum temperature rise of 1.5°C above pre-industrial levels by 2100 and publish GHG emission data and evidence annually to showcase action in line with the commitments. This includes issuing relevant international or national GHG emissions reporting protocols and climate portfolio alignment methodologies.

Several significant announcements and developments regarding finance for nature were established at CoP28. Initiatives like Nature Finance "Making Nature Markets Work" paper, TNFD financial disclosure framework and NGFS scenarios for nature-related risk assessment, and mobilizing sovereign finance through better use of concessional and result-based finance were unveiled by the CoP28 High-Level Champion. $2.5 billion for nature protection and restoration, including $1 billion from the Bezos Earth Fund, $1 billion from the LEAF Coalition, and $500 million from the Global Environment Facility (GEF) were mobilised by the World Climate Action Summit. Nature, Land Use, and Ocean Day secured $186.6 million in new financing for forests, mangroves, and the ocean. High-Level Event on Nature and Water Finance for ClimateAction highlighted key efforts for mobilizing finance for water and nature, including announcements on impactful policies, funds, and initiatives. High-level integrated frameworks to unlock nature finance, like the CGC/Climate Finance Champions paper and the Nature Finance "Making Nature Markets Work" paper were launched. Innovative mechanisms like Interest rate buydown for Uruguay's nature/climate operation by the Inter-American Development Bank (IDB), WB Global Challenge Program for Forests, and NbS Africa Accelerator Launch were announced. The establishment of new markets for conservation, ecosystem services payments, etc. were explored. The United Arab Emirates (UAE) pledged $100 million for nature-climate projects, with an initial $30 million for Ghana's "Resilient Ghana" plan. Nature Solutions Hub for Asia and the Pacific by the Asia Development Bank, to proactively scale up the flow of public and private finance into conserving nature and biodiversity loss in Asia and the Pacific was launched by multilateral development banks and international financial institutions.

Aswathi Ajayan is Economist, InfiSum Modelling Pvt Ltd.
Dr Badri Narayanan Gopalakrishnan is Distinguished Fellow, Pahle India Foundation, and Fellow, NITI Aayog.