This blog sets out how the EU can improve its stance for the upcoming climate summit as the negotiation position gets agreed by finance ministers on 8 October and environment ministers on 14 October.

The 29th international climate summit (COP29) will take place from 11-22 November in Baku, Azerbaijan. Countries are expected to agree to a new collective quantified goal (NCQG) on climate finance which will have more layers than the current $100 billion that developed countries are mobilising to support developing countries. Preparatory negotiations have been slow due to diverging views among countries on the multiple layers of the new goal. These layers include the new figures, the sources of finance (public, private, levies, etc.), the contributor base (governments, financial actors, etc.), and the spending purposes (mitigation, adaptation, loss and damage). 

As if these finance negotiations weren’t already tense enough, the political context in which they happen couldn’t be less favourable. Political attention of leaders is focusing mostly on the conflicts in the Middle East; many far-right parties in the EU are scandalising development aid; and finance ministers will not even be at the table to negotiate the new goal. A potential second Trump presidency could cut funding to the military and Ukraine substantially thus increasing the pressure on the EU to fill this gap. In this context, COP29 negotiations will stress-test the EU’s ability to play its traditional role as “bridge-builder” and “honest broker”.  

Historically, the EU has contributed the largest share of climate finance but it has taken a defensive position in the negotiations on the finance goal over the last months. Domestic budget constraints and the upcoming US elections made EU negotiators reluctant to talk about numbers for the new goal, especially as Arab countries want developing countries to provide $440 billion yearly. With the EU taking a defensive stand ahead of COP29, countries like Australia or the UK are rumoured to be the power brokers for a deal. Instead a key way to forge a finance deal that is acceptable to all parties would be for the EU to convene alliances such as the High Ambition Coalition. It could undermine the EU’s credibility if these alliances are perceived to only work together on mitigation, thus on EU priorities, and not on finance which is key for developing countries.

Irrespective of who wins the US elections, it is  important that the EU clearly states its intention to remain a credible climate finance partner. A second Trump presidency risks undermining multilateralism, defunding from international institutions and withdrawing not only from the Paris Agreement but the UN climate convention. It is in the EU’s own interest to preserve international cooperation, also on climate, and strengthen developing countries’ ability to decarbonise by actively contributing to success at Baku. 

The EU can respond to this stress-test by having ministers take these three steps

1. The EU can make the climate finance conversation meaningful and “real”.

The EU is well-positioned to take the conversation beyond the dispute over the headline numbers and acknowledge the needs of developing countries, pointing to their debt constraints and show solutions to increase access to finance. The EU has been at the forefront of finance for adaptation as well as loss and damage, so is already a good ally for developing countries. It is vital for the EU’s credibility that ministers set out how finance can be directed to support sustainable development in the global South and commit to no backsliding of the EU’s own finance contribution.

2. The EU can step up as a bridge-builder for successful negotiations in Baku.

As ministers are getting more involved in the negotiations, the EU can become more proactive and outspoken on what key ingredients for success look like. It currently focuses too much attention on its own priority to expand the donor base, which upsets its traditional allies in Africa, Latin America or among the more vulnerable countries. Instead, it can work with these countries in the setting of the High Ambition Coalition to align on a strong package that clearly spells out expectations for all layers of the new finance goal as basis for a deal in Baku. 

3. Team Europe can show the impact of its climate finance.

The complexity of national and European climate finance instruments often prevent “Team Europe” to display more than the headline number it contributed. Instead, ministers and the European Commission can highlight concrete projects they financed and results, ideally with partner countries at events during COP29. By presenting the magnitude of tools, finance streams and initiatives “Team Europe” created with concrete examples, it can demonstrate the true magnitude of its efforts – currently hidden in complexity. 

The start of the new Commission cycle can provide an opportunity to overhaul the EU’s diplomacy, finance and cooperation to accelerate the global energy transition – stay tuned for our report on climate finance for the energy transition to be released ahead of COP29.