A recent report from the Climate Policy Initiative (CPI) reveals that global investment aimed at combating and adapting to climate change reached nearly $1.5 trillion in 2022, doubling since 2018. However, the report underscores the urgency of ramping up this investment significantly—at least fivefold by 2030—to keep global warming within the critical limit of 1.5 degrees Celsius.
Titled “Global Landscape of Climate Finance 2024: Insights for COP29,” the study presents a stark picture of the current climate finance landscape, noting that this level of funding currently represents only 1% of global GDP. The report highlights a concerning shortfall, particularly for emerging markets and developing economies (EMDEs), which may require approximately 6.5% of their GDP by 2030 to meet climate targets effectively.
Barbara Buchner, CPI’s Global Managing Director, remarked on the findings, stating, “While global climate finance has made some strides, a much more ambitious, cohesive, and effective approach is essential to address the vast funding gap.” She emphasized that the data in the report clearly indicate the need for a substantial scaling of investment across all areas—domestically, internationally, and across various sectors—to achieve shared climate goals. Buchner added that COP29 provides a crucial platform for establishing clear, collaborative commitments to finance the transformations necessary for a sustainable future.
The report reveals that annual climate finance flows have grown from $674 billion in 2018 to $1.459 trillion in 2022. Despite this progress, a staggering fivefold increase is necessary to reach the estimated annual requirement of $7.4 trillion by 2030 to limit global warming to 1.5 degrees Celsius.
In a concerning trend, fossil fuel investments have continued to rise globally, exceeding $1 trillion in 2023 and 2024, despite existing commitments to reduce such investments. The report further notes that subsidies for fossil fuel consumption in emerging economies have increased fivefold during the same period. This juxtaposition of rising fossil fuel investment against the backdrop of climate commitments raises serious questions about the feasibility of meeting global climate goals.
During the UN climate conference in the UAE in 2023, nations reached a landmark agreement aimed at transitioning away from fossil fuels. The upcoming UN climate summit in Baku, Azerbaijan, is expected to solidify a new climate finance target that developed countries must meet starting in 2025, providing necessary resources for developing nations to combat and adapt to climate change.
The CPI report warns of dire economic consequences if significant financial action is not taken, predicting that economic losses by the year 2100 could be five times greater than the climate finance needed by 2050 to adhere to the 1.5-degree Celsius limit.
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While adaptation finance has more than doubled from 2018 to 2022—reaching $76 billion—annual flows still fall short. The report states that these flows have only reached one-third of the volume needed each year from 2024 to 2030 in EMDEs alone.
According to the United Nations Framework Convention on Climate Change (UNFCCC), established in 1992, industrialized nations that have historically contributed the most to greenhouse gas emissions bear the responsibility for financing and technology transfer to help developing countries combat and adapt to climate change. This group includes high-income countries such as the United States, Canada, Japan, Australia, New Zealand, and several EU member states like Germany and France.
Developing and poorer countries emphasize the need for a robust new climate finance goal, viewing it as essential for boosting climate action. They argue that expecting them to undertake additional responsibilities, especially when many continue to face poverty and inadequate infrastructure amid escalating climate impacts, undermines the principle of equity.
As the world looks towards COP29, the urgency for increased climate finance and collaborative commitments has never been clearer. Stakeholders must work together to ensure that the necessary funding flows are established, ensuring that vulnerable nations are equipped to tackle the mounting challenges posed by climate change while striving towards a sustainable future for all.
