The New Collective Quantified Goal on Climate Finance
The centrepiece of COP29 was the negotiation of a New Collective Quantified Goal (NCQG) on climate finance, succeeding the 2009 commitment of USD 100 billion per year that expired in 2025. The negotiations were contentious, reflecting fundamental disagreements about the scale, sources, and allocation of climate finance.
What Was Agreed
The final agreement set a new goal of at least USD 300 billion per year by 2035 in climate finance flows from developed to developing countries. This figure, while a significant increase from the previous USD 100 billion target, fell short of the USD 1 trillion or more that developing nations and climate finance experts had called for. Key features of the new goal include:
- Broadened contributor base: While developed countries remain the primary contributors under the UNFCCC's principle of common but differentiated responsibilities, the text encourages voluntary contributions from other parties — a diplomatic reference to wealthy developing countries, including Gulf states and China.
- Source diversity: The goal encompasses public finance, private finance mobilised by public interventions, and multilateral development bank (MDB) flows. Critics argue that including private finance inflates the headline figure without guaranteeing the concessional terms that developing countries need most.
- Allocation balance: The text calls for balanced allocation between mitigation and adaptation, and a significant increase in adaptation finance — addressing a longstanding concern that adaptation has been chronically underfunded relative to mitigation.
- Grant and concessional terms: Language on the share of grants versus loans was a major point of contention, with developing nations pushing for a higher grant component to avoid exacerbating debt burdens.
The USD 1.3 Trillion Question
In addition to the USD 300 billion core target, the agreement referenced a broader goal of mobilising USD 1.3 trillion per year by 2035 from all sources, including private finance. This figure aligns more closely with estimates by the Independent High-Level Expert Group on Climate Finance of the total investment needed in developing countries. However, the distinction between a binding target of USD 300 billion and an aspirational reference to USD 1.3 trillion underscores the gap between acknowledged need and committed action.
"The NCQG represents a political compromise rather than a scientifically determined target. Whether USD 300 billion per year is 'enough' depends entirely on what it is spent on, how it is structured (grants vs. loans), and whether it catalyses additional private capital flows."
Article 6: Carbon Market Progress
COP29 made meaningful progress on operationalising Article 6 of the Paris Agreement, which provides the framework for international carbon trading mechanisms.
Article 6.2: Bilateral Mechanisms
Article 6.2 allows countries to transfer Internationally Transferred Mitigation Outcomes (ITMOs) through bilateral or multilateral agreements. COP29 advanced the practical framework for these transfers, including:
- Standardised reporting formats for ITMO creation, transfer, and use
- Requirements for corresponding adjustments to avoid double counting of emissions reductions
- Registry infrastructure for tracking ITMOs across national systems
For GCC states, Article 6.2 creates opportunities to develop carbon credit projects — renewable energy, CCS, energy efficiency, nature-based solutions — and sell the resulting credits to countries seeking to meet their NDC targets. The UAE and Saudi Arabia have been particularly active in developing bilateral ITMO frameworks.
Article 6.4: The New Crediting Mechanism
Article 6.4 establishes a UN-supervised crediting mechanism — the successor to the Clean Development Mechanism (CDM) under the Kyoto Protocol. COP29 advanced the methodological framework for this mechanism, including:
- Adoption of initial methodologies for common project types
- Establishment of the Article 6.4 Supervisory Body's operational procedures
- Guidelines for carbon removal activities, including CCS and direct air capture
- Safeguards for environmental integrity, indigenous peoples' rights, and sustainable development
Loss and Damage Fund Operationalisation
The Loss and Damage Fund, established at COP27 in Sharm el-Sheikh and operationalised with initial pledges at COP28 in Dubai, continued to develop at COP29. Key developments included:
- Additional financial pledges, bringing total committed funding toward USD 1 billion
- Selection of the World Bank as interim host of the fund's financial intermediary
- Development of allocation criteria for fund disbursement, prioritising Small Island Developing States and Least Developed Countries
- Discussion of innovative funding mechanisms, including potential levies on fossil fuel extraction, international shipping, and aviation
Implications for the GCC
Finance Contributor Status
The NCQG's encouragement of voluntary contributions from non-Annex I parties places a diplomatic spotlight on wealthy Gulf states. With some of the highest per capita incomes and per capita emissions globally, GCC nations face growing expectations to contribute climate finance beyond their UNFCCC obligations. The UAE's COP28 pledge of USD 100 million to the Loss and Damage Fund set a precedent that other Gulf states may face pressure to match.
Carbon Market Opportunities
Article 6 progress creates tangible commercial opportunities for GCC states:
- CCS credits: Qatar's planned 11 MTPA CCS capacity and UAE/Saudi CCS projects could generate carbon credits for sale under Article 6 mechanisms
- Renewable energy credits: Large-scale solar and wind projects in the GCC could generate ITMOs for transfer to countries with higher marginal abatement costs
- Blue and green hydrogen: As Article 6 methodologies develop, hydrogen production with CCS or from renewables could generate tradeable emissions reductions
- Nature-based solutions: Mangrove restoration, seagrass conservation, and desert ecosystem rehabilitation projects could qualify under Article 6.4
Domestic Policy Development
The evolving global carbon market architecture strengthens the case for domestic carbon pricing in GCC states. A domestic carbon price would allow GCC exporters to offset CBAM costs (as noted in our previous analysis), generate revenue for reinvestment in decarbonisation, and enable participation in Article 6 mechanisms as both buyer and seller.
Disclosure and Reporting
COP29 reinforced the trend toward enhanced transparency in climate reporting. The Global Stocktake process, NCQG reporting requirements, and Article 6 transparency provisions all demand robust, verified emissions data. Companies operating in the GCC should anticipate that climate disclosure requirements — whether voluntary or mandatory — will continue to tighten.
Assessment: Incremental Progress, Not Breakthrough
COP29 delivered incremental progress on finance, carbon markets, and institutional development, but fell short of the breakthrough that many stakeholders sought. The NCQG, while a necessary step forward, is widely viewed as insufficient relative to the scale of the climate finance challenge. Article 6 progress is welcome but methodological and institutional work remains before carbon markets function at scale.
For practitioners in the GCC, the practical takeaways are straightforward:
- Climate finance flows will increase significantly over the next decade, creating opportunities for Gulf-based project developers and financial institutions
- Carbon market infrastructure is being built — companies should position now for participation as buyers, sellers, or service providers
- Disclosure and verification requirements will continue to intensify, making investment in GHG measurement and reporting systems a priority
- The gap between agreed climate targets and current action trajectories continues to widen, increasing both physical and transition risks for the region
As a GAB-accredited verification body, GSustain is positioned to support GCC organisations in navigating these evolving requirements — from GHG verification to carbon credit validation to climate disclosure assurance.