COP31 and the climate finance gap: from Belem's USD 300 billion floor to a working Article 6 market
COP30 in Belem closed with a New Collective Quantified Goal of USD 300 billion per year by 2035, roughly a quarter of the African Group ask. The 2026 host fight between Australia and Turkey, the first ITMO trades under Article 6.2 and 6.4, and the slow walk of the Loss and Damage Fund will define whether the Paris architecture remains operative through the second NDC cycle.
The COP30 Mutirao political package agreed in Belem on November 21, 2025 delivered a New Collective Quantified Goal of USD 300 billion per year by 2035, with a stretch target of USD 1.3 trillion that defers the question of who pays. Climate Policy Initiative tracked USD 1.46 trillion in total climate finance flows for 2022, but mitigation absorbed 91 percent, adaptation 7 percent, and dual benefit 2 percent, against an IEA Net Zero Emissions need of USD 9 trillion per year by 2030. Article 6.2 cooperative transfers between Switzerland, Singapore, South Korea, Sweden, and host countries (Ghana, Thailand, Senegal, Vanuatu, Chile) cleared their first authorized ITMOs in 2024 and 2025, and the centralized Article 6.4 Paris Agreement Crediting Mechanism methodologies adopted in Baku became operational mid 2025. The Loss and Damage Fund has secured USD 770 million in pledges against operational needs in the tens of billions, and the United States Paris withdrawal effective January 27, 2026 has removed the largest historical donor from the table. The 2026 contracting window for sovereign creditors, asset managers, MDBs, and the JETP partner countries is narrower than the headline numbers suggest.
Belem's NCQG: USD 300 billion by 2035, a quarter of the African Group ask #
The New Collective Quantified Goal adopted in Belem on November 21, 2025 sets a USD 300 billion per year floor by 2035 to be mobilized by developed countries, against the USD 1.3 trillion the African Group, the Alliance of Small Island States, and the Like Minded Developing Countries demanded through the negotiations. The text uses the verb 'mobilize' rather than 'provide', preserving the longstanding distinction that allows private flows, export credits, and instruments at non concessional terms to count toward the goal. UNFCCC Standing Committee on Finance has not yet defined a methodology to track the USD 300 billion under the new goal, and the methodology debate is the first item on the COP31 agenda.
The doubling of adaptation finance from the 2019 baseline of USD 20 billion to USD 40 billion per year by 2025, agreed at COP26 Glasgow, was confirmed in Belem as broadly delivered (OECD DAC provisional 2023 figure of USD 32.4 billion adaptation, with USD 28.7 billion bilateral and USD 3.7 billion multilateral). UNEP's Adaptation Gap Report 2024 nonetheless estimates adaptation needs at USD 215 to 387 billion per year through 2030 for developing countries, leaving a structural shortfall on an order of magnitude that the NCQG does not close. The Mutirao package, named after the Brazilian Portuguese term for collective effort, bundles the just transition work program, the NDC 3.0 review track, and Article 6 implementation guidance into a single political declaration, with no binding trigger if the USD 300 billion is not mobilized.
| Item | Belem outcome (Nov 21, 2025) | Developing country ask | Gap |
|---|---|---|---|
| NCQG core goal (USD billion per year by 2035) | 300 | 1,300 | 1,000 |
| Of which, public and grant equivalent | Mobilized, not provided | Provided, grant based | Definitional |
| Adaptation finance share | Doubled from 2019 baseline of USD 20 billion | USD 215 to 387 billion per year (UNEP AGR 2024) | Roughly 80 percent |
| Loss and Damage Fund pledges (cumulative through 2025) | 0.77 | 100 to 580 per year (V20 estimate) | Three orders of magnitude |
| Mutirao political package | Just transition work program, NDC 3.0 review, Article 6 implementation track | Binding USD 1.3 trillion roadmap | Unmet |
| Donor base | Developed country parties plus voluntary contributions | All high emitters and high income parties | China, Gulf, Singapore status |
The 2030 wedge: USD 1.46 trillion delivered against USD 9 trillion needed #
Climate Policy Initiative's Global Landscape of Climate Finance, December 2024 edition, tracked USD 1.46 trillion in 2022, almost double the 2019 to 2020 average. The composition is the binding constraint. Mitigation absorbed USD 1.34 trillion, or 91 percent, with electric vehicles and clean transport at USD 437 billion and renewables at USD 511 billion as the two largest categories. Adaptation reached USD 76 billion, or 5 percent. Public sources contributed USD 765 billion, private USD 695 billion. Households and individuals (rooftop solar, EV purchases) accounted for USD 184 billion of the private total.
Against this delivered base, the IEA Net Zero Emissions by 2050 scenario (October 2024 update) requires global energy investment to rise from USD 2.8 trillion in 2024 to USD 5.0 trillion per year by 2030, with the broader climate finance need including land use, adaptation, and resilience reaching USD 9 trillion per year by 2030 (CPI with IRENA World Energy Transitions Outlook 2024). Two thirds of the gap sits in emerging markets and developing economies excluding China, where current flows of USD 270 billion need to quadruple to USD 1 trillion by 2030. The IMF's October 2024 Fiscal Monitor flagged that low income developing countries face a fiscal envelope incompatible with NDC implied climate spending, with debt service for the bottom 50 countries averaging 12.4 percent of revenues in 2024.
Article 6 goes live: ITMOs, the centralized 6.4 mechanism, and the Swiss precedent #
Article 6 of the Paris Agreement, languishing through the Madrid and Glasgow rulebooks, became operational over 2024 and 2025. Switzerland's KliK cleared the first authorized ITMO transfer with Ghana in January 2024, covering 1.16 million tonnes of CO2 equivalent from rice cultivation and clean cooking activities, with corresponding adjustment applied in Ghana's biennial transparency report. The Thailand e bus activity in Bangkok had transferred 1.9 million ITMOs cumulatively through 2025, and the Senegal cookstove activity issued in Q4. Singapore, Sweden, and South Korea have signed implementation agreements but not yet completed full ITMO issuance cycles, with Singapore's MOUs spanning Papua New Guinea, Bhutan, Paraguay, Ghana, and Rwanda.
The centralized Paris Agreement Crediting Mechanism under Article 6.4 cleared its first methodologies at COP29 Baku in November 2024 after the Supervisory Body adopted the methodological and activity standards in October. The PACM registry became operational in mid 2025 with the first host authorized projects in Q4 2025. CDM credit carryover into the PACM was capped at projects registered after January 1, 2013 with retirements only against pre 2020 NDC obligations, a far tighter envelope than the original CDM pipeline of approximately 7,800 projects suggested. Voluntary carbon market integration, mediated through the ICVCM Core Carbon Principles label and the VCMI Claims Code, remains the active market segment, with 2024 issuance of 305 million credits (Ecosystem Marketplace) trading from USD 4.04 in 2023 to USD 6.50 by Q4 2025 in the high integrity segment.
| Buyer party | Host party | Activity type | ITMOs (tCO2e) | Status |
|---|---|---|---|---|
| Switzerland (KliK) | Ghana | E cooking, rice cultivation | 1,160,000 (first issuance 2024) | Authorized, transferred |
| Switzerland (KliK) | Thailand | E bus fleet Bangkok | 1,916,000 (cumulative through 2025) | Authorized, partial transfer |
| Switzerland (KliK) | Senegal | Efficient cookstoves | First issuance Q4 2025 | Authorized |
| Singapore | Papua New Guinea, Bhutan, Paraguay | Forest, REDD plus, renewables | MOUs signed 2024 | Pre issuance |
| South Korea | Vietnam, Bangladesh | Rice methane, waste | Pilot agreements | Pre issuance |
| Sweden | Nepal, Zambia, Dominican Republic | Electric mobility, biogas | MOUs signed 2024 | Pre issuance |
| Article 6.4 PACM | Centralized registry | Methodologies adopted Baku 2024 | Registry live mid 2025 | Operational |
JETP, MDB capital, and the disbursement gap #
The Just Energy Transition Partnerships (South Africa USD 11.6 billion at COP26 Glasgow, Indonesia USD 21.6 billion at the November 2022 G20, Vietnam USD 15.5 billion in December 2022, Senegal USD 2.7 billion in June 2023) have struggled with disbursement against commitment. The South Africa partnership had disbursed approximately USD 2.1 billion by end 2024 (Presidential Climate Commission and IPG progress report), mostly in concessional loans rather than the grant equivalent the National Treasury anticipated. The Komati coal plant, the flagship JETP project, was operationally retired in November 2022, but the just transition program around it has lagged on Eskom's 14 gigawatt coal closure schedule.
MDB reform, the second pillar of the post Bridgetown Initiative agenda, advanced unevenly. The World Bank Group's Capital Adequacy Framework reforms released roughly USD 50 billion in additional lending headroom over a decade. The IMF Executive Board approved SDR channeling on May 10, 2024 (up to USD 20 billion via the AfDB and IDB) but the September 2024 IMF Legal Department reserve asset characteristic test constrained adoption. MDB climate finance commitments reached USD 125 billion in 2023 (Joint MDB Climate Report, June 2024), with USD 50 billion to low and middle income economies, against the Bridgetown 2.0 target of tripling MDB lending to USD 390 billion by 2030.
Sovereign debt, debt for nature swaps, and Loss and Damage #
Climate aligned debt restructurings have moved from a one off Belize transaction in November 2021 (USD 364 million refinanced for USD 23.4 million per year of marine commitments) to a structured product class with seven sovereign deals through end 2024 totaling roughly USD 4 billion in principal refinanced. Major transactions include Barbados (USD 150 million in September 2022 and a USD 300 million expansion in December 2024), Ecuador's Galapagos swap (USD 1.616 billion in May 2023, the largest), Gabon (USD 500 million in August 2023), Bahamas (USD 300 million in September 2024), and El Salvador's Lempa River transaction (USD 1.0 billion in October 2024 with TNC and JP Morgan). The Galapagos deal retired old commercial debt at 35.5 cents on the dollar, with IDB political risk insurance (USD 85 million guarantee) and US DFC insurance (USD 656 million guarantee) lowering the financing cost and freeing roughly USD 18 million per year for 18 years.
The Fund for Responding to Loss and Damage, operationalized at COP28 Dubai in December 2023, secured USD 770 million in cumulative pledges through end 2025 against V20 estimates of USD 100 billion per year in current losses ramping to USD 580 billion by 2030. The Board, hosted by the Philippines from 2024 with the World Bank as interim trustee under a four year limited capacity arrangement, agreed an initial resource mobilization target of USD 5 to 10 billion by 2027. The largest single pledge, USD 100 million from Italy at COP28, has not yet flowed in full. The Fund is a recognition mechanism, not yet a finance vehicle at scale, and the Multilateral Climate Funds Architecture Review at COP31 will determine whether GEF, GCF, AF, and FRLD are consolidated, layered, or left fragmented.
COP31 host, US absence, and the 2026 contracting window #
The COP31 host bid is contested between Australia and Turkey within the Western European and Others Group (WEOG), with the decision unresolved through Belem and now expected at the June 2026 Subsidiary Body session in Bonn. Australia, backed by the Pacific Islands Forum, is offering a Pacific COP framing, anchored by the Australian Climate Change Authority's October 2024 advice on a 65 to 75 percent emissions cut by 2035 from 2005 levels. Turkey is leveraging its unique status as a developed country listed in Annex II of the Convention but treated as a developing country for finance purposes, a position that complicates burden sharing under the new NCQG. The default WEOG fallback is Bonn.
The United States Paris Agreement withdrawal, notified by the Trump administration on January 20, 2025, took effect on January 27, 2026 under the one year notification clause of Article 28. The Inflation Reduction Act tax credits remain on the books pending Congressional action, with the energy community bonus and the domestic content adders subject to Treasury and IRS rulemaking that the second Trump administration has narrowed but not repealed. The implication for COP31 is that the United States enters the negotiation as an observer, the second time after the 2017 to 2020 episode, with state and city climate diplomacy through the US Climate Alliance and We Are Still In replacing federal participation on the climate finance and Article 6 tracks.
Three lines of action define the 2026 window. The green bond market, with USD 575 billion in aligned issuance in 2024 (Climate Bonds Initiative Sustainable Debt Market Report, January 2025), will absorb sovereign and supranational issuance from the EU, Germany, France, the UK, Singapore, Hong Kong, and Indonesia, with the cumulative aligned market crossing USD 5 trillion in early 2025; the greenium has compressed to 1 to 6 basis points as supply has scaled. Blended finance leverage ratios, averaging 4.1 to 1 (Convergence State of Blended Finance 2024) against the 7 to 9 to 1 ratio that early Bridgetown work assumed, demand re engineering of MDB risk transfer toward first loss equity, currency hedging through the Currency Exchange Fund, and longer tenor political risk insurance. The Article 6.4 PACM and high integrity voluntary carbon market converge in 2026 and 2027 around CCP labeled credits and CORSIA Phase 1 mandatory aviation demand (100 to 150 million credits per year), and sovereign creditors should price the Article 6 host country risk premium into upcoming issuance from Ghana, Vietnam, Thailand, Senegal, and Bangladesh.
Strategos estimates a 60 percent probability that the COP31 NCQG accounting methodology will be agreed in the November 2026 plenary, a 35 percent probability that the Loss and Damage Fund crosses USD 5 billion in committed contributions by end 2027, and a 25 percent probability that JETP partner countries collectively retire 25 gigawatts of coal by 2030 against original commitments. The Paris architecture is operative but stretched. The next 18 months are the contracting window.
Sources #
- UNFCCC, Decision 1/CMA.6 NCQG and the Mutirao political package, COP30 Belem
- Climate Policy Initiative, Global Landscape of Climate Finance 2024
- IEA, World Energy Investment 2024 and Net Zero Emissions Roadmap update October 2024
- IRENA, World Energy Transitions Outlook 2024
- OECD DAC, Climate Finance Provided and Mobilised by Developed Countries 2013 to 2022
- UNEP Adaptation Gap Report 2024, Come Hell and High Water
- IMF Fiscal Monitor October 2024 and SDR channeling Executive Board decision May 2024
- World Bank Joint MDB Climate Report 2023, June 2024
- UNFCCC Article 6.4 Supervisory Body methodology and activity standards, October and November 2024
- Swiss Foundation for Climate Protection and Carbon Offset (KliK), Article 6 ITMO project portfolio
- Climate Bonds Initiative, Sustainable Debt Global State of the Market 2024, January 2025
- Convergence, State of Blended Finance 2024
- Ecosystem Marketplace, State of the Voluntary Carbon Market 2024 and 2025 updates
- Reuters and Financial Times reporting on COP30 Belem outcomes, JETP disbursements, and US Paris withdrawal
- Presidential Climate Commission of South Africa, JETP Implementation Plan progress reporting
- Inter American Development Bank and US DFC, Galapagos Marine Bond and political risk insurance documentation
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