For Global South countries dependent on the production of oil, gas and minerals, the outcome of the Baku UN climate conference (COP29) paints a challenging picture. These nations, most of them low- and middle-income countries, walk a tightrope while balancing two pressing goals: the energy transition beyond fossil fuels on the one hand, and their citizens’ development needs on the other. The question is whether international climate diplomacy will ever help bring these together in support of just energy transitions.

On COP29’s banner agenda item—the new climate finance goal—the conference did agree a new target to scale up financial support to the Global South by 2035: $300 billion per year from rich countries, notwithstanding clear objections from many countries. Conventional wisdom says that a negotiation is successful if all parties walk away equally unhappy. But the COP29 finance outcome felt even worse—more like renewing vows in a loveless marriage. This is because it effectively represents an extension of a climate finance reality marked by insufficiency, inadequacy and, above all, inequity.

There is broad-based consensus that the annual climate finance needs of the Global South add up to at least a 10-fold increase on current flows. The International High-Level Expert Group (IHLEG) on Climate Finance’s November 2024 report is a key reference, stating that international climate finance “… will need to cover $1 trillion per year of the total investment need by 2030 and around $1.3 trillion by 2035.” Another recent report, “Costing a Fossil Fuel Phaseout,” concludes that the total phaseout costs for developing and emerging economies (excluding China’s) are “likely somewhere between USD 1.5 and 2 trillion per year.”

As many were quick to point out, the $300 billion goal is actually far less than a “tripling” of the previous goal of $100 billion per year by 2020 once inflation is taken into account. Assuming a long-term inflation rate of 3 percent, the COP29 climate finance goal represents a 188 percent increase by 2035, rather than the 1,300 percent increase needed. In simple terms, COP29 fell short by a cool $1 trillion.

For low- and middle-income countries that rely on oil, gas and mineral exports, the impact will be particularly acute. An African regional dialogue on energy transition finance convened by NRGI ahead of COP29 made clear that limited financing hinders Africa’s transition potential. The IHLEG report echoes this conclusion and helps explain why:

“The largest increase in investment is required in [emerging markets and developing countries] other than China: these regions currently have low investment levels, significant development needs, and are projected to contribute over 50% of global emissions by 2030.”

The IHLEG is also very specific: “Ramping up climate investments in [emerging markets and developing countries] is the only way to reach the Paris Agreement goals of limiting the global temperature increase to well below 2 degrees Celsius…” (emphasis added.) Confirming this link, a Nigerian delegate made clear in a poignant intervention in the final minutes of the COP29 closing plenary that the consequence of the low finance goal would be lower ambition in national climate plans: “You expect us to have ambitious [nationally determined contributions (NDCs)]. The [new collective quantified goal] was supposed to enable us to have realistic finance goals. Three-hundred billion dollars is unrealistic. Let us tell ourselves the truth. This is 3 a.m. and we’re going to clap our hands and say this is what we’re going to do? I don’t think so."

Failure on finance quantity and quality

However insufficient, the deal reached at COP29 does at least increase the target amount of international climate finance. Critically, and even more concerning than the low target amount of climate finance, rich countries also failed to agree a much-needed step-shift in the quality of climate finance, especially around specifying sub-goals for grant-based financing and transparency of reporting their future contributions. NRGI’s Denis Gyeyir explained the importance of grants in Baku: “Non-debt instruments are critical for energy transition finance in African countries. Most African countries suffer a crushing debt service burden that constrains fiscal space. The lack of emphasis on grant-based financing in the COP29 finance decision is outrageous, and a just and equitable global transition requires that the G7 and other wealthy countries remedy this as they meet their commitments.”

Oxfam has regularly tracked finance flows rich countries counted toward their $100 billion per year commitment in its Climate Finance Shadow Report, finding that the grant equivalent value of climate finance provided via bilateral and multilateral channels amounted to “…just over one-third of the estimated $66.3 billion we found reported as public climate finance in 2019–20.” The obvious recommendation for the new climate finance goal set in Baku was to ensure that rich countries report loans and other non-grant finance contributions in terms of their grant equivalence—as they already do in reporting bilateral aid—so as to enhance transparency around their net financial value to recipient countries. The finance deal reflects no such improvement.

Across many other possible dimensions of climate finance quality, countries also considered but failed to agree on any improvements as part of the new climate finance goal. These include naming specific windows for mitigation, adaptation, loss and damage (or indeed energy transition); exclusion of market rate loans and export credits as qualifying contributions toward the finance goal; indicating a priority share for vulnerable country groups or categories; and linking mitigation finance to goals identified in the 2023 global stocktake (GST) of climate progress.

Wealthy countries should boost climate finance—for fairness and their own self-interest

One decision in Baku left the door open to address these issues of sufficiency and adequacy of climate finance over the coming year. The launch of the “Baku to Belém Roadmap to 1.3T” is effectively a year-long escape clause giving the Azerbaijani and Brazilian COP presidencies significant latitude to convene further meetings and produce a report by COP30 with the aim of “…scaling up climate finance to developing country Parties.”

The Baku bargain already calls on “all actors” to scale-up climate finance to the Global South to $1.3 trillion per year by 2035, but this amounts to little more than vague aspiration. “Baku to Belém Roadmap to 1.3T” offers a means to convert that aspiration into reality if rich countries are willing to raise the scale and nature of their commitments, including through innovative sources of international climate finance.

The $300 billion per year goal is a floor for future finance flows, not a ceiling. And the case for rich countries to deliver trillions, not billions, is clearly rooted in a “fair shares” approach to global equity and justice. As this year’s Civil Society Equity Review reminds us “No international effort to hold to any realistic 1.5°C pathway can honestly hope for success unless the efforts it demands are widely seen as being fairly shared.”

But if the case for fairness doesn’t convince Global North countries that over-delivery is in their interest, there’s also the narrow, economic case for action, which makes it even clearer that over-delivery is in their own self-interest. The 2024 IHLEG report describes investment in emerging markets and developing countries as the “growth story of the 21st century” and estimates corresponding avoided costs and co-benefits at 15–18 percent of global GDP in 2030.

More specifically, recent economic analysis reveals a net benefit of $5.1–$40 trillion over 2025–2035 accruing specifically to rich countries if they step up and provide adequate levels of international climate finance. As UN Secretary-General António Guterres said in his concluding remarks to world leaders at COP29, “Climate finance is not charity, it’s an investment.”

How the Global South can pave the way

For their part, low- and middle-income countries can strengthen their position over the coming year by spelling out the difference new and additional international climate finance would make in “conditional NDCs.” Under the Paris Agreement, countries committed to periodically share their own updated national climate pledges (or NDCs) with the international community. 2025 is the due date set for the next round, sometimes called NDC 3.0.

Many Global South countries have already labeled parts of their national plans as “conditional” on international support. Some, like Colombia, have put forward energy transition investment plans that situate major climate actions within their national development strategies. Global South countries can help ensure ongoing negotiations under the Baku to Belém Roadmap to 1.3T are grounded in real-world, up-to-date cost estimates linked to global progress towards the Paris Agreement objective by: adding more ambitious, “stretch goals” to their third round NDCs; costing the related additional financing requirement; and clearly presenting those components as pledges they can only achieve with international support as “conditional NDCs.”

Just transitions away from fossil fuels were too hot to handle

Two other discussions critical to the energy transitions of Global South oil, gas and mineral producers were postponed by COP29 and will be resumed at the Bonn UN climate talks in June 2025: the transition away from fossil fuels (the UAE Dialogue on Implementing GST Outcomes) and support for a just transition (the UAE Just Transition Work Program).

In both cases, lack of agreement reflected both broad-based support for action (which prevented backstepping) and the high stakes implications of decisions (i.e., “no deal is better than a bad one”). And the lack of agreement on both areas was also clearly tied to the low-ambition result on climate finance.

The historic call for a transition away from fossil fuels in the 2023 COP28 “Dubai deal” reflected a careful balance between country positions. This enabled agreement, while also opening the door to competing interpretations of what kinds of actions will help close the gap between current pledges and what’s needed to align with the Paris Agreement.

At COP29, the UAE Dialogue on Implementing GST Outcomes needed to both preserve this balance and flesh out details of how to enable and support a just, orderly and equitable exit. However, the draft decision ultimately presented by the Azerbaijani COP29 president failed to preserve this balance. While it reaffirmed the role of “transitional fuels” (read: gas), it made no mention of other elements of the Dubai deal, such as tripling renewables, doubling energy efficiency and transitioning away from fossil fuels.

Similarly, on the Just Transition Work Program (JTWP), divisions centered on two competing visions for what comprises a just energy transition. For the Global South, it is an integrated vision for a transition that better reflects their needs and realities, including pressing development priorities such as energy security, predictable state revenues and employment generation. This vision includes development of green industrial policy and sees international equity as central to achievement of just transitions.

In contrast, most wealthy countries at COP29 insisted on a narrower vision focused on worker transitions within the context of the existing climate mitigation and emissions reduction frame of the Paris Agreement. This was largely because rich countries generally take a legalistic approach to the UN climate negotiations that always seeks to minimize their own obligations and commitments.

As with the UAE Dialogue on Implementing GST Outcomes, agreement on future discussions under the JTWP ultimately foundered on a fatal combination of differing substantive positions and the low ambition reflected in the COP29 climate finance goal—both driven by the intransigence of Global North countries.

Transition minerals were firmly on the agenda

For countries in the Global South, linkages to the new climate finance goal are integral to any vision of a just, global energy transition. International equity is also relevant in other respects, such as in benefit sharing and the localization of profits from extraction of transition minerals, which was specifically referenced in the annual summary of the JTWP dialogues prior to COP29.

COP29 participants paid far greater attention to transition minerals compared to previous UN climate conferences, reflecting a growing awareness that, as with finance and mitigation ambition, progress on governance of transition minerals is a determining factor for the transition away from fossil fuels. This raises both questions around how the UN climate regime can advance the principles and recommendations of the UN Secretary-General’s Panel on Critical Energy Transition Minerals and how the Brazilian COP presidency will reflect these in just transition-related outcomes at COP30.

The outcome in Baku did little to improve financing prospects for urgent just energy transition priorities in low- and middle-income countries. However, it made clear that just transitions in these countries are the route to meeting pressing development needs and offer potential for healthy and sustainable returns on investment. Wealthier countries should support such transitions to fully meet their obligations under the Paris Agreement. Given the cumulative scale of future Global South emissions, they are also essential to achieving the Paris 1.5°C goal.

Beyond Baku, it is clearer than ever that just energy transitions remain the only way for oil-, gas- and mineral-producing countries to build a secure, inclusive and sustainable future. They should push forward with their own strategies and plans for a just, orderly and equitable energy transition beyond fossil fuels, making clear how international support affects the timing of their exit. Wealthy countries must bring new resources and proposals to the table to advance international climate diplomacy. All countries should work to ensure COP30 delivers a major course correction and puts the world back on track.

BAKU, Azerbaijan  — The COP29 UN climate conference result maintains the weak promise of international financial support for the transition away from fossil fuels in low-and middle-income oil and gas producers, according to experts at the Natural Resource Governance Institute (NRGI).

Low- and middle-income countries are most affected by climate change, and least responsible for causing it. They also face the greatest challenges when transitioning away from fossil fuel dependence. When countries came together to adopt the Paris Agreement in 2015, they also decided to set a new collective, quantified goal (NCQG) for climate finance before 2025. The main purpose of COP29 has been to secure an upgraded commitment by rich countries to help countries in the global South to recover from and adapt to climate change impacts and boost their own just energy transitions.

“The COP29 outcome leaves much to be desired and there is a very hard road ahead, but it maintains a glimmer of a pathway for low- and middle-income countries to join the global transition away from fossil fuels with financial support,” said Suneeta Kaimal, president and CEO of NRGI. “Some oil-producing countries, such as Mexico, Colombia, Indonesia and Brazil, announced meaningful new energy transition commitments. However, their path and that of other resource-rich countries remains extremely tenuous until higher-income countries deliver their fair share of funds to the Global South in grants, not loans. It’s in everyone’s interest – including their own – for the G7 and other wealthy countries to promote equity and justice and quickly fund a just energy transition.”

Beyond the headline figure USD 300 billion per year reflected in the new finance goal agreed in Baku, the agreement does little to advance the quality of finance that will be counted toward fulfilment of the goal.

“Non-debt instruments are critical for energy transition finance in African countries,” said Denis Gyeyir, NRGI Africa senior program officer. “Most African countries suffer a crushing debt service burden that constrains fiscal space. The lack of emphasis on grant-based financing in the COP29 finance decision is outrageous, and a just and equitable global transition requires that the G7 and other wealthy countries remedy this as they meet their commitments.”    

In the context of the Paris Agreement, countries have set themselves a 10 February 2025 deadline for submitting updated national climate pledges (nationally determined contributions, or NDCs) to global climate action.

“Mexico has re-entered the climate action arena with a new pledge: the goal of achieving net zero emissions by 2050 and explaining how it will get there in its NDC next year,” said Fernanda Ballesteros, NRGI Mexico country manager. “However, the new government's climate balance sheet will remain insufficient if Mexico’s state oil company Pemex, one of the world’s largest methane polluters, is not a central part of Mexico’s climate commitments, specifically of its NDC.”

For more information:

Gabriela Flores, +44 7931 924 934, gflores@resourcegovernance.org
Lee Bailey, +44 7447 560 488, lbailey@resourcegovernance.org
 

The Mediterranean region, home to over 500 million people, is warming at a rate 20 percent faster than the global average, making it one of the most climate-vulnerable regions in the world. This warming threatens not only ecosystems and water sources but also critical industrial sectors such as agriculture. At the same time, growing populations and economic development are driving increases in energy demand, placing immense pressure on already strained energy systems.

These harsh realities were on the minds of delegates from the region to the COP29 climate conference in Azerbaijan. And they have motivated NRGI to support the innovative TeraMed initiative over the fortnight-long meetings in Baku. The initiators and supporters of the initiative from both shores of the Mediterranean took advantage of the global gathering, organizing roundtables and panels to highlight the potential of the region to accelerate the development of clean energies, and urging governments to act. Led by IRENA and the Global Renewables Alliance, TeraMed will continue to campaign in Mediterranean countries beyond the COP gathering.

TeraMed is a bottom-up initiative launched by civil society organizations in the Mediterranean region. It aims to support climate change mitigation and also catalyze regional economic growth and promote energy equity between the northern and southern sides of the Mediterranean. TeraMed is pushing governments in the region to commit to accelerating the deployment of clean energy to reach a cumulative installed renewable energy capacity of 1 terawatt (TW) by 2030, in accordance with the global commitment made during COP28 in Dubai to triple renewable energies by that year. To reach that goal, the world needs to increase its energy production capacity to 11 TW.

This ambitious initiative underscores the region’s untapped renewable energy potential and its crucial role in driving the energy transition while addressing climate resilience and socio-economic disparities. According to ECCO, an Italian think tank and one of the initiators of TeraMed, the Mediterranean region has the potential and capacity to reach 4.5 TW from wind and solar; of that 3.5 TW could be generated from the southern shores of the Mediterranean. Also, according to ECCO’s study, pursuing the 1 terawatt goal could unlock investments of around USD 700 billion and create up to 3 million jobs in the direct supply chain of wind and solar.

The transition to renewable energy is no longer just an environmental imperative for the Mediterranean; it is also a strategic necessity. Solar and wind power offer a clear pathway to achieving energy security, reducing reliance on volatile fossil fuel markets, and addressing affordability challenges. However, unlocking this potential requires more than just ambition—it demands stronger regional partnerships, sustained investments, and effective mechanisms for technology transfer.

No government or society can stay neutral in the global fight against climate change, and countries must accelerate the just energy transition through clear commitments and inclusive processes. The TeraMed initiative focuses on two levels of commitment: national and regional.

Calling for country-level commitments

The initiative emphasizes that in order to achieve the one terawatt target, the governments of the region—from both northern and southern shores—must set clear national renewable generation targets. It also encourages governments to empower local communities to contribute to and benefit from renewable energy projects.

At the country level, the initiative calls for governments to endorse clear national renewable energy targets; this requires national capacities to assess needs and opportunities in order to set realistic and achievable targets. To achieve these energy targets, governments must overcome a range of regulatory and policy challenges that might be discouraging foreign investment.

Governments should also include local communities in decision-making processes. The social acceptance of renewable projects is crucial, especially on the southern shores of the Mediterranean. Communities need to understand how they will benefit from big energy projects, and this understanding will only come from governments who have a clear vision, targets and plans for making the energy transition an opportunity communities and citizens. These government plans should produce better environmental conditions, benefits in the form of affordable energy, and more efficient government spending.

In southern Tunisia, we at NRGI have worked to address these challenges by supporting the creation of RATÉJ (Réseau Associatif pour la Transition Énergétique Juste), the first coalition for a just energy transition in the region. This network brings together associations from areas hosting large-scale renewable energy projects, ensuring that local communities have a platform to advocate for their needs and priorities. By empowering these associations and facilitating dialogue between communities and policymakers, we have demonstrated the importance of inclusive governance in achieving social acceptance of projects and ensuring that the energy transition is an opportunity for everyone.

Regional cooperation for a just transition

Collaboration across Mediterranean nations is key to overcoming existing disparities in energy capacity. While some countries have made significant strides in renewable energy deployment, others lack the resources or infrastructure to follow suit. Closing this gap will require a unified effort to share technology, expertise and financing, creating a foundation for equitable growth across the region. By working together, Mediterranean countries set an example of how regional cooperation can tackle shared challenges while building a sustainable and resilient future.

TeraMed also calls for Mediterranean countries to collaborate more and better; create pathways for shared investments in advanced green technologies; and build a harmonized regulatory framework that supports a smooth energy transition.

The initiative is working toward interconnectivity between the northern and southern shores of the Mediterranean. TeraMed organizers say that “an interconnected Mediterranean region opens new opportunities for green industrialization, leveraging processes of nearshoring, greenshoring and friendshoring to foster an environment conducive to the electrification of final consumption, additionally advancing socio-economic gains of the entire Mediterranean region.”

While this promises mutual gain for Europe, North Africa and the Levant, it could also lead to unfair outcomes. The southern countries have resources and sustainable development needs, and the northern countries have their decarbonization goals, the technologies and the funds. This constitutes an unbalanced starting point, and so the initiative should promote just transitions. So the northern partners in the initiative and the organizations working on promoting the deployment of clean energy must ensure that local companies in the southern countries equitably benefit from the projects, and that the projects stimulate substantial employment in North Africa. In addition, it is very important for civil society organizations on both sides of the mediterranean to together advocate for transition financing that will not add new debt burden on governments. 

The Mediterranean region holds immense potential to pave to way to what could be a just energy transition that involves countries from the global north and global south. The success of the just energy transition in the Mediterranean will depend on the political will to let go of extractivism, fostering collaboration across borders, investing in inclusive policies, and ensuring that no community is left behind.

“We are totally committed to, in the context of all of the intergovernmental processes and initiatives we can take, to move forward with all of your recommendations,” said UN Secretary-General António Guterres at the launch of the UN Panel on Critical Energy Transition Minerals’ report. The report prescribes nine principles and five recommendations to empower communities, create accountability, and ensure that clean energy drives equitable and resilient growth in mineral-producing countries in the Global South. 

The Secretary-General also announced the creation of a high-level expert group to follow up on the panel’s recommendations on benefit sharing, value addition and economic diversification, with a view to unlocking the power of local mineral resources to foster greater equity and justice in producing countries. Guterres also committed UN agencies to follow up on the Panel’s accountability and traceability proposal to ensure human rights are protected throughout mineral value chains.

Suneeta Kaimal, president and CEO of NRGI, and a member of the United Nations Panel on Critical Energy Transition Minerals, said: “The COP29 climate finance goal must include concessional finance for Global South transition mineral-producing countries to achieve meaningfully value addition and address energy, infrastructure and skilled labor bottlenecks.

"Justice and equity in transition minerals is reaching a crescendo in the climate agenda. Since the UN panel’s guidance was launched during the General Assembly in September, we’ve seen a surge in momentum: Leaders at COP16 linked transition minerals to biodiversity and the G20 declaration included critical minerals and the energy transition for the first time. Here at COP29 we have presidents and ministers declaring the critical importance of transition minerals to energy transition, and now Brazil has committed to take the mantle and elevate minerals in the agenda for COP30.”

Anabella Rosemberg, senior advisor on just transitions, CAN International, and a member of the United Nations Panel on Critical Energy Transition Minerals; said: “The urgency of the energy transition is being dangerously weaponised to accelerate mining projects, deepen extraction and violate rights of Indigenous Peoples and communities in the Global South. The panel has taken a first look at how equity and justice can be placed at the very heart of the energy minerals value chain. 

“The COP29 negotiations present a much-needed opportunity to bring the principles agreed by the panel into the climate conversation and ensure Just Transition becomes the framework and a key enabler for action. The Climate Action Network remains engaged and mobilised to ensure these minerals do no harm, and that their use is prioritised for the transition and not for military and conflict purposes:”

For interviews:

Gabriela Flores, +44 7931924934, gflores@resourcegovernance.org 
Attila Kulcsár, +44 7472124872, akulcsar@climatenetwork.org