COP29 climate summit overruns as $250 billion draft deal stalls

By Valerie Volcovici and Gloria Dickie

BAKU (Reuters) -The COP29 climate summit ran into overtime on Friday, after a draft deal that proposed developed nations take the lead in providing $250 billion in annual climate finance by 2035 drew criticism from all sides.

Showing some progress late on Friday, the COP29 presidency released what it hopes will be a final deal for resolving rules around carbon markets.

But world governments at the U.N. climate summit were still working into the night on the contours of a sweeping funding plan to tackle climate change.

The two-week talks, being held in the Azerbaijan capital Baku, have been marked by division between wealthy governments resisting a costly outcome and developing nations pushing for more.

Many expected late Friday that the proposal for a $250 billion target could still rise.

"I'm so mad. It's ridiculous. Just ridiculous," said Panama's climate envoy Juan Carlos Monterrey Gomez, criticizing the proposed target as too low. "It feels that the developed world wants the planet to burn."

On the other side, a European negotiator told Reuters that the same proposal was uncomfortably high and did not do enough to expand the number of countries contributing to the funding. 

"No one is comfortable with the number, because it's high and (there is) next to nothing on increasing contributor base," the negotiator said.

Analysts say that, for the EU and other contributors, the $250 billion target would require only a modest increase from what they are already spending on climate finance.

The final target would include $120 billion pledged by multilateral development banks, along with $65 billion in private investment that the banks projected would be brought in.

"Without much of a lift, developed countries should be able to meet that amount by 2030," said David Waskow, director of the international climate initiative at the World Resources Institute.

Beyond the EU, those contributing countries would include Australia, the United States, Britain, Japan, Norway, Canada, New Zealand and Switzerland.

The draft invited developing countries to contribute voluntarily and emphasised that it would not affect their status as "developing" nations at the U.N. - a red line for countries including China and Brazil.

"This is not at a landing ground yet, but at least we're not up in the air without a map," said Germany's special climate envoy Jennifer Morgan.

'FIRST REFLECTION'

Late on Friday, the COP29 presidency published a hoped-for agreement for carbon markets, which could be approved on Saturday along with a final COP29 deal on climate finance.

Negotiations in Baku have been clouded by uncertainty over the future role of the United States, after the climate sceptic Donald Trump won the Nov. 5 presidential election. Trump, who takes office in January, has promised to withdraw the world's top historic greenhouse gas emitter from global climate efforts.

The Azerbaijani COP29 presidency expressed hope that negotiators would find agreement soon on the climate finance target.

The draft "doesn't correspond to our fair and ambitious goal, but we will continue to engage with the parties," said Azerbaijan's lead negotiator, Yalchin Rafiyev.

The draft also set a broader goal of raising $1.3 trillion overall for annual climate finance by 2035 through both public finance and the private investment it can help unlock.

Economists have estimated that developing countries will need access to at least $1 trillion annually by the end of the decade.

But filling the gap between government pledges and private ones could be tricky, negotiators warned.

"This goal will need to be supported by ambitious bilateral action, MDB contributions and efforts to better mobilise private finance, among other critical factors," a senior U.S. official said, referring to multilateral development banks.

The current climate finance commitment, $100 billion per year, ends in 2025. Without a new collective target agreed through the U.N. process, some of those poorer countries most vulnerable to climate impacts would have little assurance of the money they need.

That means such countries have an incentive to negotiate hard, but even those most unhappy have a reason not to walk away or block a deal.

"We are far away from the $1.3 trillion," said M. Riaz Hamidullah, a Bangladesh foreign ministry official who described the final negotiations as a "game between maximalists and minimalists."

"It's a bit like haggling in the fish market, which we do often in our part of the world."

Many previous COPs have often run over time.

HOTTEST ON RECORD

The showdown over financing for developing countries comes in a year that scientists say is destined to be the hottest on record. Climate woes are stacking up in the wake of such extreme heat, adding volume to the calls for more funding to cope.

Widespread flooding has killed thousands across Africa this year, while deadly landslides have buried villages in Asia. Drought in South America has shrunk rivers - vital transport corridors - and livelihoods.

Developed countries have not been spared. Torrential rain last month in Valencia, Spain, triggered floods in which more than 200 people died and the United States has so far registered 24 billion-dollar disasters - just four fewer than last year.

Daniel Lund, negotiator for Fiji, told Reuters there was a long way to go to reach a finance deal that matched the scale of planetary warming.

"It is a very low number in relation to the available evidence on the scale of the need that exists and understanding of how those needs will evolve," he said.

(Reporting by Valerie Volcovici, Gloria Dickie, Kate Abnett and Karin StroheckerWriting by Richard Valdmanis and William James Editing by Alex Richardson, Katy Daigle and Frances Kerry)