s COP29 unfolds in Baku, it is increasingly clear that climate finance is indeed the linchpin of meaningful global climate action. Money — who pays; how much; and on what terms — continues to dictate whether climate ambitions can translate into real, measurable progress. Against a backdrop marked by Donald Trump’s re-election and his threats to exit both the Paris Agreement and the UNFCCC, COP29 represents a critical crossroads. With fewer world leaders attending and funding demands at historic highs, the success of these negotiations hinges on the extent to which wealthier nations can commit to a redefined, impactful climate finance strategy.

The urgency for a new collective quantified goal (NCQG) has never been greater. A target of $1 trillion per year is an essential benchmark to meet the rising costs of mitigation, adaptation and resilience, especially in developing countries already facing the brunt of climate impacts. Yet beyond the numbers, the call is for finance that doesn’t saddle vulnerable countries with debt but provides resources on favourable terms. Prime Minister Shahbaz Sharif emphasised this need in Baku, drawing attention to the importance of grants over loans and the creation of a “grant equivalence” framework to ensure that funds reflect the true value delivered to recipient nations. Ideas like re-allocating Special Drawing Rights, issuing new SDRs, adjusting equity-to-loan ratios for multilateral banks and redirecting fossil fuel subsidies towards climate initiatives are innovative, yet require the political will of deep-pocketed nations, especially those with vested interests in fossil fuel industries.

A significant breakthrough at COP29 has been the progress on Article 6 of the Paris Agreement. Negotiators have ratified a framework under Article 6.4, setting up a UN-supervised carbon market that will allow countries to trade verified emission reductions. The framework’s emphasis on transparency, integrity and avoiding double counting aims to build confidence in carbon markets after years of deadlock. However, the risk of “junk credits” — carbon offsets that fail to deliver real emission reductions — remains a concern. Without rigorous safeguards, there is a danger that carbon markets could become a convenient loophole for wealthier countries to offset emissions rather than cut them. For carbon markets to fulfil their promise, COP29 must ensure that these credits are genuinely effective, equitable and aligned with broad climate goals.

From the developing world’s perspective in general, and Pakistan’s in particular (being the country that played the final shot in getting this fund announced during COP27), the operationalisation of the Fund for Responding to Loss and Damage remains crucial. While FRLD’s governance structure, separate from the World Bank’s usual oversight, is a win for low-income countries seeking independence, critical questions remain unanswered. Will the fund scale to meet the expected $400 billion in annual needs? Will it incorporate innovative financing approaches to make the resources go further? The answer to most of the procedural questions will be deferred to fund’s next board meeting in Manila. However, at COP29, questions will be raised about whether the fund incorporates innovative financing approaches and whether it can scale to meet the escalating needs of affected countries.

With the next round of nationally determined contributions due by early 2025, COP29 is a stage for countries to showcase or preview their climate ambitions. These NDCs represent a last-ditch effort to keep the 1.5 degree Celsius target within reach. However, their success depends heavily on available finance. Without robust support from the NCQG, many developing nations may lack the resources to set or achieve ambitious goals. The interdependence of financial support and climate commitments is straight forward; without adequate funding, climate action plans from poorer nations could falter.

Agriculture and food systems have also drawn attention since the last COP in Dubai. It is a sector that is both highly vulnerable to climate impacts and a significant source of emissions. Building on the UAE Declaration on Sustainable Agriculture from COP28, 160 countries have now pledged to integrate food systems into national climate policies. Yet, for smallholder farmers who produce up to 80 percent of the food in regions like Asia and sub-Saharan Africa, the benefits of climate finance remain scant. These farmers, who receive less than 1 percent of climate funds, are on the frontlines of climate resilience. Achieving food security in a warming world depends on closing this funding gap and ensuring that smallholders receive adequate support to adapt and sustain productivity.

As COP29 approaches its halfway point, the interplay of finance, policy frameworks and implementation strategies will determine its legacy. In Baku, as in various previous COPs, the world is yet again waiting for a powerful signal that words and commitments will finally transform into the financial and policy frameworks needed to secure a resilient planet. Global decision-makers gathered in Baku, and those following the COP in their home countries must remember that delaying tactics won’t hold back climate change; its impacts are fast approaching and will not spare anyone. If decisive action is not taken, the costs will only grow and the chance for a sustainable future will vanish.

The writer is in Baku and attending the COP as a member of the COP29 International Advisory Committee (comprising 21 members). His X handle: @abidsuleri