he 29th Conference of the Parties to the United Nations Framework Convention on Climate Change convened in Baku, Azerbaijan, marked a pivotal moment in advancing global climate governance. Delegates from nearly 200 nations engaged in intensive negotiations aimed at expediting the implementation of the Paris Agreement and enhancing collective climate resilience. COP29 delivered significant milestones, including enhanced commitments to mobilise climate finance; further operationalisation of Article 6 carbon market mechanisms; and strengthened adaptation strategies to address the growing risks and impacts of climate change, particularly on the most vulnerable communities and ecosystems.

The conference was characterised by intricate geopolitical undercurrents. The re-election of Donald Trump as US president introduced significant uncertainty regarding the United States’ role in global climate governance, given his prior administration’s withdrawal from the Paris Agreement and scepticism towards climate science. The selection of Azerbaijan, a prominent oil and gas producer, as the host nation had already sparked debates over the credibility and impartiality of the conference’s outcomes.

A central point of contention at COP29 was the mobilisation of financial resources to support climate mitigation and adaptation efforts in developing countries. In a notable development, delegates reached an agreement that developed nations would scale up their climate finance contributions, committing to at least $300 billion annually by 2035. The fund aims to assist developing countries in transitioning to low-carbon economies and addressing the mounting impacts of climate change. However, this amount significantly falls short of the estimated $1.3 trillion needed annually to adequately confront the climate crisis. This discrepancy underscores a fundamental flaw in the global climate finance framework: the persistent gap between the financial needs of the Global South and the insufficient resources provided by the Global North. Despite the apparent increase, the pledged funding remains inadequate to meet the scale of the challenges ahead, highlighting the ongoing difficulty of scaling up financial flows to the levels necessary for meaningful and transformative action on climate change.

Among the most consequential outcomes of COP29 was the formal operationalisation of the Loss and Damage Fund, first established at COP27 in Sharm el-Sheikh. Now ready to accept financial contributions, the fund signifies a transformative step in global climate finance. It is set to begin disbursing resources by 2025, offering targeted support to the most climate-vulnerable nations and communities. This development addresses a critical gap in climate governance by operationalising a mechanism explicitly designed to uphold the principles of climate justice and equity.

The fund’s mandate centres on providing financial assistance to avert, minimise and address losses and damages associated with both acute and chronic climate impacts. This includes rapid-onset disasters such as hurricanes, floods and wildfires, as well as slow-onset events like sea-level rise, desertification and glacier melt. These phenomena disproportionately burden developing countries and small island states, which often lack the financial and institutional capacity to respond effectively. By focusing on these vulnerabilities, the fund underscores the urgent need for equitable resource allocation in the global response to climate change.

Negotiations at COP29 finalised critical governance frameworks and funding mechanisms to ensure the fund’s effectiveness and longevity. Innovative financing strategies were discussed, including levies on fossil fuel extraction, charges on airline emissions and mechanisms to leverage private-sector investment. These approaches aim to diversify funding sources, stabilise inflows and ensure the fund’s capacity to address the escalating scale of climate-related impacts.

The operationalisation of the Loss and Damage Fund represents a landmark achievement in addressing the historical inequities of climate change. It acknowledges the disproportionate contributions of developed nations to global emissions while recognising the immediate and growing needs of vulnerable states. Despite challenges in securing timely and sufficient contributions, this fund is poised to become a cornerstone of global climate resilience and justice efforts.

While the operationalisation of the fund at COP29 was a noteworthy achievement, the discussions surrounding its design and implementation revealed several critical gaps that warrant closer scrutiny. These issues underscore the challenges of addressing entrenched historical inequities and delivering effective, sustainable climate finance within the evolving global climate governance framework.

The decision to delay disbursements until 2025 has raised concerns among many stakeholders, particularly in vulnerable countries. The urgency of the climate crisis demands immediate action. Critics argue that interim financing solutions should have been put in place to address the existing funding gaps. Delays in accessing the fund risk exacerbating the already disproportionate impacts felt by the most climate-vulnerable communities.

Despite the discussions of innovative funding mechanisms such as levies on fossil fuel exports and airline emissions, there remains considerable ambiguity regarding the sustainability and reliability of these financial sources. The reliance on voluntary contributions from developed countries, many of which have a history of failing to meet established financial commitments e.g. the $100 billion climate finance pledge, highlights concerns about the fund’s long-term viability. Without robust, binding commitments, the fund risks insufficient resources to meet the scale of need.

Governance discussions revealed significant tensions between developed and developing nations regarding decision-making power and the equitable distribution of funds. Developing nations called for more inclusive and transparent governance, while wealthier countries sought to maintain a greater level of control. This power imbalance risks undermining the fund’s ability to effectively address the needs of the most vulnerable and could perpetuate existing inequities in the global climate finance system.

A notable shortcoming in the fund’s design is the lack of explicit integration with broader adaptation financing mechanisms. Climate-induced loss and damage cannot be fully addressed in isolation from adaptation strategies. A more holistic, integrated approach that links loss and damage funding with broader resilience-building measures would ensure a more comprehensive response to the climate crisis, particularly for the most at-risk communities.

While private sector engagement was emphasised as a potential source of capital for the fund, concerns remain about whether market-driven solutions could prioritise profit over equity. The inclusion of private sector contributions requires scrutiny to ensure that these investments do not undermine the fund’s focus on supporting the most vulnerable populations, who often lack the means to attract private capital.

The unresolved issues regarding funding reliability, governance and integration with broader climate strategies highlight the need for further negotiation and innovation. Ensuring that the fund meets its transformative potential will require sustained political will, transparency and a clear commitment to addressing the systemic injustices of the climate crisis. These funds should not come with strings attached or in the form of debts. Owing to continuous climate extremes, developing countries, already vulnerable, are not in a position to navigate through such arrangements.

The writer is an environmentalist based in the US. She is a PhD scholar in sustainable development policy economics and governance.