them less attractive to private investors seeking substantial near-term invest- ment gains. Weaknesses and gaps in the climate finance information ecosystem can also hamper evidence-based decision- making and effective policy develop- ment. Without robust climate data and disclosures, it is difficult for investors to determine the potential benefits of their climate-based investments. Additionally, ongoing global crises and geopolitical tensions divert atten- tion and resources from climate action. The Russia–Ukraine conflict has shifted global energy markets, with some coun- tries, including Austria, Germany, Italy and the Netherlands, extending the life of coal-fired power facilities in the short term to ensure their energy security. Yet these challenges also present opportunities. For instance, the Global Innovation Lab for Climate Finance reflects an investor-led initiative, blend- ing public-private capital to accelerate innovation and de-risk climate invest- ments in EMDCs. Sustainability-linked loans and bonds offer flexible funding for green projects with better interest rates for borrowers when they meet their sus- tainability targets. Prospects for COP29 As the host of COP29, Azerbaijan has the potential to lead on climate action by example, having pledged to reduce emissions by 40% by 2050 and increase renewable capacity to 30% by 2030. Unlocking the transformative finance action needed to support vulnera- ble communities in the climate fight, while prioritising women, youth and Indigenous peoples, is key. With strong leadership, inclusive dialogue and a shared commitment to ensuring a just transition, COP29 can mark a turning point in the global response to climate change, with climate finance serving as a powerful tool to drive progress and ensure a just, equitable and sustainable transition.
The transition to a low-carbon energy future for emerging economies (exclud- ing China) will require total annual investments of an estimated $1 trillion by 2025 and $2.4 trillion by 2030. $ 1 tr $ 2.4 tr
The Baku Global Climate Transparency Platform, launched in September 2024, is crucial for establishing robust indica- tors, tracking progress and ensuring accountability on climate finance commitments. The third objective is to raise $1 billion in annual con- tributions for the Climate Finance Action Fund, introduced by Azerbaijan in July 2024. Those will come from fossil fuel– producing companies and countries producing oil, gas and coal, to capitalise the CFAF either through annual fixed sum contributions or based on their volume of production. Overcoming the obstacles But significant challenges remain in scaling up climate finance to the required levels. A complex and fragmented climate funding architecture makes it difficult for emerg- ing markets and developing countries to access mitigation and adaptation climate finance. Public resources for climate investments in EMDCs are often limited due to high borrow- ing costs and debt burdens. Moreover, a lack of institutional capacity and technical expertise hinders the development of robust adaptation and mitigation strategies. From an investment perspective, climate projects often strug- gle to generate sufficient financial returns, diminishing their appeal to profit-driven investors. Payback periods can span dec- ades on small-scale and localised climate initiatives, making
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