Perry World House, in collaboration with the International Peace Institute (IPI) and United Nations University (UNU), hosted an expert roundtable discussion titled “The Road to 1.3T: The Baku to Belém Roadmap”. Convened on the margins of the 2025 Spring Meetings of the World Bank Group and the International Monetary Fund, this conversation featured policymakers, academics, and practitioners from an array of institutions. They explored the steps that multilateral institutions, countries, and subnational actors might take to achieve this goal amid significant economic challenges and geopolitical shifts.
Background
When the Paris Agreement was adopted at COP21 in 2015, developed countries agreed to mobilize $100 billion per year for developing countries through the end of 2024. At COP29 in Baku, Azerbaijan, countries renegotiated this “quantum,” reaching an agreement with two layers. They adopted a “New Collective Quantified Goal (NCQG),” which increased the $100 billion quantum to $300 billion per year through 2035 for developing countries. They also agreed to the Baku to Belém Roadmap, which acknowledges that developing countries need $1.3 trillion overall to combat climate change.
The adoption of these goals was exceptionally challenging, as they were negotiated amidst a complex financial landscape, shortly after the U.S. presidential election, and alongside more general decreases in development financing and high sovereign debt levels. While popular estimates indicate the figure of $300 billion to be delivered annually through 2035 from developed countries is achievable through innovative financing, the $1.3 trillion goal requires leveraging all financial sources, not solely those from developed countries.
Discussing these needs and outcomes, COP30 Chief Strategy and Alignment Officer and Perry World House Distinguished Visiting Fellow Túlio Andrade opened the roundtable. To meet the climate finance ambitions agreed in Baku, he explained the need to build trust and tangibly link negotiated mandates to policy making. He highlighted that the COP30 Presidency is eager to hear from a wide range of voices, including those not traditionally part of climate discussions. He emphasized that tackling climate change will mean addressing current needs while also planning for the future. Andrade encouraged participants to connect the economics of risk with climate science. He also highlighted that solutions can be scaled, especially by advancing digital public infrastructure.
Key Discussion Themes
The Triple Challenge: Increasing levels of debt, underfunded climate finance, escalating climate impact
- Making finance concrete and differentiated for climate issues: Discussants highlighted that mitigation, adaptation, and loss and damage require different funding approaches due to their distinct financial needs and characteristics.
- Mitigation: Often generating revenue streams, specifically renewable energy projects, it has the greatest potential to be funded by private investment, with managed risks, supported by public finance.
- Adaptation: While adaptation often brings significant social benefits—for example, investing in seawalls protects coastal communities and infrastructure from flooding, preventing displacement and economic disruption—it does not typically generate the immediate, direct financial returns that attract private sector investment. One discussant suggested financing adaptation through blended finance with multilateral development bank (MDB)-supported national savings, while another emphasized gathering better data to show local needs for adaptation and finding new ways to deliver finance to local authorities. This highlights the need for innovative financing mechanisms to bridge the gap between the societal value and the financial attractiveness of adaptation.
- Loss and Damage: Primarily requires grant-based financing in the longer term tto avoid burdening nations with additional debt.
- Addressing sub-national needs: Experts in attendance explored how to bring global finance for energy transition and resilience to localities, noting that subnational actors are important authorities on climate action. Cities are where most people live and work; they are large greenhouse gas emitters, and they are, by necessity, innovators driving adaptation and energy transition.
- Data: There is a lack of granular data on sub-national finance and its impact. Better data with deeper analysis could help align global financial flows to local needs.
- Systemic design: Climate finance is designed to support national needs but local requirements may not always be in step with national plans and priorities.
- Creditworthiness: Cities, particularly in emerging markets, often lack the necessary creditworthiness to scale their access to capital markets. Public finance could play a catalytic role in attracting investments to cities.
- Technical Capacity: Some subnational actors may lack the technical capacity to develop bankable projects and often are not eligible for MDB financing. It was acknowledged that MDBs have enhanced their programming geared toward cities and other subnational locations, and they are already providing some support here, but more is needed.
Policy Recommendations
Based on the roundtable discussion, several approaches emerged:
- Scale Private Finance Mobilization: Discussants suggested a mechanism of asset purchase and recycling through MDBs by curating diversified portfolios of existing performing green loans/assets from local commercial and public bank balance sheets. Guaranteed against regulatory and foreign exchange rate risk, rated, diversified and post-construction and permitting risk, these would be sold to institutional investors who prefer assets in this form. This would free up capital for those who have already originated local investments and navigated local conditions to invest more in new mitigation projects.
- Enhance Data & Tracking: Improve granular data collection and analysis on subnational climate finance flows, whether multilateral or bilateral and their impacts to identify effective strategies and catalyze private investment. Examples included initiatives by the Inter-American Development Bank, the International Financial Corporationand the Global Environment Facility.
- Strengthen Subnational Finance Channels: Discussants suggested expanding MDB technical assistance and project preparation facilities for subnational actors while exploring and scaling trust-fund-style arrangements within MDBs specifically designed for subnational climate action. There is a need to work towards adapting financial systems and regulations to better accommodate direct financing for creditworthy subnational entities and reduce dependencies on sovereign intermediaries.
- Prioritize Just Transitions: Ensure climate finance packages, using the example of JETPs and the transition away from coal, incorporate balanced funding packages to accommodate for a just transition by incorporating aspects of social support, job retraining, and alternative livelihoods, acknowledging the deep social costs of transition.
- Bolster MDB Capacity & Reform: Discussants highlighted the merits of the G20 ‘Independent Review of Multilateral Development Banks’ Capital Adequacy Frameworks’ (CAF) to maximize lending headroom for affordable, long-term climate finance. There is a need to continue advocating for Special Drawing Rights (SDR) channeling and other mechanisms to boost concessional resources. The group acknowledged the potential of regional development banks, such as the African Development Bank and the Asian Development Bank, alongside the Bretton Woods institutions.
- Address Fiscal Space Constraints: Participants acknowledged the need to mainstream nature and climate considerations into macro and fiscal analysis with a suggestion to build capital stacks that are country-owned, follow a whole of systems approach, and are politically feasible. Further, to promote comprehensive debt restructuring solutions, advocate for the inclusion of climate resilience in debt sustainability analyses and continue exploring fair international taxation and innovative levies. Finally, there was a suggestion to mainstream the role of clauses that suspend debt payments during crises.
Conclusion
The road from Baku to Belém, which will set out the ambitious pathway to deliver $1.3 trillion in climate finance, is complex but navigable. The success of the roadmap hinges on moving from ambition to concrete and targeted action. It requires innovative mechanisms to blend public and private finance and a dedicated focus on empowering subnational actors. The roadmap must ensure transitions account for social costs and are truly just. It must also continue efforts to reform the international financial architecture to provide developing nations with the fiscal space and support they need. Ultimately, achieving these interconnected goals is essential for building a truly sustainable and equitable global future.
