Climate finance: NZ could face hefty bill as new funding target agreed at COP29

The government may be faced with a hefty bill to up its contribution to international climate change efforts, as a new target is set to help developing countries decarbonise.

In the final hours of overtime of the UN's climate conference COP29 in Azerbaijan, a new target was set for richer, developed countries to help fund efforts in developing nations to move away from using fossil fuels.

It promised a contribution of US$300 billion (NZ$500b) each year by 2035 - a number which was immediately decried by its intended recipients, who were present in the room, as "insufficient".

New Zealand's current contribution is based on its assessment of its share of $100 billion - the previous international target, Compass Climate head Christina Hood said.

"We're currently providing $325 million a year, from 2022 to 2026, and this is going to really set the expectation that that number goes up rather than down."

"It's really important to not think of this as reparations money, or countries putting their hand out for cash, it's really to make investments in things that are going to make a difference."

The aspirational number was US $1.3 trillion (NZ$2.23 trillion) a year - and $300 billion was a starting point.

"So yes, there is a huge gap there."

Indonesia wanted to shut down all of its coal-fired power stations by 2040 - "and they're going to need help with that".

Cindy Baxter, a COP veteran who has been at all but seven of the conferences, said developed countries should be bringing money to the table to help the developing world decarbonise - and the $300b sum was "nothing" compared with the amount being spent on fossil fuel subsidies globally.

Climate Change Minister Simon Watts said in a statement: "The New Collective Quantified Goal is collective, and will involve a range of sources including public and private funding."

No decisions had yet been made on future funding.

University of Canterbury professor Bronwyn Hayward said aspirations for COP29 were low from the start, "given this meeting was held in an oil state with an estimated 1773 fossil fuel lobbyists present".

"The gavel came down at lightning speed, with the president leaving no time for comment and barely making eye contact with the room."

She said the objections immediately followed thick and fast, with India's negotiator Chandri Nadan calling the agreement an "optical illusion", and nations like Fiji and the Alliance of Small Island States calling the funding "insufficient".

Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.