UNCTAD’S role in advancing climate and economic justice

At COP29, UN Trade and Development (UNCTAD) will draw global focus to the intersection of climate action and economic inequality. At the Trade and Investment House, UNCTAD will advocate for solutions addressing the climate crisis while creating sustainable economic opportunities and quality jobs in developing nations. Central to our approach is a commitment to equitable climate finance models that ensure support reaches the economies and communities most impacted by climate vulnerabilities, a critical focus in global climate financing discussions.

THEMATIC HIGHLIGHTS:

1. Climate finance

Discussions on a new collective quantified goal (NCQG) for climate finance are expected to conclude at COP29. Sufficient and high-quality financing is crucial to addressing developing countries’ needs for a just transition towards sustainable and climate-resilient development.

2. Trade, investment, and climate

Showcasing policies that leverage trade and investment to support Nationally Determined Contributions (NDCs) and drive sustainable growth.

3. Critical transition minerals

Advocating for responsible, value-added approaches to managing critical minerals, such as lithium and cobalt, so that benefits flow to communities in resource-rich countries.

4. Carbon markets

Highlighting carbon markets as tools for emissions reduction and sustainable economic growth, with a focus on international cooperation and standardized carbon pricing.

5. Rethinking development

Re-evaluating global development priorities to align with sustainable, climate-conscious growth that fosters resilience and inclusivity.

On climate finance, investment, and trade (FIT) day, UNCTAD will join global partners in advocating for policies that support a fair and inclusive climate response.

For the full programme, event calendar, additional resources and media contacts, please visit the UNCTAD COP29 website.

See below background notes on the key issues.

We look forward to collaborating with you to spotlight UNCTAD’s insights and contributions at COP29.

Contacts:

In Baku. Marcelo Risi, +41 76 691 18 74, marcelo.risi@unctad.org ,

in Geneva; Catherine Huissoud; +41 79 502 43 11, catherine.huissoud@unctad.org, unctadpress@unctad.org,

https://unctad.org/media-centre

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**About UN Trade and Development: **

UN Trade and Development (UNCTAD) is dedicated to promoting inclusive and sustainable development through trade and investment. With a diverse membership, it empowers countries to harness trade for prosperity.

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BACKGROUND NOTES ON THE KEY ISSUES

1. Climate finance
2. Trade, investment and climate
3. Critical energy transition minerals (CETMS)
4. Carbon markets
5. Rethinking development

1. CLIMATE FINANCE

Sufficient and well-directed funding is crucial for implementing the Paris Agreement, and UNCTAD pushes for an inclusive, ambitious finance goal that supports countries with limited resources. This reflects a development perspective on climate issues to help developing countries to achieve climate-resilient development.

A robust climate finance framework is essential for developing countries to meet climate targets and sustain development.

UN Trade and Development (UNCTAD) advocates for an inclusive, ambitious climate finance goal at COP29, addressing the critical gaps in current financing flows to ensure developing nations can pursue climate-resilient growth.

The New Collective Quantified Goal (NCQG) represents an opportunity to address both the quantity and quality of climate finance, expanding support for adaptation, capacity-building, and just transitions.

Key messages:

• A scaled-up NCQG is crucial for climate resilient development: Developing countries will need an estimated $1.1 trillion in climate finance per year starting in 2025, with $900 billion expected to come from external sources. The NCQG must target at least 1.4% of developed countries’ GDP to meet these needs, compared to the current $100 billion goal, which includes only $40 billion in bilateral and $20 billion in private financing.
• Less than it appears: While this target may seem large in the context of current climate finance flows to developing countries, it is doable when compared to other significant developed countries’ expenditures, such as COVID-19 response, military spending, or fossil fuel subsidies.
• It pays off: Anything less than this target will in fact mean more, since delay will lead to rising costs and further climate losses in dollars, lives and livelihoods across all regions.
• Adaptation funding needs significant expansion: Between 2021 and 2022, adaptation finance made up only 5% of total climate finance flows. Given the high climate vulnerability of many developing nations, a larger proportion of climate finance should be dedicated to grant-based adaptation funding, especially for those focusing on avoiding future losses.
• The NCQG must prioritize equity and accessibility: Quality is as crucial as quantity in climate finance. Developing countries often face high debt burdens, complex application processes, and limited concessionally, which undermine their capacity to implement climate plans effectively. Only a framework that enhances transparency, accessibility, and accountability can truly support their sustainable development.

Policy angle

• Promoting the NCQG as a catalyst for ambition: Establishing a clear and ambitious climate finance target through the NCQG will help give developing countries the confidence to advance climate plans, with new commitments due by early 2025. This should include mechanisms for concessional and grant-based support to ensure long-term, sustainable growth.
• Reforming international financial architecture: To transform financing “from billions to trillions,” international financial structures need reform. A restructured architecture would help unlock affordable, long-term financing, allowing countries to avoid short-term sacrifices –“impossible choices”- that derail development goals. UNCTAD supports frameworks that balance donor and recipient responsibilities, recognizing contributions from a wider base of countries and prioritizing financial accessibility.
• Fostering a just transition with inclusive financing: To achieve a low-carbon economy that generates jobs and reduces inequalities, the NCQG must support just transitions tailored to each country's unique economic and social context. This approach will help countries address systemic development barriers, from energy access gaps to limited industrialization capabilities, ensuring all populations can benefit from a green transition.

Additional facts

• Loss and damage: The current NCQG discussions have not yet prioritized loss and damage. Including mechanisms to address this aspect could significantly alleviate the climate impacts felt by the most vulnerable countries.
• Spillover effects: Policies and investments in developed countries have substantial spillover effects on developing economies, influencing everything from resource mobilization to low-carbon industrialization, making multilateral cooperation essential to advance global climate goals.

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2. TRADE, INVESTMENT AND CLIMATE

Trade and investment are vital to achieving climate goals, especially for developing nations striving to build resilient, low-carbon economies.

By connecting trade, finance, and sustainable development, UNCTAD aims to foster cooperation, scale up renewable technology, and enhance green value chains.

At COP29, UNCTAD advocates for these economic levers to accelerate global climate action.

Key messages

• Trade policy as a climate enabler: Trade policies in 60 countries’ Nationally Determined Contributions (NDCs) identified over 680 trade-related climate measures. However, only 15 of these actively engaged government trade institutions in policy development, showing an untapped potential for climate-focused trade initiatives.
• Renewable energy commitments in developing countries: Out of these trade measures, 281 support renewable electricity, underscoring a global commitment to transition energy systems. Furthermore, around 231 measures are dedicated to building sustainable value chains, supporting inclusive economic growth and climate resilience.
• High tariffs limit green technology access: Despite global growth in green goods trade, tariff rates on renewable energy technologies remain high, reaching up to 8% for solar products in some countries. Reducing these barriers is essential for making sustainable technologies more accessible globally.

Policy angle

• BICFIT Initiative for Climate and Trade: Launching at COP29, the Baku Initiative for Climate Finance, Investment, and Trade (BICFIT) will convene key stakeholders to align climate financing with trade and investment policies for a just, inclusive transition. Led by the COP29 Presidency in collaboration with UNCTAD and UNDP, BICFIT will host dialogues every two years at UNCTAD’s World Investment Forum (WIF), supporting policies and partnerships that align with the 1.5°C climate target and SDGs.
• Trade and Investment House: Hosted by Azerbaijan’s Ministry of Economy, Azerbaijan Trade and Investment Promotion Agency, UNCTAD, WTO, ICC, and ITC, the Trade and Investment House will act as a hub for discussions on sustainable transitions, covering topics such as stock exchanges' role, decarbonizing industries, and integrating SMEs from developing countries into green supply chains. This space will facilitate policy alignment between climate goals and economic strategies.

Additional facts

• Climate finance needs: The "Climate Finance, Investment, and Trade Day" (14 November) will spotlight the need for robust climate finance to support low-carbon transitions in trade policies, especially in developing countries.
• Potential for economic growth: Integrating marginalized populations and small businesses into green value chains could boost economic growth while driving climate action, making sustainable trade policies a dual benefit for environment and economy.

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3. CRITICAL ENERGY TRANSITION MINERALS (CETMS)

The shift to a low-carbon economy hinges on critical energy transition minerals (CETMs) like lithium, cobalt, and nickel—essential for electric vehicle batteries, energy storage, and renewable infrastructure.

UN Trade and Development (UNCTAD) emphasizes that developing countries rich in these minerals should not only supply raw materials but also benefit economically by building out more segments of the CETM value chain.

Strategic investments that focus on extraction, processing, and manufacturing within these countries can strengthen local economies and contribute to global mineral supply chain resilience.

UNCTAD promotes sustainable finance mechanisms that enhance infrastructure and technology development, helping countries balance mineral extraction with environmental considerations. This diversified, sustainable approach is crucial for CETM-producing nations to benefit fully from the green transition.

Key messages

• Strengthening CETM value chains in developing countries: Developing countries could realize up to 25% more economic value by expanding from raw material extraction into processing and manufacturing, creating higher-skilled jobs and stronger, more resilient economies. For example, Africa’s cobalt and lithium reserves alone are essential for 65% of global electric vehicle battery manufacturing
• Sustainable finance for infrastructure and technology development: The infrastructure investment needed to develop CETM industries is estimated at $1.7 trillion by 2030. Sustainable finance mechanisms should be tailored to support mining infrastructure, environmental safeguards, and processing facilities, ensuring long-term value creation and minimal environmental impact.
• Environmental and social standards for responsible mining: Mining accounts for up to 20% of environmental degradation in CETM-producing countries. By adopting environmental safeguards and community-centric policies, CETM investments can be both profitable and sustainable, contributing to a balanced approach that mitigates adverse impacts while fostering growth.

Policy angle

• Promoting CETM investments with strong local benefits: To maximize their role in the green transition, CETM-producing countries need policies that encourage value addition at every stage of the mineral supply chain, from extraction to manufacturing.
• Recommendation: Implement financing mechanisms that support the build-out of midstream and downstream facilities to help countries become exporters of high-value products, not just raw materials.
• Creating a sustainable finance framework for CETMs: Given the resource-intensive nature of CETM development, policies should incentivize financing options that emphasize sustainability, green infrastructure, and technology transfer.
• Recommendation: Develop standards for green mining, including strict environmental and social criteria, and ensure financing flows to sustainable projects that reduce ecological footprints.
• Ensuring responsible mining and supply chain practices: Sustainable finance should be accompanied by policies that mandate environmental and social best practices for CETM industries, balancing mineral exploitation with environmental preservation and community well-being.
• Recommendation: Create monitoring systems and partnerships to help CETM-rich countries adopt higher standards and transparency measures that improve both environmental outcomes and economic resilience.

Additional facts

• Long-term CETM demand: Demand for critical minerals like lithium and cobalt is projected to increase by 400% by 2050 due to the energy transition. Meeting this demand sustainably will require developing more processing capabilities in resource-rich countries.
• Economic potential of CETMs: With targeted investments, CETM-producing countries could see their contributions to the global supply chain rise from 20% to 35% by 2035, emphasizing the value of expanding beyond extraction.

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4. CARBON MARKETS

Of the 20 countries that are most vulnerable to climate change, 17 are Least Developed Countries (LDCs). But financial gaps in LDCs keep widening, and the investment crisis in LDCs keeps getting worse.

Carbon markets offer significant opportunities for climate action and economic growth, especially in LDCs, which are highly vulnerable to climate change but often lack sufficient financial resources to pursue their development goals and targets. However, until now, carbon markets have achieved modest progress but have great potential ahead.

LDCs need around 462 billion dollars just in investments, to get closer to the 7% GDP growth rate enshrined in the 2030 Agenda. This year, of 45 LDCs, only one (Rwanda) will meet this 7% growth rate.

UN Trade and Development (UNCTAD) advocates for policy frameworks that support carbon pricing and the quality and credibility of carbon credits as part of broader climate strategies. It is essential to address barriers like fragmented carbon markets, pricing issues, and capacity gaps that prevent countries from fully utilizing these opportunities.

Key messages

• Unlocking carbon markets in LDCs: LDCs, which contribute less than 4% to global emissions but are among the most vulnerable to climate change, have enormous untapped potential in carbon markets. By utilizing their abundant natural resources (forests, unutilized land, renewable energy potential), these countries can generate significant carbon credits. UNCTAD estimates that LDCs' carbon market potential in land-based mitigation could represent up to 70% of global aviation emissions in 2019 and even more if renewable energy is taken into account.
• Fragmented carbon markets: Global carbon markets are currently divided, with varying standards, regulations, and carbon prices. This fragmentation complicates LDCs' participation in the market. UNCTAD emphasizes the need for harmonized international standards to allow LDCs to fully participate in global carbon markets and benefit.
• Market concentration: A significant concern is the geographic concentration in the carbon credit market, where just six LDCs - - Bangladesh, Cambodia, the Democratic Republic of the Congo, Malawi, Uganda, and Zambia - account for over 75% of all voluntary market credits. This concentration limits opportunities for broader participation, learning and benefits across all LDCs.
• Economic impact of carbon pricing for LDCs: To effectively tap into carbon markets, LDCs need a carbon price around $100 per ton to make carbon credits a viable revenue source. With current prices near $10 per ton, much of LDCs’ carbon mitigation potential remains untapped, limiting their ability to participate meaningfully in carbon markets.

Additional facts

• Limited financial returns: Despite the potential, LDCs face significant barriers to accessing carbon market revenues. In 2023, carbon credits generated in LDCs amounted to just $403 million, less than 1% of total bilateral development aid. This highlights the need for improved mechanisms to unlock these markets and ensure equitable benefits across all LDCs.
• Just transitions: Carbon markets alone won’t solve the development challenges of LDCs. However, with the right reforms and investments, they can serve as a stepping stone toward broader sustainable development. UNCTAD stresses the importance of ensuring that carbon markets contribute to just transitions, supporting economies in moving towards low-carbon futures while also addressing social and economic needs.

Policy angle

• Strengthening domestic capacity: LDCs must develop robust domestic frameworks, including laws, regulations, and monitoring systems, to fully leverage carbon markets. This includes rules for carbon project participation and for benefit-sharing. This infrastructure will ensure that carbon market participation brings direct benefits to local communities and contributes to long-term sustainable development.
• Expanding international cooperation: UNCTAD calls for expanded international partnerships to lower transaction costs and improve LDCs' positioning in carbon markets. South-South cooperation and regional institutions can help harmonize standards and regulations, reducing the burden on LDCs and facilitating greater participation and negotiations.
• Prioritizing capacity building: Building expertise in carbon market mechanisms is essential for LDCs to engage effectively. Capacity-building initiatives will help countries integrate carbon markets into their broader economic and development goals, contributing to sustainable growth and modernization of their economies. LDCs also need to learn to consider carefully the trade-offs between carbon market participation and policy space over the long term.
• Inclusive carbon finance: Carbon finance should be clearly distinguished from broader climate finance to improve transparency and accountability. Clearly labeled "carbon finance" ensures that funds are used specifically to reduce emissions, avoiding misuse and ensuring that carbon market investments align with actual climate goals.

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5. RETHINKING DEVELOPMENT

The global economy faces a period of low growth, high debt, and trade fragmentation, which are straining both developed and developing countries. The UNCTAD report stresses the urgent need to rethink development policies and reform the international financial architecture to address these challenges. While the situation is dire, opportunities exist for developing countries, particularly in the fields of South-South trade, the energy transition, and the digital economy. However, countries must act strategically to avoid the trap of commodity dependence and instead diversify their economies to secure sustainable long-term growth.

Key messages

• Low growth and high debt: Global growth is projected at just 2.7% for 2024-2025 (“new low growth normal”), a sharp decline from the pre-crisis average of 4.4%. Developing countries, excluding China, have seen stagnated growth at just 2.8% over the past decade. Meanwhile, debt in these countries has surged by over 70% since 2010, severely limiting fiscal space and hindering structural reforms needed to boost resilience and productivity. These high levels of debt, compounded by global financial instability, threaten to slow economic recovery and increase social discontent.
• Changing dynamics in global trade: Trade, which once grew faster than global GDP, has slowed since the 2008 financial crisis and has not regained its previous momentum. The share of trade in global GDP peaked at 16% in 2008 but has stagnated since then. Protectionism and geopolitical tensions further dampen hopes for a strong revival of global trade, with the 2024 growth forecast expected to remain below global GDP growth.
• Opportunities for growth: Despite these challenges, there are significant opportunities for developing nations in:
  • South-South trade: South-South trade has more than doubled, reaching $5.6 trillion by 2023. This shift allows developing countries to diversify their trade relationships and reduce dependency on traditional partners, which is especially important amid rising protectionism.
  • Energy transition: The global push towards renewable energy presents developing countries with a chance to capitalize on new growth opportunities. Countries rich in critical minerals needed for the energy transition can increase their role in global value chains, moving beyond commodity exports to higher-value industries.
  • Digital economy: The rapid growth of the digital economy offers another avenue for developing countries to modernize their economies and access global markets.
• Diversification is key: Commodity-dependent economies face a volatile future unless they diversify. Embracing the new service economy, expanding into manufacturing and technology, and investing in human capital will be essential for developing countries to move up the value chain and achieve sustainable development.

Policy recommendations

• Fiscal reforms and tax modernization: Countries need modern tax policies and fiscal reforms to create the necessary space for structural changes that foster growth. UNCTAD calls for curbing anti-competitive practices and improving regulatory frameworks to manage inflation, especially in key sectors like energy and agriculture.
• Regional trade agreements: Supporting regional trade agreements, such as the Africa Continental Free Trade Agreement, is crucial for integrating developing economies into the global market and preventing trade fragmentation. Multilateral agreements must be strengthened to ensure that the rules benefit developing nations.
• Investment in green technology and infrastructure: Developing countries must scale up investments in green technologies, critical minerals, and sustainable infrastructure. This is critical not only for the energy transition but also for building resilient economies in the face of global challenges.
• Debt restructuring: UNCTAD advocates for comprehensive debt restructuring to alleviate the financial strain on developing nations. This, combined with increased investment in SDG-related sectors, is key to ensuring sustainable economic development.
• Global governance reforms: There is an urgent need to reform the global financial and trade architecture to make it more inclusive and supportive of developing nations. This will help avoid the fragmentation of trade rules and ensure that developing countries can participate meaningfully in global economic growth.

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