Free allocations under Phase 3 benchmarks: early evidence of what has changed

COP30 concluded with an agreement, proving that multilateralism is still alive. However, the results are underwhelming: no push to transition away from fossil fuels, no decision on deforestation, and mixed outcomes on adaptation metrics.  On climate finance, Belém failed to shift from ambition to implementation. Negotiations quickly drifted back to a battle on yet another high-level quantitative target. The decision to triple adaptation funding by 2035 disappointed many, with its distant time horizon, lack of baseline and non-binding wording. COP30 also missed the opportunity to engage with – and build consensus around – concrete measures outlined in the Baku to Belém roadmap to get to $1.3 trillion. Instead, it defaulted to launching new processes – a work programme on climate finance and a ministerial roundtable on the NCQG.  

Climate change does not conform to business, political or supervisory regime cycles– its adverse long-term impacts lie beyond such horizons. Ten years ago, when Mark Carney highlighted this paradox in his landmark Tragedy of the Horizons speech, climate change was not considered a financial stability risk. Today, European supervisory stress tests estimate up to €638 billion in banking losses over 8 years, while the European Central Bank (ECB) reveals that over 90% of eurozone banks face climate and environmental risks. A key question arises: Is the supervisors’ primary focus on greening the financial system sufficient in the face of rising risks, especially stranded assets? 

The climate and development finance gap is large and widening, as Official Development Assistance (ODA) declines and needs multiply. With shrinking fiscal space in vulnerable countries, solidarity levies are gaining attention as a predictable source of international finance. Launched at COP28 by Barbados, France, and Kenya, the Global Solidarity Levies Task Force (GSLTF) is the main initiative in this space.