This article is also available in Italian / Questo articolo è disponibile anche in italiano
From Baku - Negotiations on the New Collective Quantified Goal (NCQG) − the post-2025 financial target set to guide global financial efforts towards low-emission, climate-resilient development over the next 10 to 15 years − are progressing steadily in Baku. This goal, part of the Paris Agreement, aims to support the countries most vulnerable to the adverse effects of climate change, despite having contributed the least to the global accumulation of greenhouse gas emissions.
A previous target of 100 billion dollars per year, set for the period from 2020 to 2025, was only achieved at the end of 2022, thanks to the (belated) contributions of numerous industrialised nations, including Italy. But did Rome truly fulfil its obligations at the Climate COP?
“The primary tool for mobilising climate finance is the Italian Climate Fund, established through the 2022 Budget Law, which allocated 840 million euros annually until 2026 for its financing,” explains Jacopo Bencini, President of the Italian Climate Network. “These 4.2 billion euros, along with a 200 million euros refinancing for 2024, are managed by the Ministry of Environment and Energy Security (MASE) in collaboration with other Italian institutions and international partners.”
The funds primarily support bilateral agreements between Italy and priority countries (4 billion), thereby making it a geopolitical and development tool for the nation. An additional 300 million is allocated to the United Nations’ Green Climate Fund, with 100 million earmarked for the Loss and Damage Fund, which was made operational last year.
From 2026 onwards, however, Italy will need to increase the public funds allocated to meet its fair share, currently estimated at 4.73% of the total NCQG, which could be finalised by the end of the week. On paper, both the Meloni government and its predecessor, the Draghi government, have tried to do the maths: against the UN’s goal of 100 billion dollars per year, Italy contributed 4.40%, falling short by approximately 95 million dollars annually.
If Italy’s proportion within the NCQG is maintained, it would need to contribute approximately 47 billion euros towards a hypothetical 1 trillion dollar target, as outlined in the negotiation drafts. This amount would be distributed across Official development assistance (ODA), refinancing multilateral banks and the Green Climate Fund, climate-debt swaps, and private instruments such as loans, bonds, and partnerships − the latter undoubtedly taking the lion’s share. However, with Italy already facing budgetary constraints, it seems unlikely it will loosen the purse strings.
A fund for all seasons
In the meantime, it is worth examining how Italian climate finance has functioned thus far and the role played by the Italian Climate Fund, which Minister Gilberto Pichetto Fratin has proudly celebrated. While Italy has assumed a leadership role and benefits from the expertise of many skilled professionals, not everything about the Italian Climate Fund adds up.
Meanwhile, the accumulation of pledges in public development aid, climate finance (which was intended to be additional to ODA) as defined by the budget law, biodiversity finance under the Global Biodiversity Framework, additional pledges (such as the 100 million euros for the Loss and Damage Fund), and new cooperation initiatives in Africa continues.
New announcements are made constantly, yet the overall budget, excluding the additional 200 million euros for 2024, remains unchanged. The fund, now bearing many labels, has become the primary tool for the Meloni government’s geopolitical agenda, the Mattei Plan, which alone is backed by 3 billion drawn directly from the Climate Fund.
Not only this. There is also the issue of biodiversity finance: at the end of October at COP16 in Cali, negotiations on a strategy to mobilise economic resources failed. In this context, Italy is expected to contribute at least 1.5 billion dollars towards the short-term target of 20 billion dollars by 2025. Currently, there is no mention of specific contributions on the MASE website, and Undersecretary Claudio Barbaro, contacted in Cali, declined to give an interview.
In the plenary, however, Barbaro stated that they want to increase funding for conservation projects in the Caribbean, allocated through the AICS and thus tied to the cooperation budget. However, a question arises as to whether the Italian Climate Fund, which also has a mandate for biodiversity, can jointly include projects that address both climate protection and biodiversity. We will find out in December whether Italy will make financial pledges at the UN Convention on Desertification, which will take place in Riyadh from 2 to 12 December, under Saudi chairmanship.
In general, regarding resources for environmental and climate cooperation, several organisations, including the Italian Climate Network, Legambiente, and WWF, have raised concerns over the lack of transparency regarding how resources are accounted for and their origin within the Fund. Renewable Matter has analysed what is available through the MASE.
What does the Italian Climate Fund finance?
According to a presentation document from the Ministry of the Environment and Energy Security, resources are directed towards key areas of Italian diplomacy: Africa, the Balkans, and the Middle East. This aligns with the Mattei Plan and, more broadly, with MAECI's programming. Priority counterparts include sovereign entities such as SACE, which aims to foster partnerships with “Italian excellence,” in line with the fund's Steering Committee's guidelines. The first excellence to receive funding is Eni.
The operationalisation of the Italian Climate Fund is overseen by a Steering Committee, directly reporting to Palazzo Chigi, with representatives from MASE, MAECI, and AICS. To date, the Committee has approved 8 projects totalling around 600 million euros. An additional 22 projects are currently under evaluation. The list is diverse, and we have compiled it by analysing the 14 resolutions issued by the Steering Committee.
One of the first projects approved is a 50 million euro grant to the Government of Rwanda to support climate mitigation and adaptation efforts. This is followed by 100 million allocated to the Banque Ouest Africaine de Developpement for green initiatives within the West African Economic and Monetary Union. 50 million euros has been allocated to the development bank Turkiye Sinai Kalkinma Bankasi A.Ş. for green and sustainable investments by local private enterprises following the February 2023 earthquake in southern Turkey. Additionally, 100 million euros will go towards participation in a newly established special fund promoted by the African Development Bank, aimed at encouraging public sector financing for infrastructure projects with a climate mitigation and/or adaptation component.
Angola, one of Italy's top ten oil suppliers, has received 10.65 million euros in funding in favour of the Ministry of Finance for its national rural electrification and renewable energy development plan. An additional 25 million euros (though the 22 March document incorrectly reports the figure in dollars) will be allocated to the Africa Go Green Fund for Renewable Energy and Energy Efficiency S.C.S. (AGGF) debt fund, to support energy efficiency and renewable energy initiatives across the African continent. One of the most recent approvals, granted on 17 November in Baku, is a “policy-based financing” worth 150 million euros for the government of Kenya. The sovereign financing is primarily aimed at climate mitigation, with potential co-benefits for adaptation to the country’s vulnerability to climate risks.
The most criticised project, however, is the disbursement of 75 million dollars (or euros, the sources are contradictory) to Eni Kenya BV, or other company directly or indirectly controlled by ENI Spa – which remains the guarantor for the full amount of the funding – for the production of biofuels. According to Angelo Bonelli, Member of Parliament for AVS, "we are witnessing a plan wanted by the Meloni government that uses resources from the Climate Fund, which should be allocated to the sustainable development of the poorest regions in Africa, but instead, they are made available to energy multinationals like Eni for biofuel production: a process that is leading to the impoverishment of local farmers." He added, "We will pursue this issue relentlessly. Everyone must know what the Meloni government is doing in Africa, which is why I am calling for an inquiry by the United Nations into the exploitation of African farmers with the Meloni government's plan”.
It is difficult to determine how much money has actually been disbursed and how individual projects are progressing. Since July, deliberations by the Steering Committee have come to a halt due to the “Infrastructure and Strategic Investments Decree”, which allows part of the Climate Fund's resources to be allocated to the aims and objectives of the Mattei Plan. From July onwards, all projects submitted to the Climate Fund that are based in Africa, and fall within the areas mentioned above, will be submitted to the deliberation of the Technical Committee instead of the Steering Committee, creating a structure directly controlled by the Council of Ministers.
However, at the governance level, this transition from one committee to the other has not yet been defined, and de facto no transactions have been deliberated since July (although work is still continuing on various suitable project proposals for both the Climate Fund and the Mattei Plan, reveals a source).
The new global climate finance goal
"Making climate and biodiversity finance much more transparent must become a priority for the MASE, particularly in light of the renewed financial commitment being asked of Italy," Bencini continues. In less than two years, Italy will need to begin planning how to allocate resources within the new NCQG. The figure will depend on the financial target (currently under negotiation, fluctuating between one and two trillion dollars), the donor base (whether it includes only developed countries or also voluntary contributions from emerging economies like China, Brazil, the UAE, and Saudi Arabia), and the country’s strategy.
"Italy could do much more if it pooled all the public and private capital it spends on climate. Even though it is progressing better than what is being communicated," explains Luca Bergamaschi, Vice-president of the think tank ECCO. "Where can new funds be found? The most crucial step at the structural level is to reach, by 2030 at the latest, 0.7% of ODA, with 50% allocated for climate, as outlined in the 2030 Agenda for Sustainable Development. If this target is met − we're talking about 7 billion per year for climate – it would support development and help secure economies, countries, and local communities facing climate impacts that drive instability, migration, and new conflicts." Attention must also be given to refinancing funds in multilateral development banks. "Even better would be to increase this by at least 25%, which would mirror the increase in inflation and consolidate Italy's vision on Africa.”
According to an analysis provided in advance by the Italian Climate Network, "considering historical responsibilities and Italy’s current capacity to contribute, the country should be able to mobilise between 14.5 billion and 22.6 billion dollars annually in climate finance for the countries of the Global South – almost twenty times more than its current commitments." The calculation takes into account both the historical emissions of countries from the pre-industrial era to 2023 (excluding natural absorptions) and a necessary adjustment for Gross National Income (GNI) per capita, based on 2023 figures. In this way, the figure resulting from the product between the global target and historical emission responsibilities is adjusted to take into account the country's estimated ability to contribute.
Support for the IDA, but no commitment on fossil subsidies
A surprising development at COP29 came with the announcement regarding the IDA, made in Rio de Janeiro during the G20 Summit. Prime Minister Giorgia Meloni, alongside Minister of Economy and Finance Giancarlo Giorgetti, unveiled the news during a bilateral meeting with World Bank Group President Ajay Banga.
The meeting was an opportunity to take stock of the progress of the enhanced cooperation between Italy and the World Bank Group, launched with the declaration of intent adopted at the G7 Puglia Summit. This initiative aims to establish joint development projects in African countries across key sectors of the Mattei Plan for Africa, including energy, infrastructure, water, and education and training.
During the debate, Prime Minister Meloni announced that Italy intends to increase its contribution to the three-year replenishment of the International Development Association (IDA) fund. This will allow the IDA, which allocates 75% of its resources to Africa, to enhance its support for projects under the Mattei Plan. This move signals a potential expansion, provided that new resources are allocated, rather than funds being drawn once again from the Italian Climate Fund.
There was, however, no progress on fossil fuel subsidies. The phase-out of these subsidies, to which Italy has been committed since the 2009 G20 summit in Pittsburgh, is worsening rather than improving. A study by One Campaign, which compares G7 countries' spending on climate finance and fossil fuel subsidies, reveals that Italy ranks at the top, spending 36 times what it spends on climate finance — less than Japan but more than the UK. For foreign countries alone, Italy has allocated over 6.5 billion through SACE and CDP, although they have long been asked to stop disbursing resources for oil&gas investments (a position strongly opposed by Eni and other energy companies).
According to Legambiente, Italy spent 78.7 billion euros in 2023 on environmentally harmful subsidies for activities, projects, and works directly or indirectly linked to fossil fuels. 18 billion euros were allocated to subsidies for gas boilers. This amount represents 3.8% of the national GDP, costing the country a total of 383.4 billion euros over the past 13 years. “A crucial point,” Bencini explains. “Some of the additional resources for the next NCQG, as well as for the decarbonisation of our country, could very well be found here.”
Cover: Giorgia Meloni at COP29, Palazzo Chigi