COP 29 Roundup

Over the weekend the United Nations 29th Conference on Climate Change (COP29) came to a close in Baku, Azerbaijan. The agenda for this year’s COP was very much centred around finance, aiming to reach a consensus on a new climate finance target and accelerate the process of protecting countries against climate climate.

So how far did this COP go in achieving this goal? Was it the finance COP that it was heralded as? Here I’ll give a quick overview of some of this COP’s successes, missteps, and things that should give us hope for the future.

The main headline from this year’s COP is the new global target for climate finance, with developed countries agreeing to raise $300bn in grant funding a year for developing countries by 2035. This “new collective quantified goal on climate finance” (NCQG) replaces the previous goals established at COP21 in Paris (in 2015), which required developed countries to contribute $100bn a year. The $300bn will be achieved with what COP calls a wide variety of sources mobilised through government spending, which includes development-bank loans, private finance and public funds. The road to this agreed $300bn figure was not an easy one, and there were many doubts as to any deal appearing before the final closure of COP29, it was only heavy pushback from developing countries that resulted in a draft text of $25obn being sent back for being wholly insufficient.

In the aftermath of the final text being published, developed countries were keen to hail the new $300bn target as a huge win for climate finance, tripling the current sum and opening up new routes for developing countries to tackle climate change. This is true, and it is positive to see ambition for climate finance increasing at the global level. However, for the developing countries themselves, this number fell far short of what is needed, with experts estimating that developing countries will need at least $1.3tn a year in climate finance to transition away from fossil fuels, invest in renewables and protect themselves from the worst impacts of climate change. Now, while there is a pledge within the draft text for at least $1.3tn a year by 2035 this is not required to be from developed countries, and as such, there is no formal agreement as to where the money will come from, or in what form it will take, with many climate finance funds already taking the place of loans which saddle developing countries with extraordinary levels of financial debt.

Another major agreement reached at COP29 was finally reaching a consensus on carbon trading under Article 6 of the Paris Agreement after nearly 10 years of negotiations. This agreement effectively paves the way for a UN-backed mechanism to link carbon markets across the world, to help countries achieve their Paris commitments. Countries will now be able to buy carbon credits from other countries through renewable energy schemes, environment protection and restoration, and count these towards their targets. If it works, the system would allow wealthier to fund climate mitigation schemes through the purchase of carbon credits. However, international carbon markets have not had the most successful decade, with scandals around credits being environmentally worthless, deliberate obscuring of clarity and failures to achieve the projected ambition of the credit market eroding the overall credibility of the existing carbon market. A recent study published in Nature Communications found that less than 16% of carbon credits that have been issued represent a real reduction in emissions, meaning many countries are both vastly inflating their progress on emissions and vastly underrepresenting the positive steps forward for the environment. For this new Paris-based carbon trading agreement to work, lessons must be learned from previous carbon markets, the most important of which is that credits verifiably lead to environmental benefits, and improvements in ecological integrity.

COP 29 did succeed in being the ‘finance’ COP, with money being the central theme of discussions. Politics, however, cast a heavy shadow over the whole proceedings, with the recent US election throwing uncertainty over any commitments the US has made both at this COP and any previous. In light of this, China has taken a much more concrete role in negotiations, agreeing to a formula that would allow its contributions towards climate finance to be counted within the overall fund, despite itself being classed as a developing country. In essence, this will make it far more likely that financial targets will be achieved for those nations that need it. Additionally, China has made the details of its climate funding clear, where previously it had only released minimal information as to how much it was contributing to other developing nations. This is a marked shift in the COP process and could mean that while the USA takes a step back from the climate table, China, the world’s second-largest economy, steps into the gap.

There are also signs that climate targets could be accelerating around the world, one such example is in Indonesia, one of the top ten carbon emitters in the world. The country has now pledged to fully phase out fossil fuel-fired power plants within the next 15 years, 10 years earlier than its previous commitment of 2060. Although environmental experts are taking this with a grain of salt it is an indicator that the wind has changed, more and more money is flowing into the renewable sector, while the investment opportunities in fossil fuels continue to dwindle.

The next UN climate summit, COP30 will take place in Belém, Brazil, and is already being billed as the “nature COP”, with the Brazilian government saying that it is working with the Columbian COP16 Biodiversity presidency to put nature at the heart of tackling climate change. Let’s hope that rhetoric and words give way to action, the momentum for change is there, it just requires Governments to push forward instead of treading water.