COP29: A trickle of progress in a sea of change

Nicola Day, Deputy Head of Greenbank

 

Having attended the three previous COPs (the official UN climate change conferences) in person, I experienced COP29 virtually this year. It was clear even from afar that this conference was incredibly challenging, culminating in many sleep-deprived negotiators hammering out the final deal in a closing plenary session at 4am Baku time on the Sunday—a gruelling two weeks for all involved.

The 29th United Nations Climate Change Conference (COP29) held in Baku, Azerbaijan from November 11–22, 2024, drew over 66,000(1) participants in what became the second-largest COP to date. Yet, despite its size and extended negotiations (stretching 35 hours beyond the original deadline) the conference concluded with mixed results.

Dubbed the “Finance COP” this year’s summit was marked by contentious debates over climate finance and insufficient action on pressing issues like the fossil fuel phase-out. With growing frustrations over delays on climate justice, COP29 provided glimpses of hope but fell short of the transformative action needed to address the escalating climate crisis. With key agreements on climate finance, carbon markets, and adaptation frameworks, the summit made some progress but left critical issues unresolved.

Watch the video below for Nicola's reflections on some of the key points, outcomes and shortfalls from COP29, or continue reading the article below. 

 

The alarming state of our climate

Against a backdrop of record-breaking emissions and intensifying climatic impacts the stakes are higher than ever. On the first day of COP29, the World Meteorological Organization (WMO) released its 2024 State of the Climate Report, revealing that global temperatures have shattered records, and 2024 is on track to become the hottest year on record, with global temperatures 1.54°C above pre-industrial levels. It showed that sea surface temperature reached dangerous highs and polar ice levels plummeted to unprecedented lows. From wildfires in Canada, to intense hurricanes in the Unites States to devastating floods in South Asia and Europe, climate disasters have affected millions, laying bare the inadequacy of current efforts to mitigate and adapt to the climate emergency.

Meanwhile, the 2024 UNEP Emissions Gap Report has issued a dire warning: greenhouse gas (GHG) emissions reached an all-time high of 57.1 gigatons in 2023(2). The world is now hurtling toward a temperature rise of 2.7°C by 2100, a level that scientists agree would have catastrophic consequences for ecosystems and societies alike. These statistics make the goals of COP29, and the urgent actions required leading to COP30, more critical than ever.

Forest fires in Fernie, Canada, 2023. Climate change is causing fire season to start earlier and last longer, making them harder to contain. This not only affects forest ecosystems but also human health and safety. 

The spotlight at COP29 centred around four key topics:-

1.    Climate finance: The New Collective Quantified Goal (NCQG)

In the final hours of COP29, developed countries committed to mobilising $300 billion(3) for developing nations annually by 2035 under the New Collective Quantified Goal (NCQG). This represents only a small improvement over the previous $100 billion annual target set in 2009, especially after accounting for inflation and it remains far short of the trillion-plus dollar levels requested by vulnerable countries such as Small Island Developing States (SIDS) and Least Developed Countries (LDCs). Countries like Bangladesh, which have experienced significant damage and displacement of millions from devastating flooding and rising sea levels, are acutely aware of the immense costs that follow climate disasters.

The agreement, described as fragile and aspirational, lacks enforcement mechanisms, and disproportionately relies on loans. Debates over contributions from emerging economies like China and the Gulf States further complicated negotiations, leaving developing nations deeply disappointed.

Many developed countries at COP29 highlighted the financial challenges they are facing domestically, raising concerns that increasing climate pledges at government level with stretched budgets, might divert funds from other crucial development areas such as Official Development Assistance (ODA). This finance gap underlines the critical role of other sources of finance from areas such as multilateral development banks (MDBs), institutional investors, and philanthropists in bridging the divide or from mooted innovative sources such as levies on fossil fuels, shipping and aviation. In addition, reforms in global finance must prioritise accessible, grant-based financing mechanisms for vulnerable nations. Without such frameworks, crucial projects for renewable energy and adaptation risk will be underfunded.

Addressing financing for climate change should not be seen as charity - it is a universal crisis that demands a collective solution. Developed nations, which have historically benefited from activities driving climate change, such as fossil fuel use, bear a significant responsibility in addressing its consequences. As emphasised in the Paris Agreement, those who contributed most to the problem should lead the way in solving it, recognising that we all share a vested interest in securing a sustainable future.

Addressing financing for climate change should not be seen as charity — it is a universal crisis that demands a collective solution.

Solar powered water pump for agricultural use, India. The new climate finance goal being negotiated at COP29 aims to direct more money for clean energy and other climate solutions to countries and communities in need. 

2. Carbon markets: A decade in the making

One notable achievement was the finalisation of carbon trading rules under Article 6 of the Paris Agreement. After nearly a decade of negotiations, the framework for international carbon markets is now complete. It provides tools for transparent and accountable carbon trading offering integrity and robustness and ensures that carbon trading will become more coordinated starting in 2025. This will include a centralised registry system under Article 6.4 for tracking emissions reductions and stricter, more transparent rules for bilateral trading under Article 6.2 to ensure accountability and fairness.

Carbon markets crucially assign a price to emissions, valuing the cost of ‘externalities’ of pollution from fossil fuels and incentivising cleaner technologies and reforestation. While carbon markets are essential, they must be paired with strong regulations, clean energy innovation, and global cooperation to address the full scope of systemic decarbonisations across sectors like energy, transport, and heavy industry. To align with 1.5°C pathways, carbon markets must work alongside aggressive emissions reductions.

Reforestation site in Daintree, Australia. Carbon crediting initiatives can help pay to protect and restore important ecosystems, but rules being discussed at COP29 will be critical to ensure they're effective and avoid negative side effects. 

3. Mitigation: A lack of ambition

The Mitigation Work Programme (MWP) established at COP26 to urgently scale up mitigation (action to prevent climate change) ambition and implementation saw limited progress, delivering mainly workshops and exchanges without substantial outcomes. At COP29, countries failed to agree on how to implement the outcomes of the Global Stocktake, including transitioning away from fossil fuels, deferring the decision to COP30. This lack of consensus has hindered the advancement of the MWP, reflecting the challenges in aligning diverse national interests and priorities due to disagreements over responsibilities and priorities.

Saudi Arabia and other oil-rich nations resisted timelines for reducing fossil fuel dependency, but small island nations called for stronger emissions cuts from major polluters like the US and China to protect their survival. Some developed countries, such as Australia, resisted stricter coal phase-out timelines without clearer commitments from other major emitters. Additionally, developing countries like India emphasised the need for more financial support to transition away from fossil fuels, highlighting the gap in priorities.

Countries like Denmark, where wind energy powers nearly 50% of electricity, offer a model for how to transition away from fossil fuels effectively. Scaling such efforts globally is critical to achieving more critical mitigation goals.

Coastal wind turbines at the oceanic windmill Middelgrunden, situated just outside Copenhagen. The new climate finance goal being negotiated at COP29 aims to direct more money for clean energy and other climate solutions to countries and communities in need.

4. Adaptation: Incremental steps

Adaptation outcomes and discussions were slow at COP29 and centred on operationalising the Global Goal on Adaptation (GGA), with a strong focus on integrating resilience measures into national planning and promoting inclusivity, including Indigenous voices and gender-responsive approaches. Progress was insufficient on adaptation and the lack of predictable funding remains a critical barrier, especially for vulnerable nations like the Maldives, where rising sea levels pose existential threats. For these countries, adaptation measures, such as constructing seawalls, are essential for survival, yet remain out of reach without sufficient financial support from wider sources.

The path forward for climate action

COPs are part of the solution at a high level, setting the tones from the top. But they are only one part. The path forward requires a coordinated global effort involving policy reform, technological innovation, financial investment, and legal accountability. Carbon markets, climate finance, and net-zero strategies must work alongside grassroots resilience-building efforts. Collaboration is needed across many disciplines with governments setting ambitious policies, businesses innovating sustainable solutions and the use of laws, regulations and taxes as powerful levers to enforce accountability. The UN International Court of Justice ( ICJ) is an example; it began public hearings on states’ legal obligations to combat climate change and the consequences of causing “significant harm”. The hearings, which conclude on 13 December 2024, marked the ICJ’s largest-ever case, with over 100 nations and organisations presenting legal arguments. The case has potential to set legal precedents on historical emissions and accountability under international law. While the ICJ’s advisory opinion will not be binding, it could influence global climate policy and future legal actions profoundly.

The path forward requires a coordinated global effort involving policy reform, technological innovation, financial investment, and legal accountability.

Looking ahead: The road to COP30

COP29 reaffirmed the essential but imperfect role of COP conferences. While slow and often frustrating, these gatherings are an important part of other levers to set normative global goals and accountability frameworks.

As the COP presidency baton shifts to Brazil, COP30 in Belém represents a pivotal moment to move from agreements to action. Brazil has already highlighted the Amazon’s central role in global climate stability and prioritised deforestation prevention. With the “Baku to Belém Roadmap” setting an aspirational $1.3 trillion climate finance goal, much work must now be done ahead of COP30 on innovative and wider climate financing sources. The stakes are immense, and the time for transformative action is now.

Greenbank’s approach

For Greenbank, climate change is an integral part of the macroeconomic landscape, shaping the business world in profound ways. We carefully account for climate risks, such as the impact of stranded assets on valuations, while also identifying the enormous opportunities for businesses driving sustainability transitions. We believe companies that operate with a focus on a more equitable society and a healthier planet are well-positioned to lead in this evolving landscape.
 

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(1) IISD Earth Negotiations Bulletin, Summary report 11-22 November 2024. 

(2) UNEP Emissions Gap report 2024. 

(3) Carbon Brief, 2COP29: Key outcomes agrees at the UN climate talks in Baku”, 2024.