Consensus was achieved at the COP29 summit on providing USD 300 billion per year in financial assistance to the poorer and most vulnerable countries and rolling out a global carbon market, alongside a series of declarations. But they still fall short of required climate targets.

Negotiators traditionally went into overtime at the United Nations Climate Change Conference COP29 – and churned out the Baku Climate Unity Pact. It includes the New Collective Quantified Goal (NCQG) for Climate Finance. It will also be known as the Baku Climate Finance Goal.

The talks were expectedly tense. At one point, representatives of island states and other countries imperiled by climate change left the table. Eventually, the most vulnerable group accepted a pledge to get at least USD 300 billion a year in financial assistance until 2035. It is USD 50 billion more than in the draft.

Developed countries only recently delivered on the commitment to provide USD 100 billion per year. But the vulnerable part of the world actually needs more than USD 1 trillion every year.

While rich countries are racing to decarbonize by mid-century or earlier, others are in thirst, some literally, for the basics. They face devastating heat, drought, wildfires and flooding. Rising sea levels may soon wipe out countless inhabited islands and alter the world’s coastlines. Jeopardized regions also require funding for renewables, mechanisms to protect lives, livelihoods and nature and to adapt agriculture and infrastructure.

Biden sees climate finance as tool to sell US products

With a one-and-a-half-day delay, envoys agreed as well on a broader package of USD 1.3 trillion per year. The USD 300 billion sum is based on grants and subsidized loans, while private financing and climate taxation dominate the rest.

“It will help mobilize the level of finance – from all sources – that developing countries need to accelerate the transition to clean, sustainable economies, while opening up new markets for American-made electric vehicles, batteries, and other products… While some may seek to deny or delay the clean energy revolution that’s underway in America and around the world, nobody can reverse it — nobody,” outgoing United States President Joe Biden pointed out.

Private investments and commercial loans are likely to dominate the sum of USD 1.3 trillion per year pledged for poor and most vulnerable countries

Multilateral development banks (MDBs) announced projections for their contributions to climate action as USD 170 billion per year by 2030, of which USD 120 billion for low- and middle-income countries.

For instance, China is active overseas through climate finance development agencies, multilateral development banks, climate funds, export credits and bilateral loans. The country avoided specifying figures and purposes and opted to participate on a voluntary basis.

Notably, the USD 300 billion level wouldn’t be adjusted for inflation.

“The Baku Finance Goal represents the best possible deal we could reach,” COP29 President Mukhtar Babayev claimed. He is Azerbaijan’s minister of ecology and natural resources.

The Loss and Damage Fund is becoming operational as early as next year. The idea behind it is to mitigate the consequences of climate disasters and bolster adaptation in vulnerable regions. But the war chest amounts to a mere USD 730 million, for now.

Saudi Arabia stifles fossil fuel phaseout hawks

Slovenia’s Minister of Environment, Climate and Energy Bojan Kumer warned that existing agreements and policies wouldn’t curb global warming at less than three degrees Celsius by the end of the century. Scientists prevalently see the level as catastrophic, with irreversible consequences.

The consensus is that the rise needs to be limited to 1.5 degrees. Global temperatures already surpass the threshold regularly on daily, monthly and even annual scales. However, some still believe the long-term average can be returned below the critical point.

At the same time, Saudi Arabia managed to sideline the efforts to phase out fossil fuels, according to climate diplomats. The goal is not even mentioned by name in the final document, diluting the initiative. The Conference of the Parties of the UN Framework Convention on Climate Change (UNFCCC), which is the international body’s official name, only reaffirmed the conclusions from COP28.

Kumer expressed disappointment at the lack of concrete commitments for a faster reduction of greenhouse gas emissions and the gradual elimination of fossil fuels. Nevertheless, he emphasized the importance of continued cooperation with countries within the so-called High Ambition Coalition.

The conference also approved a document on gender equality, calling for greater assistance to girls and women in the climate crisis, Kumer’s ministry said. Unfortunately, the language regarding gender equality and human rights was not sufficiently included in the other texts of the decisions, as the European Union sought, it added.

Global CO2 market nearing launch

One major breakthrough at COP29 was the new framework for a global carbon market under UN supervision. It allows countries and companies to purchase and trade certified emissions allowances. Article 6 of the 2015 Paris Agreement facilitated the mechanism. Technical details remain.

Financial flows from compliant carbon markets could reach USD 1 trillion per year by 2050, the COP29 Presidency said. They also have the potential to reduce the cost of implementing national climate plans by USD 250 billion per year, it added.

The summit’s leadership urged the parties-governments to reinvest the savings in scaling their climate ambitions.

COP29 operationalized an international carbon credit scheme to direct financial flows to the developing world and reduce the cost of implementing national climate plans.

After a decade of talks, envoys operationalized the carbon credit scheme to direct financial flows to the developing world and reduce the cost of implementing national climate plans.

Article 6.4 standards define reliable and transparent carbon markets. Among other points, a deal on 6.8 facilitates international cooperation through non-market approaches.

Trust in provisional international and bilateral carbon dioxide certificates has deteriorated. There have been cases of major fraud while some emission offsetting technologies and methods proved to be unreliable or ineffective. Skeptics are pointing the finger at the fossil fuel industry and arguing that planting trees and capturing emissions are excuses for companies to maintain business as usual.

A global mechanism could create an asset category out of preserving rainforests, national parks and ecosystems. Delivery and effects are anyone’s guess, though.

New climate, decarbonization initiatives

With endorsers from over 50 countries, the COP29 Declaration on Water for Climate Action calls for an integrated approach to combating the causes and impacts of climate change on water basins and water-related ecosystems. It advocates integrating water-related mitigation and adaptation measures in national climate policies.

More than 50 maritime shipping industry actors agreed to accelerate zero and near-zero emission fuels by 2030.

As part of a USD 193 million package for clean energy endeavors, the United Kingdom supported clean cooking for 10 million people across Sub-Saharan Africa, South Asia and the Indo-Pacific, to leave coal and wood cooking behind.

All G20 countries now have net zero targets

Twenty five countries and the EU indicated they would commit to a policy of no new unabated coal power plants. The initiative is to include the decision in their nationally determined contributions before COP30.

The group includes 13 EU member states: Austria, Belgium, Cyprus, Czech Republic, Denmark, France, Germany, Italy, Malta, the Netherlands, Slovakia, Slovenia and Sweden, as well as Norway and the UK.

Over 50 countries endorsed the Reducing Methane from Organic Waste Declaration. Eight are among the world’s largest organic waste methane emitters and represent 51% of global methane emissions from organic waste.

Mexico vowed to eliminate net greenhouse gas emissions by 2050, meaning all members of the Group of Twenty (G20) have committed to a net zero target.