Calling-in from COP29: What You Missed and What Comes Next
Key Points
- Midway Progress: COP29 in Baku, Azerbaijan, is at its halfway point, having made significant progress but with much work remaining. The conference continues efforts to meet the Paris Agreement goals of limiting global temperature rise by building consensus among stakeholders on key topics, including climate finance, transparency and supporting developing countries and vulnerable populations in the fossil fuel transition.
- Focus on Climate Finance: Week one of the conference has clearly focused on advancing climate finance by revisiting agenda items from previous COPs, such as the Loss and Damage Fund, Article 6 of the Paris Agreement and enhancing methane emissions abatement.
- New Climate Finance Initiatives: Negotiators have introduced new topics to advance climate finance goals, including establishing the New Collective Quantified Goal for climate finance, and the Baku Initiative for Climate Finance, Investment and Trade. These initiatives also aim to enhance support for climate action in SIDS and LDCs.
- Future of U.S. Leadership: With COP29 commencing shortly after the election of President-Elect Donald Trump, who has expressed plans to withdraw the U.S. from the Paris Agreement, many questions remain about the future of U.S. involvement at COP. Although key figures like Energy Secretary Jennifer Granholm did not attend the conference this year, other U.S. climate leaders have reassured that the commitment to climate action extends far beyond the federal government.
- Looking Ahead to COP30: The outcomes of COP29 in Baku will set the tone for climate ambition from emerging markets and developing economies (EMDE) next year, with the next round of NDCs due by mid-February for COP30 in Belém, Brazil. Additionally, the host for COP31 in 2026 may be decided, with Australia as the main contender.
Introduction
World leaders, scientists, government decision-makers, private sector actors, climate actionists and other stakeholders have convened at 29th Conference of the Parties (COP29) to the United Nations Framework Convention on Climate Change (UNFCCC) in Baku, Azerbaijan to build consensus around climate finance, transparency and supporting developing countries and vulnerable populations in the fossil fuel transition.
In December 2015, during COP21, 196 countries signed the Paris Agreement, the landmark global commitment to keep global temperatures from rising 2 degrees (with aspirations of 1.5 degrees) Celsius above pre-industrial levels. To achieve these goals, each signatory country agreed to submit a nationally determined contribution (NDC)—which is a country’s plan of action for greenhouse gas (GHG) emissions reductions goals and climate resilience—every five years with each iteration ratcheting up ambition.
Last year, COP28 concluded the first “Global Stocktake” (GST), a comprehensive assessment of progress measured against the goals of the Paris Agreement. The GST revealed the global community is falling short of Paris Agreement objectives and called for accelerated actions to curtail GHG emissions and enable nations to adapt to climate change. The conference ended with global leaders agreeing to “transition away from fossil fuels” while “doubling down” on energy efficiency and “tripling up” on renewable energy. However, a recent U.N. Environmental Program report indicates that progress since COP28 has been meager, failing to curb emissions and move away from fossil fuels.
Negotiators at COP29 are revisiting some of the same agenda items from last year including the Loss and Damage Fund, Article 6 of the Paris Agreement, and enhancing methane emissions abatement. Negotiators have also raised new topics such as establishing the New Collective Quantified Goal (NCQG) for climate finance and the Climate Finance Action Fund (CFAF). The series of new pledges and declarations expected during this year’s conference are focusing on robust support for climate action among Small Island Developing States (SIDS) and Least Developed Countries (LDCs).
This report comes midway through the conference, noting the progress that has been made, and the agenda items for week two. More broadly, negotiators set the groundwork in the first week for Ministers and agency heads who will be arriving during week two.
Mukhtar Babayev, the former lead negotiator for the Azerbaijani delegation, is the COP President after serving as the head of the county’s Ministry of Ecology and Natural Resources. As COP President, he is guiding negotiations throughout the week toward a range of stated priorities described below.
Climate Finance
Once again, climate finance is a top priority at COP29, with the goals and initiatives below playing a critical role in supporting climate action efforts and the energy transition.
New Collective Qualified Goal
A central goal of COP29 is setting a NCQG for climate finance, which is intended to replace the previous $100 billion annual pledge to support climate mitigation efforts and adaptation in developing countries. The NCQG is expected to address the outcomes of the GST and go beyond the $100 billion goal, as well as base aid on an assessment of a countries’ real-world needs. While the Organisation for Economic Co-operation and Development (OECD) reports that developed countries materially surpassed the $100 billion goal in 2022, many–including the COP Presidency–contest that greater transparency is needed, as much of the aid came from diverted funds from existing aid channels as opposed to newly added funds.
As negotiators exchange views on what constitutes an “ambitious” goal for climate finance, a U.N. Advisory group claimed that global climate action needs between $6.3 and $6.7 trillion a year by 2030. Excluding China, the panel said the developing world needs $1.6 trillion for clean energy, $250 million for climate adaptation, $250 million for loss and damage, $300 million for sustainable agriculture and natural capital and $40 million for fostering a just transition.
After the conclusion of the first week, parties have introduced 33 pages of proposals on the NCQG with goals ranging from $100 billion to $2 trillion, and with the “G77 and China” group proposing a $1.3 trillion aggregate figure. Disagreements persist as developed countries pressure China and Middle Eastern parties to join the official donor pool. China instead proposes creating voluntary and nonbinding funding arrangements for south-south cooperation, rather than agreeing to any formal commitment.
Negotiations throughout week two will clarify details for public versus private finance, grants versus loans, as well as which parties should fund commitments, and which parties should benefit. Restrictions on the use of funds could also be revisited while negotiators attempt to raise the overall annual pledge amount beyond $100 billion. In the lead-up to COP29, the COP29 Presidency and others had engaged various ministries of finance and raised NCQG in multilateral forums with heads of states to ensure key parties were well prepared before the conference commenced. Despite the preparation, recent U.S. election results threaten to destabilize commitments from other developed nations, though Subnational leaders from the United States (U.S.), as well as a group of 25 nations expressed their continued support for the COP29 process, signaling their intent to remain ambitious.
Loss and Damage
The Loss and Damage Fund was established at COP27 with the goal of providing financial assistance to climate-vulnerable developing countries. While important action was taken in establishing this fund at COP27 and operationalizing it at COP28, on the second day of COP29 the fund was officially finalized and is expected to begin disbursing critical funds to countries disproportionately suffering the effects of climate change in year 2025. United Nations Environment Programme (UNEP) defines Loss and Damage as the negative effects of climate change that occur despite mitigation and adaptation efforts.
Prior to COP29’s commencement, the Loss and Damage Fund had received $700 million in pledges from 23 countries, but the COP29 Presidency is calling for larger commitments in order to protect vulnerable populations. In addition to scaling up the Loss and Damage Fund, the COP29 Presidency is urging increased cooperation across the various mechanisms and networks that aim to address loss and damage more broadly, including the Warsaw International Mechanism and the Santiago Network. There were hopes that on Thursday, which happens to be the thematic “finance day” of the COP, countries would announce new commitments to the Loss and Damage fund, but only Sweden came with a pledge of $18 million. Sweden simultaneously pledged $763 million to the separate Green Climate Fund.
Discussions during week one focused on setting a quantitative goal for the Loss and Damage Fund have been championed by the Alliance of Small Island States (AOSIS) who among others are advocating for a percentage of the NCQG to be allocated to the fund.
International Carbon Trading
Article 6 of the Paris Agreement allows for countries to meet their nationally determined contributions through transacting in international market mechanisms and non-market approaches. Article 6 has two market mechanisms—enabling bilateral trading of emissions between high emitting countries and lower-emitting countries under Article 6.2, and a multilateral trading system which all countries could participate in under Article 6.4. The rules for such a mechanism are complex and have undergone years of stalled talks. Progress was made on the first evening of COP29 when an agreement was reached on carbon market standards as part of Article 6.4 of the Paris Agreement, providing a sense of optimism for the remaining deliberations. Several challenges remain including establishing transparency mechanisms and determining whether a central registry is needed. During the rest of the first week at COP29, negotiators deliberated extensively on these details, with Singapore and Japan calling for more time to explore differences in opinion regarding the role and purpose on an international registry and other areas of contention.
Later in the week, negotiators initiated discussions on the adoption of specific methodologies for carbon credits (i.e., for biomass waste gases, renewable energy, carbon capture and sequestration, reforestation and other methodologies), pulling from previously approved methodologies under the Clean Development Mechanism. Negotiators are also creating mechanisms for intervening when a country’s methodologies are deemed “inconsistent.” The European Union (EU) pushed for measures to enhance transparency and accountability, while a group of developing countries with the Arab Group contested saying it would undermine their ability to participate in the carbon market. Thursday evening, the chair of these discussions, Harry Vreuls of the Netherlands warned that the talks were headed in the wrong direction.
A comprehensive Article 6 agreement did not emerge by the end of week one, though draft texts of Article 6.2 and Article 6.4 have been forwarded to the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA) next week for further work with decisions confirming that Parties had not reached consensus on either item. A final Article 6 document could emerge during week two that would enable new elements of Article 6 to enter an implementation phase.
The Climate Finance Action Fund
Prior to the conference, the COP29 Presidency had announced plans to establish the CFAF. This fund aims to increase climate financing through an innovative approach involving oil and gas producing nations and companies. The CFAF would establish an investment fund that is focused on developing countries and generating development outcomes. This would be achieved by concentrating on climate-related projects, fostering renewable energy production and supporting research and development (R&D) to innovate new climate solutions.
Stakeholders anticipated the launch of the CFAF on Thursday to commemorate the thematic “finance day,” but it was removed from the agenda. To establish the CFAF, at least 10 countries must pledge a minimum of $1 billion through various financial instruments, including green bonds, other debt instruments, venture capital and equity. However, challenges remain in creating a workable and acceptable fund structure. Developing countries expressed concerns that contributing to Azerbaijan’s fund could set a precedent, potentially pressuring them to support the NCQG as well. Whether the fund will be launched in the second week of the conference remains to be seen.
The Baku Initiative for Climate Finance, Investment and Trade
The Baku Initiative for Climate Finance, Investment and Trade (BICFIT) Dialogue, which is a collaboration between the COP29 presidency, the U.N. Trade and Development Organization (UNCTAD), Development Program (UNDP), the World Trade Organization (WTO) Secretariat, International Trade Center (ITC), and multiple COP Presidencies, with various international organizations, multilateral development banks, multilateral climate funds, civil society organizations, think tanks and academic institutions, was held on Thursday, November 14, 2024.
The BICFIT dialogues covered key topics such as ways to integrate climate finance, investment and trade agendas to support policy development and promote climate investment. It emphasized the importance of ensuring equitable and environmentally sustainable transitions for vulnerable populations such as those dependent on micro, small and medium-sized enterprises (MSMEs). BICFIT Dialogue’s platform is intended to strengthen support for countries’ NDCs, National Adaptation Plans (NAPs), and Long-term Low-Emission Development Strategies (LT-LEDS) while fostering alignment with sustainable development.
Transparency and Reporting
In September, Azerbaijan introduced the Baku Global Climate Transparency Platform to assist developing countries in fulfilling their reporting obligations, with the First Biennial Transparency Reports due shortly after COP29 concludes. The reports from individual countries will document their progress toward achieving climate policy and emissions reductions goals. Throughout the conference, parties interacting with the platform are being encouraged to participate in the Enhanced Transparency Framework (ETF) to track progress and ensure accountability. The overarching goal is to strengthen trust, enhance accountability and drive collective action towards the climate goals of the Paris Agreement.
A Focus on Methane
Governments have expressed their intent to highlight methane emissions at COP29. Week one started strong with the COP Presidency introducing the Declaration on Reducing Methane from Organic Waste, and U.S. and China co-hosting a summit event on methane and noncarbon dioxide (CO2) GHG emissions, during which both China and the U.S. released plans, guidance and funding to further reduce methane and nonCO2 emissions. The following day, the European Commission presented their roadmap to reduce methane emissions from fossil energy at the conference, followed later in the week by the U.N. Environmental Program’s “Eye on Methane” report through their International Methane Emissions Observatory (IMEO). Throughout the week, representatives from the EU Commission, the U.S., Germany and Australia have reaffirmed political and financial support for IMEOs work in quantifying methane emissions.
U.S. Leadership Post-Election
Many Parties anticipate that the incoming Trump administration will move immediately to seek U.S. withdrawal from the Paris Agreement, despite pushback from hallmark domestic energy companies. CEOs of both Exxon Mobile and Cheniere Energy (the U.S.’s largest liquefied natural gas (LNG) exporter) have come out in support of the U.S. remaining in the agreement, and cautioned against any reversals as creating too much uncertainty for businesses.
Despite input from American industry, Trump likely will proceed with his campaign promise of leaving the Agreement. The President-elect could file a request to the United Nations (U.N.) to withdraw from the agreement on day one. Additionally, during the year-long process before the withdrawal is effective formally, the U.S. could refrain from meaningful participation in multilateral forums post inauguration.
In the opening days of the conference, U.S. negotiators quickly came out reassuring the COP community that U.S. commitment to climate action extended far beyond the federal government—with lead negotiator John Podesta saying COP is “bigger” than any one country. Questions remain regarding whether climate finance commitments from the U.S. are durable. While the U.S. Government sent 405 U.S. delegates this year, key voices like Secretary of State Antony Blinken, Energy Secretary Jennifer Granholm and Executive Director of USAID Samantha Power noticeably are absent. The absence of strong leadership from the U.S. could foreshadow the dynamics of COP30, when the U.S. negotiating posture will align with the Trump administration, which will likely be represented by a less robust team, if a delegation is even sent at all.
Concerns Going into Week Two
While week one discussions at COP29 have been productive, significant challenges remain, particularly in reaching agreement on the amount and rulebook for the ambitious NCQG. Concerns about full participation are heightened with Argentina withdrawing from the conference under President Javier Milei’s instructions, and France’s Environment Minister, Agnès Pannier-Runacher, boycotting due to “unacceptable” comments by Azerbaijan’s President, Ilham Aliyev. Additionally, on Friday, key figures, including former U.N. Secretary-General Ban Ki-moon and former U.N. climate chief Christiana Figueres signed an open letter calling for a fundamental overhaul of the COP process, arguing that its current structure is inadequate for addressing the climate crisis.
Road to COP30 and Beyond
The results of COP29 in Baku will foreshadow the level of climate ambition we can expect from EMDE next year. The next round of NDCs is due by mid-February in preparation for COP30 in Belém, Brazil. While some countries like Brazil, the United Arab Emirates, and the United Kingdom (U.K.) have already unveiled new NDCs during week one at COP29, many developing countries first want to gauge how much financial support they can expect to receive from the international community. Without sufficient commitment from the world’s largest polluters, many may choose to submit less-ambitious NDCs and instead focus on domestic development and protecting against climate disasters. Amidst geopolitical conflict, rising inflation and a global wave of conservative election results, negotiators at COP29 will continue to work to send a strong signal to the global community that support for climate action can weather the storm.
Finally, there is a possibility that the host for COP31 in 2026 will be decided in Azerbaijan. Australia is considered the front-runner, with support from the U.S., U.K., France, Germany and New Zealand. Australia has proposed co-hosting the summit alongside Pacific Island nations, who’s leaders re-expressed their support for the bid earlier in week one at COP29, which promises to highlight the existential inequity of rising sea-levels and ocean acidification. However, Turkey remains in contention after announcing its intent to host the conference at COP28 last year.
