By Harsheenee Aujayeb, General Manager, ESG Intellis Solutions Ltd
The opening day of the UN Climate Change Conference, COP29, in Baku, Azerbaijan, saw the World Meteorological Organisation (WMO) release a red alert on the sheer pace of climate change in a single generation. The WMO’s State of the Climate 2024 update made it clear that global mean temperature in 2024 is on track to outstrip the temperature even of 2023, the current warmest year. For 16 consecutive months (June 2023 to September 2024), the global mean temperature likely exceeded anything recorded before, and often by a wide margin, according to WMO’s consolidated analysis of the datasets.
The world is struggling to keep warming under 1.5 degrees Celsius compared with pre-industrial times – a target established under the 2015 Paris Agreement to avoid the worst effects of climate change.
Key takeaways from COP29
Against this backdrop, COP29, or the 29th Conference of Parties to the UN Framework Convention on Climate Change (UNFCCC), is being called the ‘climate finance COP’.
Why? Because a key expected outcome was a new global climate finance target that was finally agreed after lengthy negotiations at USD 300 billion annually. This target, or new collective quantified goal (NCQG), is being viewed as one of the summit’s main deliverables, and is set to replace the existing USD100 billion goal that is due to expire in 2025.
In addition, the creation of an UN-backed global carbon market and acknowledging climate-related trade barriers for future dialogues gave some relief to developing economies in their struggle to counter the impact of climate change, even as they contribute the least to it.
- Climate Finance Deal:
- New climate finance target: The good news is that a new global climate finance target has been decided at USD 300 billion annually by 2035, three times the current target of USD 100 billion till 2025. The bad news? It falls significantly short of the USD 1 trillion+ demanded by developing nations.
- Wider net on contributors: Another significant milestone at COP29 has been the inclusion of the private sector and emerging economies like China in funding discussions. While China is not listed as a developed nation and hence does not qualify under the UN criteria that only developed nations contribute, the COP29 agreement calls on “all actors to work together to enable the scaling up of financing.”
- Carbon Credit Rulebook:
- Creation of a global framework for carbon credit trading: The UN-backed global carbon market will facilitate the trading of carbon credits, incentivising countries to reduce emissions and invest in climate-friendly projects.
- Private sector involvement welcomed: The new Article 6 carbon trading mechanism will allow countries to trade carbon credits with each other, as well as companies. Thus, there is clear potential for mobilising private investments, but concerns over transparency and double-counting persist.
- Inclusion of Trade Barriers in Future Dialogues:
- Concerns of developing countries acknowledged: COP29 formally recognised climate-related trade barriers (e.g., carbon border taxes) as a significant concern for developing economies.
- Concerns of developing countries acknowledged: COP29 formally recognised climate-related trade barriers (e.g., carbon border taxes) as a significant concern for developing economies.
- Progress Amid Challenges:
- Geopolitical headwinds countered: Despite political headwinds, such as Donald Trump’s election and growing fossil fuel influence, negotiators managed to avoid collapse and secure agreements.
Main Areas of Concern
A key concern is that the new target for climate finance might come nowhere close to the new annual funding goal of USD1 trillion to USD1.3 trillion that climate experts had estimated. This would be the bare minimum needed to assist vulnerable nations to deal with loss and damage from climate change. In addition, fossil fuel dominated discussions and geopolitical issues straddling US’ historical emissions responsibility and EU’s new carbon border tax continued to cause tensions.
- Inadequate Climate Finance:
- The USD 300 billion target is seen as a delaying tactic and insufficient to address the scale of challenges.
- There is also lack of clarity on mobilising the additional USD1 trillion needed from private and public sources.
- Impact on Vulnerable Populations:
- Extreme weather patterns, from terrible heat waves to lethal tropical cyclones and floods, have become more intense as temperatures shoot up and cause the poorest countries to face devastating damage from climate change.
- Small island nations and low-income countries disproportionately suffer from climate-induced disasters while facing inadequate support to counter their effects.
- Fossil Fuel Dominance:
- The continued influence of fossil fuel lobbyists hindered progress on phasing out fossil fuels.
- COP29 missed the opportunity to reinforce commitments from COP28 to transition to renewables.
- Geopolitical Instability:
- US policy uncertainty under new leadership and its historical emissions responsibility has created trust deficits.
- Trade policies like the EU’s carbon border tax served to strain relations with developing nations.
What we want to see
At ESG Intellis, we believe that the voices of small island developing nations must be heard as a key party affected by the onslaught of climate change. Trying to bridge the gap between current commitments of USD 300 billion annually to the more than USD 1 trillion needed to effectively counter climate change implications for vulnerable nations is a key priority. In addition, a targeted focus on implementation of agreements made at the COP meetings as well as regular assessments to track their progress is a must.
- Increased Financial Ambition:
- Commitments to close the USD1 trillion+ finance gap through innovative mechanisms and stricter accountability measures for pledges.
- Commitments to close the USD1 trillion+ finance gap through innovative mechanisms and stricter accountability measures for pledges.
- A Fossil-Free Future:
- Concrete roadmaps to phase out fossil fuels and triple renewable energy capacity. However, these should also reflect ground realities in developing countries such as their capacities and constraints in embracing green energy.
- Active barriers against fossil fuel lobbying in climate negotiations.
- Just Transition Policies:
- Equitable frameworks for supporting developing countries in transitioning to low-carbon economies without compromising growth.
- Equitable frameworks for supporting developing countries in transitioning to low-carbon economies without compromising growth.
- Focus on Implementation:
- Shift from negotiations to actionable delivery on existing agreements.
- Regular assessments to track progress and enforce accountability.
- Empowering Small Nations:
- Strengthen the voice of small island states in decision-making and prioritise their adaptation needs.
Baku to Belém: From climate finance to climate justice
Even as COP29 drew to a close on 22 November, Brazilian and world leaders have already held preparatory meetings for COP30, which will be held in Belém, Brazil, in a little over a year. We look to the future with hope and faith in the potential of COP30 in Brazil to address biodiversity loss and renew focus on climate justice.
Indeed, a world vision for a sustainable future requires an ambitious outlook on a Brazil COP that provides democratic solutions, with less inequality and more justice, to take strategic decisions regarding a more resilient and secure future. We would urge for collaborative leadership from all stakeholders—governments, private sector, and civil society—to meet the ambitious goals set for 2035. Climate change is affecting our world, and we all need to work together to ensure a sustainable tomorrow for future generations.