COP29: Incremental progress, but all eyes are on 2025 targets

The 29th session of the Conference of the Parties (COP29) to the UN Framework Convention on Climate Change was held in Baku, Azerbaijan, from 11 November to 22 November 2024.^[1]

The conference was successful in reaching agreements on a new climate finance goal and regulations for future carbon markets. However, with complaints about procedural issues, a decline in climate leadership from the United States, and continuing divergence in views between developing and developed countries, the outcomes of COP29 were ultimately not nearly as ambitious as many had hoped.

COP29 itself has not changed the landscape of action against climate change. The outcomes were politically conservative, given the difference between the interests and perspectives of developing and developed states.

Instead, parties seemed to have their eyes on COP30, to be held next year in Brazil, where the submission by each party to the Paris Agreement of revised Nationally Determined Contributions (NDCs) is likely to draw out whether parties are prepared to make firmer commitments consistent with achieving the goals of the Agreement.

Next Collective Quantified Goal on climate finance

The agreement of the Next Collective Quantified Goal (NCQG) on climate finance was the key outcome of COP29, and was hotly debated throughout the two weeks of the conference. COP29 President Babayev described the process of reaching this agreement in the Closing Plenary as “the hardest task that the multilateral climate process has ever attempted”. Simon Stiell, the Executive Secretary of the UNFCCC, commented that “this new finance goal is an insurance policy for humanity”.

The Parties' commitment at COP15 in 2009 was to mobilise USD $100 billion per year by 2020 to support developing countries to address climate change, through both mitigation and adaptation.

The new goal is triple that, and has been set at USD $300 billion per year by 2035.

While the new NCQG is a significant increase from the previous target, it still falls far short of the USD $1.3 trillion per year which the developing countries advocated for. The decision's only acknowledgement of this $1.3 trillion target was a "[call] on all actors to work together".

Key aspects of the new goal include:

• Developed countries are to take the lead on contributing to the goal. Developing countries are "encouraged" to contribute on a voluntary basis.
• Some of these funds may come from private sources, including foreign direct investment.
• The importance of removing barriers and addressing disablers faced by developing countries in financing climate action is reiterated, through:

• • inviting financial institutions, including multilateral development banks, to reform their operations and instruments to be fit for urgently addressing global climate change; and
  • underscoring the need for public and grant-based resources, concessional and non-debt creating instruments, and measures to create fiscal space. This is particularly relevant to adaptation, and responding to loss and damage.

• The implementation of the NCQG is to be reviewed in 2030.

However, it was not determined how these sums will be raised, or who will deliver the finance. There are also no designated sub-goals for specific types of climate action, such as mitigation, adaptation, or loss and damage.

In the absence of such commitments, is hard to be optimistic about their efficacy over the next year, especially in circumstances where the new goal will require a significant uplift in national contributions across the board. However, at the least, the deal is a platform which the Parties can now build upon.

Most of Australia's current climate finance commitment is given to Pacific Island nations, who face severe weather events and sea-level rises driven by climate change. However, at the moment, the $3 billion committed by Australia towards the 2020–2025 global goal is made up largely from its existing aid commitments, rather than being "new and additional". It remains to be seen whether Australia will increase its aid commitments in light of the new goal.

Regulations for future international carbon markets

Another landmark takeaway was the adoption of key decisions on Article 6 of the Paris Agreement, which provides for market and non-market mechanisms, including decisions to   implement carbon trading agreements. This is a significant resolution and follows almost ten years of negotiations.

The Article 6.2 decision facilitates carbon trading (described as transfer of mitigation outcomes) between party states. It provides guidance for parties in implementing cooperative approaches, such as timing, content, and authorisations. Key features include:

• All three elements of authorisation, being cooperative approach, internationally transferred mitigation outcomes, and entities, can be authorised together or separately.

• The UN Secretariat is to provide registry services through which Parties can issue mitigation outcomes as units. This will be interoperable with the international registry.
• A centralised accounting and reporting platform will be a public repository for the statements and authorisation of each participating Party.

The Article 6.4 decision also enables a centralised carbon market in the form of an international carbon registry. The aim of this registry is to enable the transfer of Article 6.4 emissions reductions credits between states and non-state actors while avoiding double counting.

A supervisory body, made up of members of Parties to the Paris Agreement, is to continue to engage with scientific and technical expertise on reviewing the efficacy of the rules, processes and guidelines that underpin these market mechanisms. However, the body is also to strive for regulatory stability, by reducing the frequency of revisions to standards and procedures.

Finally, the Article 6.8 decision focuses on progressing non-market approaches. Parties are now moving from the first phase of the work programme activities, to the second, from 2025 to 2026. More focus will now be on the further development and use of the Non-Market Approaches (NMA) Platform, which is a web platform on which Parties, multilateral, bilateral, and other public donors, and private and non-governmental organisations, can submit their views on non-market approaches. The NMA Platform can then be used for collaboration, by connecting Parties, developing non-market approaches, and exchanging information.

Although carbon market activity has already been occurring, this progress is significant. It allows carbon markets to move forward with confidence, and has the potential to reduce the overall cost of decarbonisation.

Collective signalling on mitigation ambition

The negotiations regarding the Sharm el-Sheikh mitigation ambition and implementation work programme faced roadblocks, and ultimately resulted only in a procedural conclusion.

This conclusion focused on industry, and highlighted the global dialogues and investment events held over the previous year. These included discussions on the creation of a digital platform to facilitate implementation of mitigation outcomes. This platform aims to enhance collaboration between governments, financiers and others on developing investable projects in a country-owned and nationally-determined manner.

Increasing focus on methane as a potent greenhouse gas

COP29 also saw a focus on reducing methane output.

Parties participating in the Global Methane Pledge (GMP) reviewed recent progress and set additional targets, and governments and philanthropy announced nearly USD $500 million in new grant funding for methane abatement.

The European Commission also announced the Methane Abatement Partnership Roadmap. This aims to enhance collaboration between importers and exporters, and to encourage reductions in the energy sector.

GMP Champions Canada, the European Commission, the Federated States of Micronesia, Germany, Japan, Nigeria, and the United States, penned an open letter calling GMP participants, subnational governments, private companies, and non-governmental actors to continue and accelerate efforts to reduce methane emissions.

As Australia is a signatory to the GMP, there may be increasing attention on efforts to reduce methane output from relevant sectors such as agriculture and energy, sparking further regulatory changes.

Areas of disagreement

COP29 was not successful in reaching outcomes in a number of crucial areas. These include:

• the implementation of the Global Stocktake (GST) outcomes, especially regarding energy transition;
• the just transition work programme; and
• review of the progress and the Adaptation Committee and its effectiveness and performance.

This is perhaps surprising in light of the closing statement of last year's COP28, which, ambitiously, endorsed a transition away from fossil fuels. However, the COP29 text merely references the previous year's outcome, and does not state any higher ambition or make any stronger calls for action. Crucially, no agreement was reached at COP29 to avoid overshooting the 1.5°C temperature increase goal.

It is therefore no wonder that many groups and countries were left disappointed at a perceived lack of commitment to meaningful goal-setting.

Shifting climate leadership

During negotiations, with the US Presidential Election occurring the week before the commencement of the conference, attendees were very conscious of the fact that President-elect Trump is expected to withdraw from the Paris Agreement for a second time once he re-enters office.

If this eventuates, pressure on the European Union and China to fund bilateral climate finance may increase.

Despite this, China's perspective at COP29 remained that it should be considered as a developing country per the UN Rules, as set in 1990, despite the fact that it was the world's largest emitter of carbon dioxide in 2023. Its contribution to the NCQG therefore remains voluntary, though it has been 'encouraged' to contribute.

Ultimately, however, the US Chief Climate Envoy, John Podesta, argued that a change in US political administration is not fatal to a global move towards renewable energy. This is likely true.

Indeed, COP29 saw a support for prioritising collaborative dialogues between countries, financial institutions, and non-governmental bodies to implement the technology priorities of developing countries. We are approaching a level of momentum on climate change action that is being driven by changing technologies and evolving markets. It is these technological and financial forces, rather than political ones, which are likely to be increasingly influential.