Months before COP29 began in Baku (Azerbaijan), it was already known as the Finance COP. It was expected that the main discussions would revolve around money; specifically, the objective of increasing financing for climate action in developing countries.
On the road to curbing climate change, the finance COP has left two keys: the commitment by rich countries to provide $300 billion annually to support the poor in their process of reducing greenhouse gas emissions, and the agreement on how carbon markets will work under the Paris Agreement.
The finance COP has ended with agreements that do not satisfy the majority and the feeling that it has been a transitional summit towards the next one, the COP30 to be held in 2025 in Brazil. The decisions needed to curb climate change and adapt to its consequences have yet to materialize.
Financing increases
In 2015, a commitment was reaffirmed for developed countries to allocate $100 billion per year to finance climate action in developing states by 2020. In other words, the richest (those who have contributed the most to greenhouse gas emissions) should support the poor (those who have contributed the least to climate change and yet suffer the most from its consequences).
In 2024, this target has not been met. Therefore, the main goal of COP29 was to create a more ambitious and realistic target, significantly exceeding the $100 billion figure.
The final COP29 agreement states that the richest nations must contribute at least $300 billion annually by 2035. This is three times the current figure, but below the actual needs of countries in the global south (a recent report by the High Level Panel of Independent Experts on Climate Finance states that at least $600 billion per year is needed).
In turn, the text refers to the need to increase efforts to bring the amount up to 1.3 trillion dollars per year by 2035. And what is the plan to reach these figures? For the first time, this new target (formally known as the New Collective Quantified Climate Finance Goal, NCQG) has been proposed to come from both public aid and credits as well as private investment. This poses new challenges when it comes to obtaining and channelling financing.
No changes in the list of contributing countries
Another debate that opened up during COP29 revolved around which countries should bear the brunt of climate finance. Currently, it is the United States, the European Union, Canada, Switzerland, Australia and Japan. According to data from the World Resource Institute, other countries could contribute, considering their historical emissions and economic development.
The European Union has also lobbied for other countries, such as China, to become a contributing state but has yet to succeed. Saudi Arabia and South Korea are other countries that won’t contribute funds at the moment.
A step forward in the carbon markets
The second key Baku deal has been concluded after nearly a decade of negotiations. This is the long-awaited carbon market mechanism, which paves the way for creating an international system for buying or selling carbon credits. At COP29, the final elements establishing how this system will work have been agreed upon.
This new market will make it possible to buy or sell the right to emit carbon dioxide (CO2). For example, a country that does not meet its emissions limits may sell its right to do so to another country. This is a mechanism that has generated controversy and whose approval has been delayed for years. However, some technical aspects are still pending definition.
What is left out of the agreement
The COP29 agenda also contemplated the achievement of some objectives that could not be met. One of them is linked to the compensation mechanism for losses and damages caused by climate change. Before the COP began, some US$700 million of the US$580 billion needed between now and 2030 had been committed.
Some countries were expected to put money on the table this 2024, but the final agreement only records a generic mention of this issue. Nor have many announcements been made about the commitments of countries to reduce their emissions. However, states must update their emission reduction plans (NDCs) in 2025, so this issue will be crucial at COP30 in 2025.
And what does science say in the meantime? The United Nations Environment Program’s (UNEP) Emissions Gap Report 2024 indicates that emissions need to be cut by 42% by 2030 and by 57% by 2050 to prevent warming from reaching 1.5°C on a protracted basis. In turn, the Climate Change Copernicus Service indicates the data available in November 2024 that it is very likely that this year will be the warmest since records have been kept.
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