COP29: financial promises, yet no decisive action in tackling emissions or reducing reliance on fossil fuels. All eyes are now on Belém

The United Nations Climate Change Conference held in Baku, Azerbaijan, from 11 to 24 November 2024 (COP29), featured intense negotiations among nearly 200 countries, marked by heated debates and frequent stalemates. Negotiations, initially set to conclude on Friday 22 November, extended into Saturday night and the early hours of Sunday, where a consensus was ultimately achieved. Despite making certain tangible advancements, the final agreement fell short of meeting global expectations. The energy sector's disagreements and targets deemed inadequate by many nations, highlighted areas of progress but also exposed several unresolved complexities.

Climate finance: a promise or a broken vow? One of the most talked-about agreements at COP29 was the pledge to secure USD 300 billion a year by 2035 for climate finance to support developing countries, which, despite their limited role in contributing to climate disasters, bear the brunt of their consequences. This commitment, known as the New Collective Quantified Goal (NCQG), is a step forward when compared to the USD 100 billion set for 2025-2030 and the proposed USD 250 billion, but remains well below the 390 billion estimated by the UN for climate mitigation and adaptation, and remains far behind the economic estimates, which suggest annual needs between USD 455 billion and USD 584 billion.

The target of USD 1.3 trillion remains a distant dream. The amount allocated falls significantly short of the demands from many developing countries, which had called for up to USD 1,000 or even 1,300 billion per year by the middle of the next decade. In fact, the target of 1,300 billion (Article 7) remains an aspirational goal, aimed to be achieved through contributions from all available financial sources, both public and private, although the specifics of how these funds will be raised remain unclear. While it is merely suggested to increase the share of grants, particularly for less developed countries and small island states, no minimum thresholds have been set, despite the requests from vulnerable nations who had hoped that industrialised countries would cover at least this amount.

Solutions to mobilise finance are on the table, yet the roadmap remain unclear. The raising of these 300 billion will be supported by various sources, including public and private funding, bilateral and multilateral contributions, as well as innovative solutions such as carbon taxes, climate-debt swaps (which allow debt reduction in exchange for climate action), and philanthropic donations. Yet again, the specifics of how the funds will be allocated remain undefined, with a repeated call for increasing the grant portion for the least developed countries and small island states, to ease the financial strain on those countries already struggling economically.

Both articles, while setting significant amounts, they seem to challenge the traditional principle that climate finance is the sole responsibility of industrialised nations. In fact, while Article 7 states that all countries are called upon to work together to increase climate finance towards developing countries, Article 8 highlights that, although developed countries should take the primary responsibility, developing countries must also contribute to this effort, thus altering the traditional financial burden distribution. Regarding the target countries, both articles do not make a clear distinction between the ‘most vulnerable’ nations and developing countries in general, thus removing the prioritisation of ‘particularly vulnerable’ countries outlined in earlier talks. However, the funds will be allocated to countries experiencing the most severe climate-related challenges.

Roadmap to COP30: new targets and review of funding through to 2030. In addition to this, the final agreement also includes two significant developments: a roadmap of activities that will guide the initiatives leading up to COP30 in Brazil in 2025, with the goal of understanding how to mobilise the USD 1.3 trillion per year, focusing on grants, low-interest instruments and measures to create 'fiscal space'. Furthermore, the agreement includes a review of the new climate finance targets in 2030 to assess progress and make any necessary adjustments.

In what ways will the funds be allocated? The funds raised will be primarily allocated to two areas: adaptation and energy transition. The funds allocated for adaptation will be used to build climate-resilient infrastructure, support sustainable agricultural practices, and enhance defenses against extreme weather events. The energy transition, on the other hand, aims to finance the growth of renewable energy and progressively reduce dependence on fossil fuels, in order to cut global emissions and ensure a more sustainable energy future. These two sectors are crucial for enabling vulnerable countries to cope with the impacts of climate change and initiate an economic transformation towards a more sustainable model.

Who is providing the funding? The question of who will provide the necessary funds for the climate transition was one of the key points of discussion at COP29. In fact, this is one of the main breakthroughs at COP29: the conference has finally broken the long-standing paradigm, established in 1992, which viewed only wealthy nations as the main financial contributors, opening the door for emerging economies such as China and Saudi Arabia to take part in climate finance efforts (Article 9). However, the contribution remains voluntary and without binding obligations, thus considerably reducing its effectiveness. Despite the push for more global participation, the lack of concrete commitments has weakened the agreement, leaving climate finance in a state of uncertainty. Moreover, the system fails to address the allocation of responsibilities: China, despite having an economy comparable to that of the United States and an emissions budget three times greater than Europe's, is still considered a developing country.

The situation is made even more challenging by Donald Trump returning to the White House in January 2025, which could lead to the United States withdrawing from the Paris Agreement once again, as happened during his first term. This scenario raises concerns about the stability of the agreement and the ability of the international community to stay united in the fight against climate change, especially as increasing Western focus on geopolitical conflicts risks could push sustainability to the background.

The energy sector: a step backwards on the fossil transition. The energy sector was one of the central themes of the conference. Despite numerous calls for rapid decarbonisation, the final agreement at COP29 fell short of the expectations set at COP28 in Dubai. Rather than banning fossil fuels, the conversation revolved around ‘transition fuels’, which would allow oil and natural gas to be used for years to come, despite widespread calls for immediate decarbonisation. Specifically, oil-producing nations, including Azerbaijan, have firmly opposed drastic measures, fearing that such actions could harm their economies, which heavily rely on fossil fuels. Essentially, the agreement on the energy transition reaffirmed the goal of reducing emissions, but it fell short of committing to binding measures for a swift phase-out of oil and gas. The conference primarily focused on climate finance, but the absence of decisive actions on mitigation measures and the lack of progress in the Global Stocktake (GST) dialogue revealed a clear lack of true ambition. Fundamentally, COP29 established a framework for the future, but it lacked the ambition and urgency needed to effectively tackle the climate crisis.

Mitigation: a battlefield with no concrete victories. The Mitigation Work Programme (MWP) was one of the topics discussed at COP29, aiming to establish concrete actions to cut greenhouse gas emissions and limit the rise in global temperatures. However, in the end, the text failed to deliver specific pledges. Not only were references to the global warming limits set in the Paris Agreement (1.5°C or 2°C) removed, but the target to reduce emissions by 43% by 2030 and by 60% by 2035 compared to 2019 levels, which had appeared in the preliminary drafts, was also eliminated. There was no reference to achieving carbon neutrality or the importance of adhering to the IPCC guidelines, the leading scientific body for climate change.

Furthermore, the final document lacks specific measures for increasing the use of renewable energy sources. The MWP ultimately only vaguely references the dialogue on climate change in cities, but fails to provide any concrete climate policies or achievable mitigation targets, and the issue of global emission reductions has been postponed to COP30. The reality is that with global warming accelerating and 2024 on track to be the hottest year ever recorded (according to the European Climate Change Service Copernicus), the risk of failing to keep global warming below 1.5°C is becoming increasingly tangible. The absence of clear commitments at COP29 has only heightened the uncertainty, even as the evidence of climate change continues to grow and become undeniable.

The Global Stocktake: a process lacking clear direction. The Global Stocktake (GST), an essential component of the Paris Agreement, was intended to assess global progress in tackling climate change, by assessing whether and how states should update their Nationally Determined Contributions (NDCs). Although the first GST at COP28 showed insufficient progress, no significant steps were taken in Baku. In Baku, three key issues made the negotiations difficult: defining the scientific basis to be used, the question of financial flows, and the annual dialogue on the GST. Of the issues discussed, only the Emirates Ambition and Unity (EAU) Dialogue resulted in a final text, although it was not approved by the plenary, pushing the decision to COP30 in Belém. The key shortcomings of the GST text include the lack of an effective monitoring process to track the implementation of goals, such as the transition from fossil fuels to renewables, and the absence of concrete targets in crucial areas like electricity grids, energy storage or a ban on new coal power plants. Without a clear implementation plan, there is a high risk that the GST will remain ineffective.

Adaptation: steps forward, yet still insufficient. Progress has been made in climate change adaptation, in particular with regard to the Global Goal on Adaptation (GGA). After a long stalemate, the GGA was reintroduced in Dubai the year before, and concrete steps were taken in Baku. Delegations have agreed on a reduced number of indicators to monitor progress in adaptation, narrowing down from around 5,000 initial proposals to a maximum of 100, to ensure a balance between global assessment and national details. These indicators, as outlined in Article 20 of the decision, will include both global indicators and other optional ones, leaving room for some national flexibility. Work on these indicators will continue until the COP30 in Belém, where the assessment methods will be refined.

Another central theme was the inclusion of means of implementation for adaptation, with a particular focus on financing. Although developed countries opposed specific adaptation targets in the new post-2025 global financing goal, the ‘enabling factor’ formula was ultimately adopted, recognising that funding is essential, but not the sole determining factor for progress, avoiding binding them to overly rigid conditions. There was also discussion on transformative adaptation, which involves radical changes in social and economic systems to address the root causes of vulnerability to climate change. Although there are still uncertainties about how to define this type of adaptation, COP29 recognised its importance. However, developing countries fear that the inclusion of transformative adaptation in the GGA may limit access to funds by imposing overly burdensome conditions. On the contrary, developed countries see this concept as an opportunity to more effectively allocate available resources.

Finally, the negotiation on National Adaptation Plans (NAPs), crucial tools for planning and implementing adaptation actions in vulnerable countries, was postponed to COP30, as no consensus was reached on the text in Baku. NAPs are crucial for monitoring progress in adaptation, and discussions on this topic will continue at the mid-term negotiation session in Bonn in 2025.

Carbon markets: a criticised agreement. During COP29 in Baku, progress was also made in the implementation of Article 6 of the Paris Agreement, which regulates carbon markets, instruments intended to drive emission reductions and promote international cooperation. Despite the progress, several issues remain, particularly concerning transparency and non-market approaches.

A key achievement was the refinement of the rules for Article 6.2, which regulates the bilateral exchange of emission units, known as ITMOs (Internationally Transferred Mitigation Outcomes). These credits represent CO₂ reductions that can be transferred between countries to meet national climate targets (NDCs). A two-tier system has been adopted: an international registry will track these transfers, linking to national registries and the central registry of the global mechanism. This will ensure greater traceability, but issues with transparency remain: although data checks are compulsory, there are no penalties for mistakes, and information is often published late, hindering real-time monitoring. Additionally, there was discussion about the flexibility of authorisations for ITMOs, particularly regarding the possibility of modifying the transfer conditions. The negotiators managed to reach a compromise, but the risks of inconsistencies remain.

Regarding Article 6.4, which establishes a global market for carbon credits, the transition from the previous Clean Development Mechanism (CDM) has been simplified, but this has raised concerns about the environmental effectiveness of credits from existing projects, which do not always guarantee real reductions. In addition, the new rules also allow the issuance of credits linked to CO₂ removal through technologies such as carbon capture and storage, but concerns have arisen regarding the permanence of these removals and their long-term effectiveness. The guidelines for these mechanisms are still not sufficiently clear, and other technical decisions, such as those related to monitoring methodology and the risks of reversibility in reductions, have been deferred to the Supervisory Body, an expert body that will start operating in 2025. Finally, progress on Article 6.8, which promotes non-market approaches, has been limited. A platform has been created to promote technological and political cooperation to reduce emissions, but developing countries have emphasised the need to measure the effectiveness of these solutions in contributing to national climate goals.

Little progress was made on solutions for vulnerable countries. There was no shortage of discussions on solutions for vulnerable countries, which are the most affected by climate change. Some countries such as India, Nigeria and the small island states of the Pacific expressed strong disappointment that COP29 did not make sufficient commitments to support countries at risk of disappearing due to sea level rise, destruction from extreme weather events, and other natural disasters. Even the call for a fund for climate reparations (to compensate for damage caused by climate change) did not receive the attention many had expected.

COP29: some progress made, yet it falls short. Focus now shifts to Brazil. COP29 made some progress, but the compromises were disappointing. The measures on emissions and the transition from fossil fuels were weak, and while the climate fund was increased, it is not adequate to tackle the crisis. In short, the conference highlighted how difficult it is to reach a global agreement that truly makes a difference. The focus is now on the COP30 in Belém, already dubbed the 'COP of COPs'. There, efforts will be made to address the issues left unresolved in Baku, such as the reduction of emissions and a real acceleration towards energy transition. However, the expansion of fossil fuel production in Brazil raises concerns about the compatibility between global climate goals and national policies. The next climate conference should be the turning point from promises to action, but the question remains: how much longer will it take to make the decisive step? And the answer, unfortunately, seems a long way off.