At the core of the largest COP29 agreement is $300bn of finance per year led by developed countries, with developing countries encouraged to contribute voluntarily. That is three times larger than the previous total, and represents a $50bn increase on the previous draft text, said to have been the product of 48 hours of intensive diplomacy by the COP29 Presidency. Beyond the $300bn figure is a much larger ambition to scale up a combination of public and private finance to reach $1.3tn/y by 2035. Together, these make up the so-called New Collective Quantified Goal on Climate Finance (NCQG).

COP29 President Mukhtar Babayev said: ‘The Baku Finance Goal represents the best possible deal we could reach. In a year of geopolitical fragmentation, people doubted that Azerbaijan could deliver. They doubted that everyone could agree. They were wrong on both counts.’

Is the COP29 NCQG figure large enough?   
Opinion differs about whether the agreed sum is sufficient. Ani Dasgupta, President and CEO of the US-based think tank World Resources Institute, reacted with muted positivity. He says: ‘Despite major headwinds, negotiators in Baku eked out a deal that at least triples climate finance flowing to developing countries. The $300bn goal is not enough, but is an important downpayment toward a safer, more equitable future. The agreement recognises how critical it is for vulnerable countries to have better access to finance that does not burden them with unsustainable debt. And it opens the door for a broader set of countries to contribute.’

‘The poorest and most vulnerable nations are rightfully disappointed that wealthier countries didn’t put more money on the table when billions of [lives] are at stake. According to leading economists, $300bn by 2035 does not meet the scale of what developing countries need to pursue a low-carbon economy and protect their citizens from mounting droughts, floods, and wildfires.’

‘This deal gets us off the starting block. Now the race is on to raise much more climate finance from a range of public and private sources, putting the whole financial system to work behind developing countries’ transitions.’

His nuanced reaction was echoed by commentators in the UK. For example, at the University of Exeter, Professor Peter Cox, Director of the Global Systems Institute, says: ‘It is absolutely fair that developing countries should receive money from the developed world to help them adapt to climate change. It seems that some progress has been made on that, but the sum agreed ($300bn/y) still falls well short of the climate change damages that developing countries suffer.’

On the other hand, Exeter Professor of Physical Geography Stephen Sitch adopts a more positive tone. ‘Given the geopolitical realities, the $300bn represents a foundation that can be built upon. Also, there is an important agreement on carbon markets which will open up further opportunities for expansion of nature-based solutions.’

What were the main carbon market developments at COP29?   
Sitch was referring to agreement on provisions in Article 6 of the Paris Agreement, which governs the international trade of carbon credits, upon which recent COPs have been unable to reach a consensus. Carbon trading has been a controversial part of the international response to climate change, with little trust in the efficacy of some schemes. According to the Environmental Defence Fund, Article 6.2 now covers the transfer of carbon between two countries (bilaterally). Trades from domestic systems or linked emissions markets can now be officially recognised, and those trades are reflected in their official decarbonisation plans. Transparency requirements, rather than a global watchdog, regulate the system.

On day one of COP29, countries agreed standards for a centralised carbon market under the UN Article 6.4 mechanism. The Paris Agreement Crediting Mechanism includes environmental and human rights protection, and the right of appeal by anyone affected by a project. The agreements also mandate that the carbon market supervisory body should consider the best available scientific evidence, according to an official statement by UN Framework Convention on Climate Change (UNFCCC).

The Environmental Defence Fund also pointed out that Article 6.4 covers the transfer of carbon credits from the older Clean Development Mechanism to the Paris Agreement Crediting Mechanism.

Reviewing Article 6 as a whole, it says: ‘Altogether these two mechanisms have the potential to lead to a marked improvement in carbon markets under the UNFCCC. However, much depends on two factors: progress on defining further several standards under Article 6.4, and the proper scrutiny of standards and approaches used under Article 6.2.’

In the organisers’ official press release, COP29 Lead Negotiator Yalchin Rafiyev commented: ‘Today, we have unlocked one of the most complex and technical challenges in climate diplomacy. Article 6 is hard to understand, but its impacts will be clear in our everyday lives. It means coal plants decommissioned, wind farms built and forests planted. It means a new wave of investment in the developing world.’

A scrum of participants at the COP29 closing plenary session in Baku, Azerbaijan 
Photo: UN Climate Change/Vugar Ibadov CC BY-NC-SA 2.0

What about loss and damage?   
Steps were also taken at COP29 to begin operations of the Loss and Damage Fund, intended to provide financial assistance to countries vulnerable to the impacts of climate change. Its establishment was agreed in COP27 in Egypt, and progressed at COP28. A board meeting held in Baku ahead of COP29 in September saw the appointment of a Senegalese-US banker, Ibrahima Cheikh Diong, as Executive Director for an initial four-year term.

At COP29, host country the Philippines signed an agreement with the Fund’s board. Other agreements between the Fund’s board and the World Bank were also signed.

To date, the total pledged financial support for the Fund exceeds $730mn. According to the COP29 organisers, the Fund will be able to finance projects as soon as 2025.

More reaction   
A dissenting view of the success of the event comes from the Least Developed Countries (LDC) Group negotiating for 45 countries across Africa, the Asia-Pacific and the Caribbean, whose joint population numbers over one billion people. It says: ‘The LDC Group is outraged and deeply hurt by the outcome of COP29. Once again, the countries most responsible for the climate crisis have failed us. We leave Baku without an ambitious climate finance goal, without concrete plans to limit global temperature rise to 1.5°C, and without the comprehensive support desperately needed for adaptation and loss and damage. This is not just a failure; it is a betrayal.’

It characterised the NCQG as a ‘glaring symbol’ of this failure. It, they said, ignores the needs of LDCs and SIDS [small island developing states] by offering no minimum allocation, lack of ‘meaningful support’ in loss and damage, and ‘weak and vague’ commitments for climate finance, whose lack of clear definitions ‘undermines transparency, leaving the door open for manipulation and inaction.’

Nick Wayth, CEO of the Energy Institute (EI), offered a wider assessment of the significance of this year’s achievement. He says: ‘It was great to be at COP to speak about the challenges of the global energy transition as well as gender diversity. In Baku, I saw first-hand the need for an inclusive approach to this process – so the progress made in increasing the availability of climate finance for vulnerable people around the world is very welcome.’

‘However, the Energy Institute’s Statistical Review of World Energy tells us that the world’s progress in the energy transition remains slow. Until we can reverse the trend of increasing global emissions – which in 2024 reached an all-time high of 40Gt CO₂ – more and more of the world’s population will be adversely affected by climate change.’

‘Independent, non-partisan organisations like the EI play a vital role in providing objective, unbiased and trustworthy information about the energy transition to governments, companies and individuals.’

UN Climate Change Executive Secretary Simon Stiell summed up the two-week-plus event in a short phrase: ‘It has been a difficult journey, but we’ve delivered a deal.’

He continues: ‘No country got everything they wanted, and we leave Baku with a mountain of work to do. The many other issues we need to progress may not be headlines but they are lifelines for billions of people. So this is no time for victory laps, we need to set our sights and redouble our efforts on the road to Belém [Brazil, hosts of COP30].’

‘Even so, we’ve shown the UN Paris Agreement is delivering, but governments still need to pick up the pace. Let’s not forget, without this UN-convened global cooperation, we’d be headed towards five degrees of global warming.’

‘But we are still a long way off course. Bold new climate plans on the way to Belém will be crucial to getting us back in the race. They must embed the targets we agreed in Dubai, including to rapidly ramp up renewables, transition away from fossil fuels, and transform societies, making them more resilient.’

Stronger national climate plans (Nationally Determined Contributions, or NDCs) become due from all countries next year. These new climate plans must cover all greenhouse (GHG) gases and all sectors, to keep the 1.5°C warming limit within reach. At COP29 two G20 countries – the UK and Brazil – signalled clearly that they plan to ramp up climate action in their NDCs 3.0. The UK’s plan is to reduce economy-wide GHG emissions by at least 81% by 2035, compared to 1990 levels, excluding emissions from international aviation and shipping. The Brazilian government said it would reduce net GHG emissions by 59% to 67% by 2035, relative to 2005.

Only 348 days remain until COP30 kicks off; time will tell what gets done by then.

• Further reading: ‘COP29 week 2: A mixed bag of debate, new initiatives and criticism’. Mixed messages have been coming from the first days of COP29 in Baku, Azerbaijan. Despite an agreement at last year’s COP conference to transition faster from fossil fuels, there was talk of a controversial ‘gas swap’ scheme being held by Azerbaijan. Nevertheless, there was a plethora of new initiatives, though nothing yet attention grabbing on levelling the Global North and Global South divide on the financial front. New Energy World Features Editor Brian Davis reports.
• ‘Global visions: International Energy Week debates the key factors impacting the energy transition’. With more than 30 sessions on energy scenarios, energy finance, making a just transition, technological innovation and electrification, International Energy Week 2024 covered lots of ground. One session in particular encompassed the widest possible scope, addressing the global energy situation and outlook.

MODIFIED 9/12 16:30 GST: Changed the currency of the $1.3trn/y figure from GBP to USD.