Head of the UK’s negotiating party at COP29 was Alison Campbell. She described the NCQG agreed in Baku as ‘imperfect’. However, she complimented the new $300bn/y sum of public finance as being ‘similar in character’ to the previous figure of $100bn/y, in that developed countries retain overall responsibility for donation. She adds that the larger $1.3tn/y target now includes outflows from (multilateral development banks (MDBs), which brings in contributions of China, Saudi Arabia and others, and encourages bilateral voluntary contributions.

‘This was important to walk a line that was true to Article 9 of the Paris agreement’s obligations’, she said, while also recognising that the world has changed since 1992, and other countries should be making donations too.

Professor Lord Nick Stern, Chair of the Grantham Research Institute on Climate Change and the Environment, pointed out that the previous $100bn figure first emerged 15 years ago, at COP15 in Copenhagen. It was derived from negotiations he was involved in as UK negotiator, with negotiators for the African Union and the US. 

He recalls: ‘We had a number above $200bn and we wanted it to be public [finance], and for a medium-term target [as well in] 2015. During the course of discussions with [the US]…the numbers got changed to $100bn by 2020. And the words “and private” were added.’ 

He stressed that the $100bn/y figure explicitly included both government money and external finance, from the start, despite some statements to the contrary at COP29.

He went on to say, ‘It’s important to realise that this was a negotiated number, not what was necessary to deal with temperature goals.’ In fact, Stern has also been involved in what he described as a deductive process to determine the amount of investment required by geography and by sector to deliver on the Paris Agreement. (Those findings, by the Independent High-Level Expert Group on Climate Finance, were published during COP.) The figure, for emerging countries excluding China, was $400bn/y by 2035; so the present agreement fell short of that, but on the other hand, not so far off either.

Professor Stern went on to highlight two particularly significant aspects of the new deal relate to the non-private half of the $1.3tn goal for external flows by 2035. First is a much-enlarged role for MDBs, which make up a quarter ($325bn) of that total sum.

‘In a sense, although I’m not sure it’s sufficiently sunk in, the numbers that have been in large measure accepted at COP29 involve a quadrupling of the MBD flows by 2035, and a tripling by 2030,’ Prof Stern said. That is particularly significant for the developing world because of the benefit they offer in cost of capital; they can offer rates four times lower than the 20% or higher that many countries in the developing world are paying. And, Prof Stern asserts, it would be relatively inexpensive to implement, costing the UK a few hundred million pounds/year for eight or nine years. 

 
His second point related to the $325bn/y from ‘other sources’, which includes overseas development finance, voluntary carbon markets, special drawing rights, philanthropy and solidarity payments. ‘Those sources are something where we could work very strongly between now and 2030.’ In particular, he suggested a tax on maritime fuel and on jet fuel. ‘If you fly, jet fuel is untaxed and that is quite extraordinary,’ he observed.

Where did COP29 fall down?
On the other hand, fellow panellist Timo Leiter, Grantham Institute Distinguished Policy Fellow, said that other areas of COP were frustratingly unproductive. Although progress was made on a process to define indicators for targets for global adaptation agreed at COP28, there was no progress on national adaption plans, which were hampered by deeper political tensions. For example, there was the fate of a report about doubling adaptation finance, which developed countries agreed to do at COP26 in Glasgow. ‘On this matter, countries couldn’t even agree on a text that acknowledged the existence of the report,’ Leiter said.

Asked whether that kind of logjam meant that there was something wrong with the COP process itself, he replied: ‘What do we expect from COP? If it’s to solve the climate crisis, then COP cannot [do it]. The reason why we have a blockage, particularly on mitigation ambition, is that there are countries which don’t want to reduce their revenue stream from selling oil and gas. That’s the blocking issue. It’s not an issue of how COP is organised.’

He continued: ‘Even after adoption of the Paris Agreement, there were people saying, “Now we don’t need COP; we can shift to implementation.” But that doesn’t [reflect] how international law is created. All of these decisions on the global goal on adaptation (GGA) indicators, the GGA framework, they need a forum to [be] decided. COP is like a parliament to the Paris Agreement, and if the parliament doesn’t meet, we don’t make progress.’

Panellist Jodi-Ann Wang took a more pessimistic view. The Grantham Institute Policy Fellow focused on the ‘just transition’ element of COP – another area suffering a frustrating lack of progress in Baku, she reported. But as to the event as a whole, Wang observed: ‘I don’t think COP is the only place to solve the climate crisis, and really shouldn’t be, but also it’s a site where there’s so much power and politics involved, even in the sense of, how many negotiators can a country send, and how much are they stretched between the different agenda items to give them equal weight? That’s a material reality that we have to face. 

‘Looking at it from the just transition angle, we are trying to do just transition when there are so many inequalities at play, and we’re trying [to use] a consensus-building mechanism. Sometimes the power imbalance gets obscured in the negotiation process, and we have to be mindful of that.’
 

Still, Prof Stern, who has attended every COP since 2006, said the annual event has done a lot to deepen the understanding of the environmental problem we are facing. But he pointed out one fundamental limitation: that COP is a meeting of environment ministers. 

‘I have a deep respect for environment ministers, but that doesn’t mean that they carry the clout, the financial clout, and as we’ve seen in many of the discussions that I referred to, they don’t understand the finance numbers. We have to have arenas where finance ministers get together and try to make these things happen.’ He then went on to refer to the G20 – although that is quite an exclusive one, being limited to the top 20 world economies – as well as the Grantham Institute’s own Coalition of Finance Ministers on Climate Action, which has members of nearly 100 ministries around the world.
 

For the titled economist, environmental investment in the developing world is an aspect of sustainable development, which he defines as ‘growing and developing and reducing poverty in a way that’s very different from dirty, destructive models of the past. It’s about investment, and that’s where I think we have to keep everything focused.’
 

‘The move to a low-carbon economy will drive development and poverty reduction. If you have that perspective, then the driving force is within the developing world. They choose their own patterns of development. They create the climate for investment.’

‘What do we expect from COP? If it’s to solve the climate crisis, then COP cannot [do it]. The reason why we have a blockage, particularly on mitigation ambition, is that there are countries which don’t want to reduce their revenue stream from selling oil and gas. That’s the blocking issue. It’s not an issue of how COP is organised.’ - Timo Leiter, Grantham Institute Distinguished Policy Fellow
 

Who will lead the world towards net zero?
In terms of global leadership, it was acknowledged that the US took a back-seat role at COP29, since the US election went to President-elect Donald Trump, who has promised to pull out of the Paris Agreement. 

Asked what that might mean for COP, Stern replied by saying that could lead to a space for leadership. One that began to be filled by Keir Starmer at the beginning of COP29, with an opening statement and strong Nationally Determined Contribution (NDC).

On that point, Campbell said, that the UK seems to have adopted a helpful narrative, that, whatever happens as a result of the US election, acting at COP is in our national interest. ‘The more that narrative goes global, and others view it, the better, and hopefully it will become embedded.’

But as, Stern admits, the UK is a small country. Far more powerful a player is China, itself responsible for 32% of global carbon emissions from energy, according to the 2024 Statistical Review of World Energy. As it happens, China’s 15th five-year plan, covering the second half of this decade, will become clear during the course of next year. Those plans will have the greatest impact on climate, particularly if the country sets ambitious climate targets, he predicts. 
 

Also next year, he added, South Africa takes on the G20 after Brazil; along with India, which led it in 2023, the three countries form a kind of troika of powerful southern-hemisphere states. 
 

He concludes: ‘That’s enormously important because the leadership in this story should come from the developing world. And there’s a chance of building on Brazil’s presidency [of the G20], and COP30 and South Africa’s presidency of the G20 [next year], to see a leadership which is outside of the US and Europe.’

The webinar is available to watch in full, on YouTube, via the Grantham Institute website. 

• Further information: 'What did COP29 achieve for climate finance?' An overview of the results of COP29 on climate finance and carbon taxes, with positive and negative analysis
• Another perspective on the role of oil and gas in this process: 'Fossil fuel companies must become part of the solution instead of part of the problem'