COP29: What's the buzz this year?

Over 65,000 world’s leaders, decision-makers, private sector organisations and civil society members gathered once again at COP29 in Baku, Azerbaijan to tackle one of humanity’s greatest challenges: climate change. At the heart of this year’s talks was the question of climate finance—particularly mobilising and allocating funds for the necessary work. Let’s dive into some of the key outcomes from COP29 and explore what was agreed.

3 TAKEAWAYS FROM COP29: 

🎯 Ambitious Nationally Determined Contributions (NDCs)

Countries are under increasing pressure to step up their climate efforts and set clear goals for the next round of national climate plans. With the deadline to update these plans, known as Nationally Determined Contributions (NDCs), set for February 2025, nations are being urged to make their commitments more ambitious, investable, credible and equitable.

This involves setting stricter emissions reduction targets and following through on promises made at previous climate summits, such as phasing out fossil fuels and tripling renewable energy capacity by 2030.

At COP29, the UK, UAE and Brazil were praised for already revealing new NDCs and stronger emission reduction targets. Businesses, including the Alliance of CEO Climate Leaders, emphasised the need to turn these goals and plans into stable long-term domestic policies that encourage private sector investments.

Meeting these challenges is essential to keep global climate progress on track.

🏭 Developing Global Architecture for Carbon Market

One key milestone was the finalisation of rules for international carbon markets under Article 6 of the Paris Agreement, a framework nearly a decade in the making. This agreement establishes a global system for countries to trade carbon credits.

In simple terms, carbon credits are earned through projects like planting trees or building wind farms in lower-income countries, with each credit representing one metric ton of emissions reduced or removed from the atmosphere. Countries and companies can purchase these credits to support their climate goals.

The newly adopted rules create two different types of markets. The first – known as Article 6.2 – regulates bilateral carbon trading between countries as well as private sector companies, while Article 6.4 creates a global crediting mechanism for countries to sell emissions reductions. Article 6.4, also known as the Paris Agreement Crediting Mechanism — identifies and supports verifiable emission reduction projects and helps draw funding needed to implement them.

The progress made on Article 6 during COP29 is a major step toward functional carbon markets, which are vital for achieving the Paris Agreement’s emissions reduction targets and unlocking critical funding.

As Simon Stiell, UN Climate Change Executive Secretary, said, “We are a long way from halving emissions this decade, but wins on carbon markets here at COP29 will help us get back in that race.”

🏦 New Collective Quantified Goal (NCQG) on Climate Finance

The final COP29 finance deal included an agreement by wealthy nations to provide “at least” $300 billion annually by 2035 to help developing countries deal with the effects of climate change. This pledge is an upgrade from the $250 billion first proposed during negotiations and builds on an earlier promise made way back at COP15, where wealthier countries committed to giving $100 billion annually to climate-vulnerable nations by 2020. (For context, they finally hit that $100 billion target—but only in 2022, two years late.)

This deal hasn’t exactly been welcomed with open arms. Many environmental groups and vulnerable nations think it’s not enough. Chandni Raina, part of the Indian delegation, put it bluntly: the deal won’t come close to solving the massive challenges these countries face.

And they might have a point. Experts say the actual cost of meeting global climate, development and mitigation goals could be closer to $1.3 trillion per year, necessary by 2035. Compared to that, $300 billion feels more like a drop in the bucket than a real solution.

It raises a big question: if the world knows what’s needed to tackle climate change, why are we still falling short?

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I also recently listened to the "Reflections from COP29" episode of the ERM Sustainable connections podcast It offers interesting insights into the substantial implications of COP29 outcomes for the business community! Highly recommend checking it out—Click here to listen.

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