Energy Buzz: COP29 I $300bn of climate finance a year… but is it enough | a new carbon trading market | the road from Baku to Belém

The "finance COP"

The big headline is that a new collective quantified goal (NCQG) has been agreed at COP29.  Under the deal agreed by almost 200 countries, wealthy nations committed providing “at least” $300bn in climate finance by 2035 to help developing countries cope with climate change. This is accompanied by a somewhat vague goal that "all actors" should scale up public and private funds to reach at least $1.3tn by 2035.  

Prior to the conference, countries agreed that the figure had to be more than the current goal of $100bn per annum, but the road to the deal was bumpy: there were heated negotiations, loud expressions of disappointment and frustration from developing countries when the deal was announced (who calls for developed countries to raise at least $500bn of climate finance each year), and extended discussions about how high-emitting countries that are not defined as "developed nations" by the UN should contribute to climate finance – ultimately, their contributions remain voluntary.

While progress may seem modest, this deal marks another step forward in the march towards a clean energy future.

Carbon credit trading

COP29 finally reached an agreement on carbon trading under Article 6 of the Paris Agreement. This means all elements of the Paris Agreement have been agreed, after nearly 10 years of negotiations.

The rules governing country-to-country trading under Article 6.2, as well as a new international carbon market under Article 6.4, are now more or less complete.

Under the Paris Agreement, countries can use carbon credits to meet their Nationally Determined Contributions (NDCs) by trading "Internationally Transferred Mitigation Outcomes" through bilateral agreements. This mechanism is largely in operation but further rules were agreed to identify and authorise carbon credits by countries. However, the rules on implementation require further development as transparency and accountability are lacking. Under Article 6.4 a separate system was agreed for other carbon credit trading, including a 5% levy for adaptation projects and protections for Indigenous peoples.

The road from Baku to Belém, via Washington

Negotiations in Baku were impacted by the re-election of Donald Trump, who has promised to roll back climate action and take the world’s biggest historical emitter out of the Paris Agreement once again. The next year promises to be turbulent for climate action, with increasingly divergent political outlooks on green energy and the value of multilateralism.  

During COP29, countries failed to reach an agreement on how the outcomes of last year’s “global stocktake”, including a key pledge to transition away from fossil fuels, should be taken forward. Countries remain deeply opposed about how the pledge is worded and shunted the decision on how to deliver meaningful outcomes to COP30 which will take place next year in Brazil. A new initiative was announced, the “Baku to Belém Roadmap to $1.3tn”, under which a report on the wider climate action fundraising will be produced at next year’s COP30 in the rainforest city of Belém.

COP29 wasn't the "placeholder COP" that was threatened, and the build-up to COP30 in Brazil begins now.

Keep an eye out for more detailed insights on COP29 in the coming days.    

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Authored by Amy Cleaves