Key Outcomes and Challenges from COP29: Advancing Climate Finance, Carbon Markets, and Global Cooperation
COP29 was held from Monday, November 11, 2024, to Friday, November 22, 2024, in Baku, Azerbaijan. The summit focused on the urgent need for global climate action, with over 65,000 leaders, decision-makers, private sector representatives, and civil society members in attendance. As 2024 is predicted to be the hottest year on record, and with extreme weather events costing billions in damages, COP29 emphasized the need for immediate and large-scale action to address the climate crisis. This year’s summit saw climate finance and carbon markets take center stage, as efforts to mobilize funding and create effective market mechanisms progressed.
Key Takeaway 1: New Global Climate Finance Target
One of the most significant outcomes of COP29 was the agreement on a new global climate finance target. Negotiators set a goal of mobilizing $1.3 trillion per year, with $300 billion to be delivered by developed countries. This target builds on the previous commitment of $100 billion per year, though it still falls short of the financial needs of developing nations, especially those most vulnerable to climate impacts. The emphasis was on ensuring that financial commitments translate into real, on-the-ground action, with private sector involvement being critical to meeting these targets.
Key Takeaway 2: Carbon Market Architecture (Article 6)
COP29 made significant progress in operationalizing the carbon market mechanisms outlined in the Paris Agreement’s Article 6. The summit clarified how countries will authorize carbon credit transactions and manage tracking registries, creating a more transparent and structured framework for carbon markets. The centralized carbon crediting mechanism (Article 6.4) now includes mandatory safeguards to protect both the environment and human rights, including the informed consent of Indigenous Peoples. These steps are essential for building functional carbon markets that can help meet global emission reduction targets and mobilize the necessary finance.
Key Takeaway 3: Ambitious and Investable Nationally Determined Contributions (NDCs)
A major focus at COP29 was encouraging countries to enhance their Nationally Determined Contributions (NDCs) and make them more ambitious, investable, and equitable. As the deadline for updating NDCs approaches in 2025, many nations, including the UK and Brazil, presented more ambitious emission reduction targets. The goal is to establish credible plans that not only meet global climate goals but also attract private sector investment. To achieve this, it is vital that governments translate these plans into stable, long-term policies that are credible and investable in the eyes of the private sector.
Key Takeaway 4: Fossil Fuel Transition Challenges
Despite the growing calls for transitioning away from fossil fuels, COP29 saw no binding commitments on phasing out fossil fuel subsidies. These subsidies remain one of the biggest barriers to decarbonization, as they distort energy markets and hinder the adoption of cleaner alternatives. Without clear timelines and mechanisms to phase out these subsidies, achieving global decarbonization goals will remain difficult. This issue will need to be addressed in future COP negotiations, especially by 2025.
Key Takeaway 5: Scaling Climate Finance and Attracting Private Sector Investment
While the new climate finance target represents a significant increase over previous commitments, scaling and disbursing climate funds remain major challenges. Attracting private sector capital will be essential to meet these financing targets. The challenge will be to ensure that the financial commitments made at COP29 lead to a project pipeline that results in real-world action, particularly in developing nations. If these challenges are not addressed, the momentum from COP29 risks waning before COP30.
Key Takeaway 6: Linking Climate Action with Nature
At COP28 in Dubai, nature-based solutions were emphasized as key to both mitigation and adaptation efforts. However, at COP29, there was less emphasis on linking biodiversity with climate action. Nature-based solutions and the integration of biodiversity into climate strategies were less prominent, leaving COP30 to take up this critical issue and strengthen the connection between climate action and nature protection. This will be crucial for achieving a comprehensive, integrated approach to addressing climate change.
Key Takeaway 7: Energy Transition and COP28 Energy Pledges
Despite efforts from Brazil and other parties to push the energy transition agenda forward, COP29 failed to make significant progress on meeting COP28 energy pledges, including the goal of tripling renewable energy capacity by 2030. There was also no explicit mention of phasing out fossil fuels. Moving forward, collaboration between governments and the private sector will be essential to translate energy targets into actionable, implementable plans at the national and sectoral levels. The future COPs must focus on removing barriers to renewable energy projects, such as shortening permitting times, boosting grid readiness, and securing finance for projects in developing countries.
What Didn’t Move Forward? While COP29 marked progress in many areas, several critical issues remain unresolved:
- Fossil Fuel Transition: The failure to agree on binding commitments to phase out fossil fuel subsidies remains a major challenge.
- Scaling Climate Finance: While a new climate finance target was set, the mechanisms for scaling and disbursing funds remain unclear, particularly in attracting private sector capital.
- Linking Climate Action with Nature: The integration of biodiversity and nature-based solutions into climate strategies was not as prominent as in previous years, leaving COP30 to take up this challenge.
- Energy Transition Commitments: There was no explicit reference to phasing out fossil fuels, and progress on the COP28 energy pledges was limited.
Looking Ahead: The year 2024 proved pivotal, with COP29, COP16 for biodiversity, and COP16 for desertification aligning to offer a unique opportunity for integrated climate action. Nations will update their NDCs before COP30, and the COP process itself needs reform to ensure that it can effectively address the climate crisis with the necessary urgency and scale. The World Economic Forum in Davos, Switzerland, will serve as the first major platform for public-private collaboration post-COP29, providing an opportunity to transform summit outcomes into actionable initiatives.
COP30, scheduled for Belém, Brazil, will build on COP29’s progress and address the unresolved issues. Brazil’s role will be key in setting the tone for climate ambition, and the next round of NDCs, due in mid-February 2025, will be crucial for shaping future climate negotiations.
