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The dust has settled on the climate negotiations. The Conference of the Parties to the UN Framework Convention on Climate Change (COP29) took place in Baku, Azerbaijan in November. The UN negotiations focused on climate finance goals and carbon markets. The negotiations overran, and the final outcome has been seen by many as an important and modest step forward, and a contentious compromise.
Climate finance goal agreed
Climate finance goal agreed
Finance was the focal point of COP29 which delivered a New Collective Quantified Goal (NCQG). Developed nations agreed to a financing goal of USD 300 billion a year to developing countries by 2035 to support their climate goals. This figure represents a tripling (in nominal terms) of the last goal agreed at the Copenhagen COP in 2019.
However, this amount falls far short of the USD 1.3 trillion required by 2035, according to research from the High-Level Expert Group on Climate Finance.1 In addition, it’s not clear how this amount will be raised and who will deliver the finance, which may prove problematic. For some nations, the type of finance – such as grants versus loans and the ease of access of the financing – is just as important as the amount.
Nonetheless, the fact that an agreement was reached on climate finance was viewed by some as an important, if modest, step forward. There were moments where it seemed that an agreement may not have been reached at all.
Carbon markets operationalized
Carbon markets operationalized
After almost a decade of negotiations, COP29 moved forward Article 6 of the Paris Agreement, covering the carbon markets. The rules around international, high-integrity government-backed carbon markets were agreed. This means that country-to-country trading and a carbon crediting mechanism is fully operational.
This carbon crediting mechanism identifies verifiable emissions reductions and can help in bringing funding for decarbonization, as well as reducing the cost of decarbonization.
Text removed on transitioning away from fossil fuels
Text removed on transitioning away from fossil fuels
One notable development at COP29 was the removal of wording about the ‘transition away from fossil fuels’. Opposition from several petrostates meant that this commitment was removed from the text, which had been hailed as one of the key outcomes from the final text of COP28 the year prior.
Nationally Determined Contributions (NDCs) to be updated by February
Nationally Determined Contributions (NDCs) to be updated by February
All 194 countries that have signed up to the Paris Agreement need to submit an NDC, which outlines how each country will reduce their emissions. The NDCs are submitted every 5 years, and they need to be more ambitious each time. The deadline to submit the next NDCs is February 2025.
The UK, Brazil and the United Arab Emirates (UAE) have revealed their targets ahead of the February 2025 deadline. The UK committed to an emissions reduction of at least 81% by 2035, compared to 1990 levels; Brazil between 59% and 67% by 2035 compared to 2005 levels; and the UAE aims to reduce emissions by 47% by 2035 compared to the 2019 levels.
It’s hoped that COP29 will encourage higher levels of country ambition ahead of the next submission round of countries’ climate plans. These NDCs need to create an enabling environment to invest and scale up climate finance. All eyes are on the NDCs to keep the Paris Agreement ambition of limiting global warming to 1.5 degrees alive.
Mitigation ambition in new and updated NDCs relative to initial NDCs
Mitigation ambition in new and updated NDCs relative to initial NDCs
![: Mitigation ambition in new and updated NDCs relative to initial NDCs. It’s hoped that COP29 will encourage higher levels of country ambition ahead of the next submission round of countries’ climate plans.](/mt/en/assetmanagement/insights/asset-class-perspectives/infrastructure/articles/key-takeaways-from-cop29/_jcr_content/mainpar/toplevelgrid/col1/textimage_copy/image.580.png/1737618509183.png)
Outside of the negotiations: focuses included clear climate policy; tripling renewables and doubling energy efficiency; adaptation and resilience; the just transition, and the role of private finance
One theme that emerged is that whilst the policy environment is generally supportive in many places for net zero, it’s still not enough. Investors generally welcome clear policy direction to provide some certainty for capital allocation and there is still more to be done on transition policies.
The 2024 Global Investor Statement to Governments on the Climate Crisis is an investor call for climate action, demanding a whole-of-government approach with policy implementation at all levels of government. 534 institutional investors managing more than USD 29 trillion in assets have urged the enactment of policies that will unlock the private capital flows needed for a just transition to a climate-resilient, nature-positive, net-zero economy.2
Last year’s COP set the goal of tripling global renewable energy capacity and doubling energy efficiency by 2030. Investments in the grid were emphasised as crucial in achieving this goal. Areas such as planning and permitting are also important in bringing renewable energy to the grid. Improving energy efficiency is a key focus, especially for sectors like real estate.
Adaptation and resilience is rising up the agenda. Physical climate risks are impacting our communities, cities and countries. Climate mitigation, or reducing emissions, usually dominates the conversation, but we need to be thinking about how to make changes to the way we do things in a changing world. Building the business case for investing into resilience and adaptation is an area that requires more focus.
Ensuring a Just Transition means greening the economy in a way that is as fair and inclusive as possible to everyone concerned, creating decent work opportunities and leaving no one behind.3 In addition, initiatives to enable climate finance to reach those that are most negatively affected by climate change and the transition to a low carbon economy are essential. Momentum around the just transition is growing.
Last but not least, an area that received a lot of attention was the role of private financing in achieving global climate goals. Public finance should seek to create the conditions to crowd-in private finance. In a challenging macro-economic environment and strained public finances, private capital is essential in unlocking the investments needed to reach net zero at speed and scale.
A step forward, but much further to go
A step forward, but much further to go
The outcome of the negotiations of COP 29 represents a modest step forward. COPs provide direction, send signals, and help steer the direction. Nonetheless, the macroeconomic and geopolitical backdrop presents a challenge to the implementation of net zero.
The publication of the NDCs in 2025 will be a test of commitment to net zero. Global emissions need to be reduced by 60% below 2019 levels by 2035. Much more action is needed on all fronts: consistent and strong policy signals, funding and investment from public and private sectors, alongside the mainstreaming of adaptation and resilience considerations.
Climate resilient development mitigates risks, creates sustainable growth, and reduces costs to the global economy in the long term, when done right. As we look ahead to COP 30 in Belem, Brazil, it’s essential that we continue to accelerate progress to a safer and prosperous future for all.
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