Author: Ruari Phipps, Sustainability Consultant, Flotilla
COP29 has concluded, and reactions to the conference’s outcomes have been mixed, to say the least. While there were some positives—such as new pledges for action on methane, fossil fuels, and clean energy, as well as increased ambition in some nations’ NDCs—the prevailing sentiment is one of disappointment that the so-called “finance COP” failed to deliver sufficiently. This article highlights key outcomes from the conference and offers reflections from Flotilla on what this means for climate action moving forward.
1. $300 Billion a Year for Developing Countries by 2035
The second week of the conference focused on agreeing to a “new collective quantified goal” (NCQG) for climate finance. This outlines how much funding developed nations will raise for developing countries by 2035. At COP21 in Paris, the goal was $100 billion per year, a figure widely considered insufficient given that developing nations need trillions to transition to cleaner economies—$1.3 trillion annually, to be precise.
This goal is layered with complexity. Many developing nations have contributed very little to historical emissions and, as most are in the Global South, are the most climate vulnerable. Thus, climate finance is not just about supporting green development but also about high-emitting developed nations taking responsibility for the climate change they have caused and helping those nations facing its worst effects.
However, the new climate finance goal of $300bn per year by 2035 has left developing nations deeply disappointed, with some branding it “a joke” and some of the most climate-vulnerable nations walked out of talks, refusing to endorse the text. This represents a missed opportunity to ramp up ambition ahead of an uncertain geopolitical time period, where changes of government may see foreign support from the US and European nations falter.
The $300 billion will be raised through public funds, development-bank loans, and private finance mobilized by government spending from 23 developed parties, including the US, EU, and Japan. These nations are also pressing emerging economies like China to contribute and are looking to “public and private sources” to bridge the funding gap up to $1.3 trillion by 2035.
2. Global Carbon Markets Agreed
An agreement on global carbon trading was finally reached at COP29. The newly established “Paris Agreement Crediting Mechanism” (PACM) is being hailed as a game-changer. The vice-chair of the PACM described it as “the world’s first Paris-aligned crediting standard,” though some observer groups remain sceptical.
The PACM offers a global, transparent tool for organizations to contribute to reducing greenhouse gas emissions worldwide, potentially driving investment and ambition in international decarbonisation projects.
3. Loss and Damage
Climate-vulnerable nations also require help to recover from the aftermath of climate-related disasters, thus, at COP28, the ‘Fund for Responding to Loss and Damage’ was launched. The key debate at COP29 was whether to include loss and damage funding under the NCQG, which raised concerns that it might detract from finding nations willing to contribute directly to the fund.
At COP29 it was decided to keep loss and damage funding separate from the NCQG and several new pledges brought the fund’s total to $759 million. While this is far from adequate — Spain alone had to approve a €10.6 billion relief package for victims of the recent Valencia floods — it does represent some progress as the fund is now capitalised and ready to begin disbursement in January 2025.
4. New Pledges and Commitments
COP29 saw many new pledges and commitments, particularly around fossil fuels, clean energy, and methane:
· Fossil Fuels
o Twenty-five nations and the EU pledged to include “no new unabated coal” in their updated NDCs.
o The UK, Colombia, and New Zealand joined the coalition to phase out fossil-fuel subsidies, increasing the membership to 17 nations. However, progress among existing members has been minimal.
o For the first time, no new nations joined the ‘Beyond Oil and Gas Alliance,’ signalling challenges in phasing out oil and gas.
· Clean Energy
o Six nations without nuclear capacity joined 25 existing countries committed to tripling global nuclear capacity by 2050.
o The UK launched the Global Clean Power Alliance, aimed at supporting members in expanding renewable energy capacity and improving energy efficiency by 2030.
· Methane
o COP29 reinforced the urgency of tackling methane, with Ed Miliband emphasizing, “CO2 is the marathon; methane is the sprint.”
o The Global Methane Pledge now has 159 signatories aiming for a 30% reduction in methane emissions by 2030, though progress remains slow.
o Thirty nations committed to reducing methane from organic waste in their NDCs.
o UN satellite data revealed 1,200 major methane leaks in the last two years, with only 15 receiving responses.
o An additional $500 million in global grants raised total methane reduction funding to over $2 billion.
Overall Reflections
The outcomes of COP29 evoke a familiar frustration. Recent conferences have seen underwhelming national climate commitments, leaving the private sector to step up where governments have not. According to the World Economic Forum, the private sector controls more than $210 trillion in assets, but only a small portion is allocated to climate investments, but COP29 has now signalled the desire to leverage private climate finance. Therefore, the policies & incentives that developed national governments implement to catalyse this after this callout could create some great opportunities for the capital allocators in coming years.
While COP29 produced numerous pledges and some updated NDCs, it left many with a sense of disappointment. These conferences often seem unable to drive substantial action, however, there is a silver lining: the Climate Action Tracker has shown a significant reduction in end-of-century temperature predictions since the Paris Agreement at COP21, meaning the COPs do drive change. Every tenth of a degree matters, so it is key we keep seeing these predictions fall, and where governments fail to increase their ambition, the business community must take the lead in driving change.
Sources
Carbon Brief
Climate Action Tracker
