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International climate negotiations will begin in Baku on 11 November. COP29 is being dubbed as the ‘finance COP’, with countries needing to set a new global target to mobilise as much as $1 trillion per year of climate finance to developing countries. Ahead of COP30 in Brazil, a key moment for global climate ambition, Baku will signal whether countries are serious about ramping up their own national emissions targets in a tense geopolitical environment.
Despite the relative success of last year’s summit in the UAE, doubts linger about the future of the COP process and its ability to drive meaningful change. COP29 is expected to be a smaller affair this year, after the record attendance in Dubai and New York’s high-profile Climate Week. This may lead to more focused negotiations but also signals a loss of momentum particularly since COP26 in Glasgow. As in Dubail last year, the Conference will take place against a backdrop of geopolitical instability and political fragmentation.
In a year of elections, the politicisation of climate issues at the ballot box across the world has removed COP from global headlines, with politicians cautious about making new green commitments. COP29 will be overshadowed by the US Presidential election taking place just six days before. The outcome will determine the US involvement at Baku and distract world leaders. Persistent issues such as Ukraine and the Middle East will also continue to divert attention.
In the UK, the new Labour government is keen to reclaim its status as a global climate leader. The Energy Secretary of State Ed Miliband will personally lead the UK’s negotiating team (in the previous Government it was largely left to junior Ministers) and is in New York this week drumming up support. Foreign Secretary David Lammy has framed climate change as central to UK foreign policy and the UK has appointed a new Special Representative on Climate and Nature. However, the UK’s own climate finance commitments are unlikely to be set until the Spring Spending Review.
Looking ahead to Baku, questions remain around the strategic focus of the Azeri Presidency with concerns that its oil and gas connections have undermined momentum. The Presidency is prioritising less contentious areas like clean technology innovation, with limited emphasis on accelerating the energy transition. Perhaps reflecting a concern around lack of momentum, the Presidency is also working closely within its ‘troika’ alongside Brazil and the UAE to show that there is a post-COP29 pathway to Brazil.
The Presidency’s 'action agenda' includes priorities such as a sixfold increase in battery storage capacity, large expansions to electricity networks and cuts in methane emissions from organic waste – all relatively uncontentious. Language around the ‘phasing out’ or ‘phasing down’ of fossil fuels is conspicuous in its absence. The COP President Mukhtar Babayev has however set out a plan to mobilise private finance from fossil fuel producing countries and companies into a voluntary Climate Finance Action Fund (CFAF). He hopes to launch the fund with contributions from the state oil company Socar at COP29.
Climate Week 2024 currently taking place in New York, is likely to generate more private sector commitments than COP29 itself. Many businesses are sending fewer attendees and less has been done in advance to line-up major collective agreements from the private sector.
Climate finance
The key measure of success for COP29 will be on the vexed issue of climate finance. Under the Paris Agreement, countries need to agree a ‘New Collective Quantified Goal’ (NCQG), setting the ambition for climate finance mobilisation for developing countries post-2025. This replaces the 2009 target of $100bn annually, which was only met in 2022. There is now real concern around the ability to scale finance at pace. Interim talks in Bonn illustrated that both agreeing on the NCQG and national commitments will be challenging, particularly in view of fiscal constraints faced by developed nations. No consensus exists yet on the dollar amount or timeline, with countries like India and Saudi Arabia pushing for $1 trillion annually by 2030. The debate around which countries are classed at donors also persists.
Nationally Determined Contributions (NDCs)
Countries are required to submit revised NDCs setting out how far they plan to reduce national emissions by 2035 ahead of COP30 in Brazil. There is a chance that some countries will choose to move more quickly and signal at least a high-level ambition for 2035 at COP29. This includes the UK, where Ed Miliband has tasked the Climate Change Committee to advise on the UK’s 2035 target, with recommendations expected in late October. While this timing may not allow for a detailed submission, a provisional target could be announced. The Presidency Troika – UAE, Brazil and Azerbaijan – are expected to present more detailed enhanced targets at the summit.
There was originally a hope that COP29 could build on the commitment at COP28 that countries would ‘transition away from fossil fuels in a just and equitable’ way to reach net zero emissions by 2050. But there has been little evidence thus far that the Azeri Presidency will look to materially strengthen this ambition.
Article 6
Article 6 of the 2015 Paris Agreement enables countries to trade carbon credits in order to meet their NDCs. It also seeks to establish a new international carbon crediting mechanism, with regulatory oversight to prevent double counting and dodgy credits. The implementation of Article 6 has met significant challenges in recent years, with protracted debates on how to grapple with the varied reliability and integrity of carbon markets, and the ability of these mechanisms to drive real emissions reductions. COP28 saw the breakdown of Article 6 negotiations around bilateral carbon trading and the establishment of a global carbon trading mechanism. COP29 will be a key juncture for pushing towards tangible progress in this area following major setbacks.
Loss and damage
Intense political debate continues on how the long-promised Loss and Damage Fund, established at COP28, will interact with the NCQG. With key governance structures now established, COP29 will focus on operationalising the Fund. This will include how best to scale-up contributions and whether and in what form private finance should be involved. Guidance around private sector participation in loss and damage remains limited so there is little precedent to build on. COP29 may also further debate on how to effectively deploy and grow funds available for adaptation, given the growing focus on this in many national policy programmes.
We saw in Dubai last year, when negotiations were on the brink of collapse, that however challenging the context heading into a COP, progress can be made. The geopolitical backdrop and politicisation of the green agenda this year make the context for COP29 perhaps even more challenging, but not impossible.
The Azeri Presidency benefits from limited expectations for COP29, aside from setting the New Collective Quantified Goal (NCQG) on climate finance. The main focus remains on COP30 in Brazil. Failure to establish even broad ambitions on climate finance would damage the COP process, erode trust with developing nations, and lower NDC ambitions for 2025. Whether this can be avoided remains in the balance.
This blog was written by Alice Coffey, Josh Buckland and François-Joseph Schichan. Alice is a consultant that supports clients on energy, sustainability and ESG issues. Josh is partner and lead of the sustainability and ESG team at Flint, he works across the UK, European and international markets. François-Joseph advises clients on geopolitics and European affairs across a range of sectors, including financial services, energy and digital. To further discuss the analysis of this blog or any questions, contact us here.