Money, mitigation and markets were key discussion points as COP29 in Baku, Azerbaijan entered the end game.
IEMA Deputy CEO, Martin Baxter, who has been in Azerbaijan since the start of the UK Climate Conference, said many negotiators were clearly frustrated at the slow progress during talks and a lackluster new deal that emerged.
A finance deal was eventually reached, but there remains a large gap between developed countries and developing countries about how much finance should be provided to help cut carbon emissions, enhance climate resilience and provide support for loss and damage.
Martin said: “The voting block of 77 countries, that includes China, India and a raft of developing countries, require $1.3 trillion per year by 2035 from public and private sources to finance climate action. An initial $250bn offer was raised to $300bn, but was insufficient to prevent the least developed countries and small island developing states from walking out of the talks on Saturday, before a compromise was eventually reached well into Sunday morning.”
In return, those 23 developed countries want to see “meaningful and ambitious mitigation and adaptation action, and transparency in implementation”.
Yet no monitoring or tracking of the Global Stocktake (see below) implementation has been agreed.
And there is still no plan of how to mobilise to that $1.3tr/yr. The development of voluntary carbon markets will help (see below) but this cannot be the sole solution.
Martin said: “The world will require substantial mobilisation of private sector finance to bridge this significant gap with figures suggesting 85% of the net zero transition is going to have to be paid for by the private sector.
“Another equally important consideration is the type of finance that is to be provided by developed countries, with the need for this to be grant rather than debt finance - which has been a significant proportion of the contribution since the Paris agreement.”
Before COP29 began, the UNFCCC Business and Industry NGOs (BINGOs) group had called for “a real catalyst for the mobilisation of private sector climate finance in developing economies”, but concluded that while there had been “some important steps forward” in tackling the prevailing barriers on the deployment of private capital, “this is not enough, and much work remains to be done”.
At the previous COP28 summit, the terminology used in the final deal to “phase-down” rather than “phase out” fossil fuels, was seen as a compromise.
Martin said: “One of the key areas of focus this time around was to accelerate deployment of the climate mitigation measures set out in the Global Stocktake, such as tripling renewables, doubling energy efficiency and phasing-down fossil fuels. Despite efforts from petro-states to row back on the agreement to phase down fossil fuels, this was unsuccessful.”
After years of wrangling, the rules for international carbon markets were approved at COP29, paving the way for more private sector finance and investment in climate action.
These standards against which voluntary carbon markets would function are an important step towards mobilising climate finance.
Martin said: “This is an important outcome of this COP summit and one that helps to complete the Paris rulebook. The creation of a credible carbon market that will mobilise private sector finance to support delivery of measures in the Global Stocktake is urgently needed, particularly given the slow progress of developed countries providing significant financial support.”
A key outcome to emerge late in the negotitaions was the removal of text from an earlier draft that reference the “durability of storage over climate-relevant time frames”, meaning “nature-based solutions” would have equal standing with negative emissions technologies, such as carbon capture and storage (CCS).
And finally, new Nationally Determined Contributions will be ratified at COP30 in Brazil next year – taking us through to 2035.
Martin said: “Each country must lodge their new NDCs by the end of February and this will be the acid test for the level of ambition on climate change over the next 10 years.”
“Crucially, we need to see NDCs also focus on implementation. One positive to emerge came from the next host country, with Brazil already submitted NDC referencing the need to focus on “training, education and capacity-building across different economic sectors” … and using revenue from a proposed Emission Trading Scheme to support “professional training for a sustainable economy” among other things.
“However on the flip-side to having an ambitious NDC, is the fact Brazil’s national oil company is investing the majority of $111bn of new investment in more oil and gas extraction.”
Each year, IEMA publishes a briefing note on the Conference of the Parties – IEMA’s Senior Policy and Engagement Lead for Climate Change and Energy Chloë Fiddy looks at the key topics on the agenda at COP29 in Azerbaijan later this month.
The key outcomes that IEMA would like to see from COP 29 include:
Acknowledgment that green knowledge is a prerequisite for green growth;
Recognition that green skills are a basic necessity, at all levels of the education systems and across the whole economy;
Agreements reached that mandate countries to develop appropriate workforce strategies to ensure the successful delivery of their biodiversity and climate change plans;
International commitment to submit and deliver vastly more ambitious Nationally Determined Contributions;
Transparent monitoring of carbon trading mechanisms to ensure their effectiveness; and
Globally equitable solutions on finance for mitigation, adaptation and loss and damage.
