What to expect from COP29

The outcome of the UN Climate Change Conference COP28 in Dubai in December 2023 was hailed by many as historic. Almost 200 nations agreed on a roadmap for “transitioning away from fossil fuels.” UN Climate Change Executive Secretary Simon Stiell urged to convert the agreement into action: “Now all governments and businesses need to turn these pledges into real-economy outcomes, without delay.” 

Intense preparations are expected to lead to concrete results at COP29 in Baku, the capital of Azerbaijan, from November 11 to 22. Although the country is a major oil producer, it is suffering itself from impacts of global warming and has made “green growth a priority for Azerbaijan for the decades ahead,” says Mukhtar Babayev, Minister of Ecology and Natural Resources and President-Designate of the world’s largest and most important climate change conference. 

His ambition is to use the event as a springboard to “demonstrate how the country turned the economy to the green direction.” In a letter to the United Nations Framework Convention on Climate Change (UNFCCC), Minister Babayev set out his presidency’s priorities and work plan based on the two pillars of “enhancing ambition” and “enabling action” in order to turn the vision “In Solidarity for a Green World” into reality. 

While Babayev called on all parties “to strive for the highest possible ambition,” he also stated clearly: “Our top negotiating priority is agreeing a fair and ambitious New Collective Quantified Goal on climate finance (NCQG) adequate to the urgency and scale of the problem, taking into account the needs and priorities of developing country parties.” 

The NCQG was introduced in 2009 when developed countries agreed to collectively mobilize US$100 billion annually by 2020 for climate action in developing countries. The goal was finally met in 2022, when US$115.9 billion were raised. A new NCQG is to be agreed at COP29 and negotiators not only have to increase the total amount of climate finance by a large margin, but also specify the timeframe and terms of its provision, what the finance will support, how it will reach the communities that need it most and how climate finance will be measured. 

First rounds of negotiations showed the parties far apart. The Independent High-Level Expert Group on Climate Finance says that emerging markets and developing countries, excluding China, need to invest up to US$2.4 trillion a year by 2030 to meet climate and nature goals. But estimates vary widely: The Intergovernmental Panel on Climate Change, for instance, speaks of a range from US$5-9 trillion. 

While it is widely understood that the floor of US$100 billion is insufficient, there is no agreement how much should be provided and by whom. Currently, only countries that were classified as developed in 1992, when the UNFCCC was signed, need contribute to climate finance for the developing world. But the world has changed enormously since then. China, for instance, is now the world’s biggest emitter by far – and also the world’s second largest economy. Yet, China and other countries that have significantly improved their economies over the past few decades carry no obligations under the UNFCCC. Thus, the G7, an informal forum of the world’s leading economies, are calling on China, Saudi Arabia, South Korea and others to contribute to climate financing. But both sides are far apart: After the most recent round of talks in late August failed to reach agreement the UN published a document suggesting seven options. While developed nations claim that tight fiscal spaces make huge increases in public funding unrealistic, vulnerable and developing countries want to go far beyond the current US$100 billion-goal. 

One option, reflecting the Arab countries’ position, sets out a target for developed countries to provide US$441 billion each year in grants, combined with an aim to mobilize a total of US$1 trillion in funding from all sources, for the period 2025-2029. Meanwhile, the EU is pushing for a global climate-funding target of more than US$1 trillion each year to which China should also contribute, a demand Beijing still rejects. 

Despite the differences Minister Babayev said: “We have come a long way.” As a contribution Azerbaijan launched the Climate Finance Action Fund (CFAF). The facility will serve as a vehicle to channel investments to developing countries and will be capitalized with contributions from fossil fuel producing countries and companies. CFAF will become operational at the conclusion of an initial fundraising round, which seeks to raise US$1 billion, and once 10 countries have committed to becoming shareholders. 

Tied closely to the outcome of the climate finance negotiations is the debate on how to fill and formalize the setup of the Loss and Damage Fund agreed at COP28. It was established to provide crucial support to vulnerable nations facing climate-related challenges. The COP29 presidency seeks progress: “Particularly in Small Island Developing States and Least Developed Countries mechanisms for financial support are essential, and we must act without delay,” Minister Babayev wrote. 

Another important topic at COP29 will be the finalization of efforts to make Article 6 of the Paris Agreement operational. Under this provision, countries are able to transfer carbon credits earned from the reduction of greenhouse gas emissions to help one or more countries meet their climate targets. However, no breakthrough has been reached yet to implement the mechanism. In his letter, Minister Babayev spoke of a “long overdue priority.” 

The conference in Baku is also expected to prepare the groundwork for the renewal of the National Determined Contributions (NDCs), each country’s individual climate action goals, which are due on February 10, 2025. At COP28 last year almost 200 nations recognized the outcome of the Global Stocktake which called for “deep, rapid and sustained reductions in greenhouse gas emissions” in line with the 1.5°C climate target. But action has yet to be taken. 

The Global Stocktake also showed that climate adaptation efforts are not on track. Countries are supposed to have National Adaptation Plans in place by 2025 and progress their implementation by 2030. The COP29 presidency has called on developed countries to “at least double adaptation finance by 2025” and underlined the “urgent need for continued and increased contributions to funds,” including the Green Climate Fund and the Adaptation Fund. 

Expectations for Baku are centred on one thing though: “It’s finance, finance, finance,” says Nigel Topping, who represented Great Britain at COP26 in Glasgow in 2021. “We’ve really focused on NDCs and they are nice, but you can’t invest in an NDC. Every COP from now on is a finance COP.”