COP29, held in Baku, Azerbaijan, brought a mix of progress and obstacles in the global effort to combat climate change. While promising commitments, long-awaited frameworks, and raised ambitions offered hope, critical gaps remain that must be addressed.
A Step Forward in Climate Finance
One of COP29’s major achievements was the $300 billion annual pledge by 2035 to address gaps in climate finance. Simplified access to funding and a 2028 tracking mechanism were introduced to improve accountability and transparency. However, the pledge still falls far short of the $1.3 trillion experts say is needed annually. There are also concerns about the reliance on loans over grants, which could increase the debt burden for nations already struggling with the impacts of climate change.
The Loss and Damage Fund pledged $759 million annually to support nations most affected by climate disasters. While this builds on earlier commitments, it falls drastically short of the $580 billion required by the nations most affected annually. Issues such as unequal fund distribution under the Warsaw International Mechanism further raise concerns about whether the most vulnerable countries will receive the help they need.
Carbon Trading Rules Finally Agreed
After more than a decade of debate, COP29 delivered clear rules for international carbon markets under Article 6.2. These rules aim to ensure transparency and environmental integrity for bilateral and multilateral trading. A UN-supervised market under Article 6.4 was also launched, replacing the Kyoto Protocol’s Clean Development Mechanism with stronger safeguards and accounting standards.
Despite these achievements, the new system faces challenges. Operational details remain unclear, key disclosures are still voluntary, and there is a risk that low-quality offsets could undermine real emissions reductions. The success of these mechanisms will depend on whether they can avoid creating loopholes that weaken national climate efforts.
Countries Set Higher Targets but Face Barriers
Countries like the UK, Mexico, and Canada announced more ambitious climate targets, aiming to keep the world on track toward the 1.5°C goal. Initiatives like the Global Clean Power Alliance promise to boost international cooperation, and sector-specific strategies could help key industries decarbonise faster.
But these announcements came without detailed plans for implementation, creating uncertainty about how these goals will be achieved. Funding mechanisms remain vague, and without a clear strategy for transitioning away from fossil fuels, there are serious doubts about whether these commitments can deliver the long-term progress needed.
The UK Sets Ambitious Targets
The UK unveils an ambitious 81% emissions reduction target by 2035, compared to 1990 levels. This builds on significant progress, with the country already halving emissions since 1990.
The UK also launched major initiatives, including the Climate Investment Funds’ (CIF) new Capital Market Mechanism will issue investment-grade bonds, listed on the London market, to raise $75 billion in finance for renewable energy projects in developing nations. Domestically, the creation of Great British Energy, a state-owned clean energy company, aims to boost investments in wind, solar, and nuclear energy while creating green jobs. Co-leading the Global Clean Power Alliance with Brazil further reinforced the UK’s role as a global leader in clean energy innovation.
Looking Toward COP30
With COP30 in Belém, Brazil, the focus will shift to addressing unresolved issues and advancing progress made at COP29. The Baku to Belém Roadmap will be key to scaling up climate finance, with enhanced frameworks for private sector contributions and innovative funding mechanisms expected to play a central role in bridging the $1.3 trillion gap.
Strengthening Nationally Determined Contributions (NDCs) will be a priority, requiring countries to align their policies with climate resilience and emissions reduction goals. A clear plan to phase out fossil fuels, long delayed, will need to take centre stage, while the Amazon’s critical role in global climate stability will add urgency to discussions around deforestation, reforestation, and sustainable development.
What COP29 Means for Business
COP29’s $300 billion annual climate finance target falls short of the $1.3 trillion needed, placing increasing responsibility on businesses to close the funding gap through loans, investments, and carbon credits. Additional measures, such as reducing fossil fuel subsidies and taxing high-emission industries like aviation and shipping, are being considered to supplement these efforts.
The Article 6.2 framework introduces opportunities for businesses to trade UN-certified carbon credits, opening new revenue streams for climate action projects. This is especially significant for businesses in the Global South, where such mechanisms could unlock funding potential of up to $1 trillion by 2050.
Clean electricity now accounts for over 30% of the global energy mix, driven by substantial growth in solar energy (23%) and wind generation (10%) in 2023. To sustain and accelerate this progress, public-private partnerships must be strengthened, enabling businesses to lead the clean energy transition and drive decarbonisation at scale.
