Takeaways from COP29

While there were disappointments, there was much cause for celebration too

Two major global events took place last month: the G20 Summit in Brazil and the 29th Conference of the Parties (COP29) to the UN Framework Convention on Climate Change in Baku, Azerbaijan. Catalysing finance to address climate change was a central theme at both events. The deal reached in Baku, though hard-won, falls short of expectations.

To be fair, the expectations for climate finance were never easy to meet. Assessments had shown that developing countries need $1.3 trillion per year through 2035 to build infrastructure for adapting to climate change; investing in clean energy, land use, and urban development to reduce greenhouse gas emissions; and recovering from disasters. This amount was to come from the 24 high-income countries listed in Annex I of the UNFCCC. Given the outlook of slow economic growth, green investments required in their own territories, and the likelihood of the U.S., which accounts for half of cumulative federal spending, pulling back, there was little appetite for a significant commitment.

The biggest disappointment, however, is that even the small commitment made — $300 billion per year — does not come entirely from public finance, but from sources including Multilateral Development Banks, carbon markets, and private finance. It is recognised that private finance tends to flow to economies where returns are commercially attractive, and it can easily shift back to advanced economies when conditions change. This creates uncertainty about whether emerging economies will see much benefit. Even larger economies like India are unlikely to get adequate resources for priorities such as adaptation.

Business at the COP29 summit in Azerbaijan

• Reflections on Baku’s ‘NCQG outcome’

• Rethinking ‘representation’ for a meaningful COP30

• Local action amidst global inertia

That said, there were significant victories as well. The set of agreements on carbon markets concluded a decade of negotiations. While bilateral carbon credit deals between countries had been taking place under Article 6.2 of the Paris Agreement, COP29 clarified the procedures for authorising these credits, their transferability between registries, and the standards needed to ensure their environmental integrity. This prevents credits from being revoked and investment getting stranded. A bigger win was the move towards implementing a global carbon market under Article 6.4, with several procedural rules agreed upon. The swift adoption of these rules by individual countries is crucial to launching this market, which will help direct capital towards the most efficient emission reduction projects worldwide. India is likely to be a major beneficiary in this regard.

Other positive outcomes included new emission reduction pledges from the European Union, Canada, and other regions. Many nations committed to propose steeper 2035 targets in their revised Nationally Determined Contributions than their current commitments. The U.K. and Brazil have announced their updated targets, while Norway is consulting on its own. Mexico, under the leadership of climate scientist Claudia Sheinbaum, became the latest major economy to announce a goal to reach net zero by 2050. At the G20 Summit, Indonesian President Probowo Subianto unveiled an ambitious plan to retire all coal and fossil fuel-fired plants by 2040. This is significant, as Indonesia is the largest exporter and third-largest consumer of coal globally. It also highlights that the focus on coal is back — a challenge that India staved off in previous COPs in order to ensure that the focus remained on all fossil fuels. The lack of progress on the “phase-out” of all fossil fuels at both COP29 and the G20 Summit is a cause for concern.

Should we acknowledge that the battle to limit global temperature rise to 1.5°C has likely been lost, and adopt a more realistic target? A study released before COP29 indicated that the world was already 1.49°C warmer than pre-industrial levels by the end of 2023. Another suggests that there are still pathways to reverse temperature rise within the 1.5°C limit, even with a temporary overshoot. But this would require the removal of several hundred gigatonnes of carbon using untested carbon removal technologies. At present, large-scale investment in these technologies is not being seriously discussed. Despite this, the 1.5°C goal remains a key leverage point for developing countries, which use it to push for more financial support, and for large economies to take more aggressive steps to cut emissions. There are pros and cons to abandoning the 1.5°C target. It deserves serious thought.

Sumant Sinha is the founder, Chairman and CEO of ReNew, and was recognised as global climate leader in 2024 TIME100 Climate list

Published - December 04, 2024 01:36 am IST