Key Takeaways from COP29

By Umar Zulkefli

United Nations Climate Change Conference in Baku, Azerbaijan

COP29, held in Azerbaijan’s oil-rich capital of Baku, felt more like a survival game than a climate conference. With political tensions, economic pressures, and fossil fuel interests dominating the agenda, the world’s most important climate talks teetered on the brink of collapse. Yet, after marathon negotiations and a dramatic walkout by vulnerable nations, delegates struck critical deals on climate financing packages and carbon markets. The summit’s outcome offers a glimpse of both hope and the big challenges that lie ahead in the global climate fight.

Wealthy Nations Commit $300 Billion for Climate Finance by 2035

The climate finance deal agreed by almost 200 countries at COP29 saw wealthy nations pledge to lead in providing “at least” $300 billion annually by 2035 to help developing countries cope with climate change. While this figure marked an improvement from the initial $250 billion proposal, it remained far below the $500 billion sought by the G77 group of developing nations and the $1.3 trillion experts estimate is necessary. Countries like India and small island nations voiced their frustration, calling the amount "paltry" and the timeline too slow to address urgent challenges. This new agreement will replace the previous commitment to provide $100 billion per year in climate finance by 2020, a goal that was met two years late, in 2022, and is set to expire in 2025. Political realities, including strained budgets in wealthier nations, shaped the modest outcome. Still, there was cautious optimism as the agreement emphasised innovative funding mechanisms, such as carbon levies on international shipping and aviation, offering a glimmer of hope for scaling up climate finance.

Carbon Trading Markets Open with Loose Oversight

At COP29, the carbon credit market was finally kick-started, a decade after the proposal was first sketched in the Paris Agreement. Trading could begin as soon as 2025, pending the finalization of details by technical bodies. This new framework allows nations and companies to trade credits for emissions reductions, providing a potential financial boost to climate action. The agreement overcame disagreements about the proposed UN registry, with compromises enabling the market’s launch. Countries like Bolivia and the Democratic Republic of Congo, home to heavily forested regions, emphasised that properly regulated markets could reverse environmental destruction. However, the system has drawn criticism, with a Nature Communications study  revealed that less than 16% of carbon credits represent real emissions reductions, raising fears of “greenwashing,” as experts like Dr. Lambert Schneider warned that these integrity issues could spill into the Paris Agreement’s official UN system, undermining efforts to meet global climate targets. Ultimately, the agreement adopts a "buyer beware" approach, relying on transparency to deter bad practices while leaving room for refinement. The money raised by these carbon deals could help contribute to the climate finance needs of poorer countries, which economists estimated at $1.3tn a year.

COP29’s Key Roadblocks: Trade Barriers and Petro-State Power

COP29 underscored the enduring influence of fossil fuel-producing nations in global climate negotiations, with the summit marking the third consecutive year it was hosted by an oil-rich country. Azerbaijan’s president, alongside the OPEC secretary general, emphasised that oil and gas resources were "a gift from God," reinforcing the entrenched role of fossil fuels in the global economy. Efforts to build on COP28’s pledge to transition away from fossil fuels and triple renewable energy capacity this decade were significantly hindered, with Saudi Arabia reportedly playing a disruptive role. A Saudi official controversially attempted to amend critical text without consultation, while the country repeatedly sought to remove references to the “transition away from fossil fuels” agreed at COP28, citing concerns over energy security. Germany criticized the host nation and petro-states like Saudi Arabia and Russia for obstructing progress on the renewable energy agenda, further highlighting the deepening clash between national economic priorities and global climate goals.

Simultaneously, trade policies emerged as a significant point of contention, with developing nations arguing that measures like the EU’s Carbon Border Adjustment Mechanism (CBAM) imposed unfair costs on their economies. Acknowledging the growing intersection of climate and trade, delegates agreed to include these issues in future summits, signalling a step toward equitable decarbonization policies. Furthermore, negotiators sought to shield years of progress from the potential disruption of a second Trump presidency and a possible second US exit from the Paris Climate Agreement. The year 2035 chosen to meet the investment pledge by wealthier nations strategically aimed to delay U.S. re-engagement until after Trump, ensuring stability in global efforts while expanding the contributor base through voluntary commitments from major emitters like China. Together, these developments revealed the complex interplay of economic, political, and environmental interests shaping COP29’s outcomes.

The COP29 summit in Baku exemplified the complexities of global climate politics, where progress was achieved against a backdrop of significant challenges. The contentious location, Trump’s re-election, and Argentina’s withdrawal all heightened uncertainty, underscoring the polarized views that undermine global trust and cooperation. Despite these obstacles, the summit’s ability to produce agreements on climate finance and carbon credit markets highlighted the enduring, if fragile, relevance of multilateral diplomacy.

However, the incremental progress achieved at COP29 is far from sufficient. With the impacts of climate change intensifying, there is a pressing need for more ambitious action. The agreements reached must be strengthened, and commitments expanded at COP30 in Brazil, where the international community will have another chance to bridge the gap between ambition and action.

As the world grapples with economic pressures and geopolitical turbulence, COP29 serves as a reminder of what is at stake. Unity, innovation, and greater commitments from all nations are essential to overcoming political and economic barriers. The climate crisis demands nothing less than bold, collective action to secure a sustainable future for all.