The first week of the COP29 climate summit in Baku ended with the expected amount of controversy and optimism. Dubbed the ‘climate finance COP’, negotiations on a wide array of measures to address climate change started to gain momentum. Here are five highlights from the first week at Baku:

1. Changing the game: Article 6 carbon credits market breakthrough

• COP29 started with around 200 governments adopting a framework under Article 6.4 of the Paris Agreement, to set up a multi-billion dollar carbon market governed by UN rules. The agreement has been praised as a ‘game changing tool’ that will support climate action in developing countries, matching buyers and sellers and significantly reducing the cost of implementing Nationally Determined Contributions. Many carbon market stakeholders are debating how the new carbon market will impact existing carbon pricing mechanisms and the merits of a potential supply side mechanism for scalability. Some environmental groups have voiced concerns the swift agreement may lack procedural integrity.

2. A heated debate: Argentina pulls-out negotiators and France boycotts

• On the orders of President Milei, Argentina withdrew its climate negotiators from COP29 last Wednesday. No explanation was provided for the withdrawal by the Argentinian government. President Milei previously threatened to withdraw from the Paris Agreement altogether but has since backed down from this position. France withdrew its top negotiator from COP29 after Azerbaijan's President Aliyev accused France of suppressing climate change concerns in New Caledonia. France’s Environment Minister, Pannier-Runacher, condemned the remarks but confirmed that his remote participation in the event would continue. 

3. Exchanges and auctions: KSA launches its carbon credit exchange

• The Kingdom of Saudi Arabia has marked a significant milestone at COP29 by launching its first carbon trading exchange, managed by the Regional Voluntary Carbon Market Company (RVCMC). RVCMC is backed by KSA’s sovereign Public Investment Fund (80%) and the Saudi Tadawul Group (20%). On November 12, various Saudi and international companies participated in the inaugural auction, offering 2.5 million high-integrity carbon credits from projects certified by Verra, Gold Standard, and Puro.earth. The auction focused on projects in the Global South, including Bangladesh, Brazil, Ethiopia, Malaysia, Pakistan, and Vietnam. The opening of the Saudi exchange comes as several nations in the Middle East are looking into growing their participation in the voluntary carbon market. 

4. Supply chains: Methane and other superpollutants in the scope

• Methane and other "superpollutants" (including hydrofluorocarbons, NOx, and tropospheric ozone) took centre stage at COP29, with the announcement of $500 million additional grant funding, raising total commitments to over $2 billion.  The US and China showcased strengthened cooperation by releasing comprehensive methane action plans and emphasizing low-cost strategies to reduce non-CO2 greenhouse gases. Their collaboration has been marked by shared technical understanding despite broader climate policy divides. The EU launched its Methane Abatement Partnership Roadmap intended to enhance cooperation among fossil fuel importing and exporting countries, setting the stage for enhanced monitoring and reduction measures across global supply chains.

5.  Sinking funds: Support for lower-income countries 

• The New Collective Quantified Goal (NCQG), an initiative aimed to increase financial support for lower-income nations to help them reduce greenhouse gas emissions, is being negotiated at COP29. The draft negotiating text is available here. A report published ahead of COP29 by the Independent High-Level Expert Group on Climate Finance (IHLEG), established under previous COP presidencies, estimates that $2.4 trillion is needed annually to meet Paris Agreement climate goals. The US and EU are advocating for a broader contributor base to meet these commitments, potentially including major greenhouse gas emitters like Saudi Arabia, the UAE, and China. Reforms to the global multilateral lending complex are also touted with the view to de-risk climate finance and attract private capital to meet financing targets.

That’s all for the first week of COP29. As the summit enters its second week, the outcomes of ongoing negotiations, particularly around the NCQG and financing reforms, will be critical in determining the trajectory of global climate action. Stay tuned for our next update.

This post was co-authored by Avesta Aria and Benedikt Corkill.