The COP29 climate summit concluded last Sunday in a flurry of last-minute negotiations met with tempered optimism from all sides. Here are some highlights from the end of COP29 (our Week 1 in Review can be found here). 

1. All eyes on COP30

• COP29 it is likely to be remembered for its various headline-grabbing controversies, heated debates and to some extent, in achieving more than was expected of it, including reaching agreements on fundamentals like the Article 6 global emissions trading mechanism and tripling of the NCQG. Of course, all hopes are being pinned on COP30 in Belém, Brazil, where the parties are expected to explore ways to realistically achieve the pledges required for carbon transition. Whether updated national pledges (NDCs) will result in the transformative change required to meet the Paris Agreement targets ahead of COP30 remains to be seen.

2. New Collective Quantified Goal (NCQG): Last-minute Deal Struck

• The NCGQ draft text from Week 1 of COP29 highlighted the need to scale up financing to assist developing nations in coping with climate change to at least $1.3 trillion per year by 2035. Challenges to this goal continued to mount but following tense negotiations and walkouts, an agreement was finally reached on Sunday, with the developing countries agreeing to provide "at least" $300 billion annually to developing countries. The negotiations narrowly avoided multiple near-collapses as countries such as India, Bolivia, and Nigeria voiced strong objections to the finance package, described by one delegate as “nothing more than an optical illusion.”

3. Loss and Damage Fund Made Operational

• Following the agreement to establish a fund to help low-income developing countries offset climate-induced disasters (reached at COP27), the Loss and Damage Fund (LDF) was created to compensate for losses and damages from climate change related disasters. Last week, the LDF was made fully operational in order to aid nations impacted by disasters such as floods and rising sea levels, prioritising in particular small island developing states (SIDS). Critics have continued to argue that the financial pledges (totalling more than $700 million) do not equate to climate justice. 

4. Article 6: Global Carbon Markets Take Centre Stage

• After an early agreement in the first week of COP29, member countries finalised some of the rules for launching a global emissions trading mechanism, which has been 10 years in the making. In particular, the Article 6 measures were agreed to broaden carbon emissions reduction trading across borders. Article 6.2 modalities for establishing national accounting systems to authorize and facilitate transfers of credits between countries, known as Internationally Transferred Mitigation Outcomes (ITMOs), are expected to be the much-needed tool to enhance carbon market integrity and confidence.

5. Countries are making strides

• The UK has pledged over £200 million to tackle deforestation in countries such as Colombia and Indonesia, whose forests are globally significant carbon sinks. This follows the UK Government’s commitment to provide over £11 billion in climate finance from 2021/22 to 2025/26. Of the pledged sum, £188 million is earmarked directly to the Scaling Climate Action by Lowering Emissions (SCALE) programme, supporting the development of high-integrity carbon markets globally. Another £48 million is allocated to blended finance to help unlock private investment in sustainable forest enterprises across the tropical forest belt.

6. Japan’s Carbon Markets are Opening for Business

• Japan's Green Transformation (GX) ETS, launched in 2023, will transition into a fully-fledged carbon market by 2026-27, supported by upcoming legislation. The Japanese government will require participation from 300-400 domestic companies emitting more than 100,000 tons of CO2 annually, covering 60% of the country's greenhouse gas emissions. Companies will receive free emissions quotas, with the ability to buy or sell quotas based on their emissions, similar to the EU ETS. This approach reflects Japan's broader policy alignment with the EU during COP29.

A Categorical Imperative?

Now that the dust has settled in Baku, the UAE-Belém framework is coming into focus. This two-year program developed at COP28 in Dubai was designed to cover a broad range of thematic targets for sustainable development and will surely demand immediate attention as COP30 approaches. The question remains as to whether the hard-fought gains in financial commitments at Baku will translate into progress on key Paris Agreement issues.

As the global climate crisis continues to mount with more extreme weather events in more unlikely places, increasing pressure on business and operations, will today’s measures will be effective at all or is the system itself in need of reform in order to meet the diverse and mounting challenges of climate change?

This post was co-authored by Benedikt Corkill.