COP29 Outcomes: The Global South Accepts Compromise, Aiming for Increased Financing from All Sources

On the night of November 23-24, the five-hour closing ceremony of the 29th session of the UN Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP29) concluded with the adoption of the “Baku Climate Unity Pact”. This pact encompasses three key decisions of the summit:

• CMA11a: "New Collective Quantified Goal on Climate Finance,"
• CMA9a: "Global Goal on Adaptation,"
• CMA6: "Mitigation Work Program and Project Implementation adopted at COP27 in Sharm El-Sheikh."

Interestingly, the final documents of COP27 in Sharm El-Sheikh in November 2022 were also approved in the early morning hours following intense negotiations between the host country and negotiating groups.

This parallel with COP27 is particularly relevant because 2022 marked the end of the commitment, established at COP15 in 2009, for developed countries to annually allocate no less than $100 billion to vulnerable developing nations for combating climate change. In 2023, the 198 parties to the Paris Agreement decided that the "New Collective Quantified Goal" (NCQG) on climate finance would be determined in Baku during COP29.

Tripling Climate Finance for Developing Countries

Speaking during the COP29 closing ceremony on November 24, UNFCCC Executive Secretary Simon Stiell highlighted that the "agreed tripling of public climate finance to $300 billion annually for developing countries" will safeguard the lives and economies of the most vulnerable states from climate catastrophes and secure livelihoods through the rapid growth of clean energy.

Key Outcomes from COP29:

• Tripling public climate finance to $300 billion annually for developing countries, starting in 2025 and lasting until 2035.
• Strengthening collaboration among all climate stakeholders to boost financing for developing countries from all sources (public and private, including multilateral development banks) to $1.3 trillion annually by 2035.

The NCQG was finalized after two weeks of intensive negotiations and years of preparatory work, requiring unanimous agreement on all details. "The NCQG is humanity's 'insurance policy' against worsening climate change impacts, but like any insurance, it works only if contributions are paid in full and on time," Stiell stated early on November 24 in Baku.

He expressed optimism about achieving NCQG goals, citing the International Energy Agency's forecast that global clean energy investments will exceed $2 trillion for the first time in history in 2024.

Foundations for Future Climate Action

According to Stiell, the COP29 financial goals build on the practical successes of COP27, including the establishment of the Loss and Damage Compensation Fund (already containing $800 million) starting in 2025 and the COP28 agreement on a swift and just energy transition from fossil fuels, with a tripling of renewable energy by 2030.

Another milestone was the agreement on carbon markets, which had eluded previous summits, alongside the adoption of Biennial Transparency Reports (BTRs) to ensure accountability.

Challenges and the Road Ahead

Despite the breakthroughs, Stiell acknowledged that the Baku climate financing agreement fell short of satisfying all parties. Significant work remains on critical issues heading into COP30 in Belém, Brazil, next year.

"No country got everything it wanted, and we leave Baku with a mountain of tasks ahead. Many other issues, crucial for billions of people, may not make headlines but remain vital. This is no time for triumphalism; we must roll up our sleeves and double our efforts on the road to COP30," Stiell concluded.

Below is a brief overview of the key achievements of COP29.

Article 6 of the Paris Agreement

One of the notable achievements of the past two weeks was the progress made in carbon markets. After nearly a decade of negotiations, countries have reached an agreement on the final components that will define how carbon markets will function under the Paris Agreement. This paves the way for international carbon trading and a carbon credit mechanism to be fully operational by 2025.

Specifically, COP29's decision on carbon trading between countries (Article 6.2, bilateral relations) provides clarity on how nations will allocate rights for trading carbon credits and how registries recording such transactions will operate. Vulnerable countries will be allowed to register their carbon credits for free in registries established by wealthier nations. This provision also includes technical verification of carbon quotas to ensure transparency in the process.

As for Article 6.4, which sets standards for a centralized carbon market under the UN's oversight body, it will benefit developing nations by creating new financial flows from carbon trading. This market, valued at $1 trillion, will primarily channel funds to the least developed countries.

The importance of this article also lies in the mandatory environmental and human rights safeguards for carbon market projects. These safeguards ensure that no project can proceed without the explicit and informed consent of affected individuals, who will have the right to challenge decisions in court. The text agreed upon for Article 6.4 includes a clear mandate to align the UN carbon market with scientific data.

However, work on carbon markets was not fully completed in Baku.
“The oversight body establishing the new carbon credit mechanism has received an extensive to-do list for 2025 and will continue reporting back to COP participants,” a negotiator revealed.

Article 6 of the Paris Agreement also accounts for the issuance of certificates for reducing greenhouse gas emissions through tree planting, afforestation, or forest restoration. In Baku, the UK's International Forestry Unit pledged £3 million to support the UN Climate Secretariat’s specialized program to halt forest degradation in developing countries by 2030.

Adaptation

COP29 marked a significant milestone for adaptation, achieving several key results in this area. The COP decision on issues affecting least developed countries (LDCs) includes provisions to create a program supporting the implementation of National Adaptation Plans (NAPs) for LDCs through innovative financing and technical assistance.

“The outcome on the Global Goal on Adaptation outlined a clear path forward toward COP30 in Brazil. COP29 also launched the ‘Baku Adaptation Roadmap’ and the ‘Baku High-Level Dialogue on Adaptation’, aimed at strengthening the implementation of the Framework Program approved in December 2023 at COP28 in the UAE,” stated the UNFCCC.

Additionally, the ‘Baku Work Plan’ was adopted to enhance collaboration between COP participants, Indigenous Peoples, and local communities. This plan aims to increase the role of Indigenous Peoples and local communities in addressing the climate crisis.

Gender and Climate Change

Countries also reached an agreement on gender issues and climate change, extending the expanded ‘Lima Work Program on Gender and Climate Change’ for another 10 years. This decision underscores the importance of gender equality and promotes the integration of gender considerations in the work of the Convention.

Furthermore, they agreed to develop a new gender action plan to be adopted at COP30, outlining specific directions for further efforts.

Civil Society, Children, and Youth Participation in the Climate Process

At COP29, debates involved representatives of civil society, subnational bodies, businesses, Indigenous peoples, youth, charities, and international organizations. A decision was made in Baku to enhance the involvement of these groups in the Action for Climate Empowerment (ACE) program and to integrate ACE elements into countries' national climate policies and nationally determined contributions (NDCs).

The EU Commissioner for Climate, Wopke Hoekstra, emphasized during the COP29 closing ceremony that expanding and diversifying the donor base for climate financing was not only a priority for the European Union but also a matter of justice, given the scale of the climate crisis.
“Tripling public climate financing is a significant achievement of COP29. We need more resources, and they must come from everyone who has the capacity and responsibility to contribute. Although we aimed for more ambitious mitigation measures, we had to face resistance from those trying to weaken last year's consensus. The good news is that we managed to maintain this consensus, laying the foundation for positive progress towards Belém and COP30,” Hoekstra stated.

He added that developed EU nations are making every effort to support the most vulnerable populations.
“In Baku, a decision was made to simplify access to financing and increase the share of funding allocated to climate adaptation. This is especially important because public funds are the key driver in this area. We also witnessed a historic strengthening of the role of multilateral development banks in supporting this transition, which will, in turn, attract significantly more private funds. This approach is essential for achieving the $1.3 trillion goal by 2035,” Hoekstra noted.

On Sunday, November 24, Azerbaijani President Ilham Aliyev called COP29 a "turning point in climate diplomacy" through his social media accounts.
“We are proud to have received high praise from all guests for the excellent organization of COP29, which brought together 80 heads of state and government and over 76,000 registered participants. Despite a large-scale smear campaign, Azerbaijan achieved historic results in climate negotiations. Azerbaijan acted as a neutral mediator, creating opportunities for impartial negotiations. Throughout the process, we advocated for outcomes that accounted for the needs of developing nations, especially small island states and the least developed countries, as they bear the brunt of climate change and face existential threats,” President Aliyev noted.

U.S. President Joe Biden, in a statement on November 24, praised Azerbaijan for successfully hosting COP29 and taking significant steps in the right direction.
“On behalf of the American people and future generations, we must accelerate our efforts for a cleaner, safer, and healthier planet. During the conference, countries agreed on an ambitious goal for international climate finance by 2035. This will mobilize vital financial resources from all possible sources needed by developing countries to speed up the transition to a clean and sustainable economy,” President Biden emphasized.

Challenges and Controversies

Experts, however, noted that Donald Trump’s victory in the U.S. presidential elections in November and his skeptical stance on the Paris Agreement significantly impacted the approved climate finance amount at COP29 and raised doubts about the full implementation of COP29 decisions.

Notably, on November 23, most developing nations rejected the $300 billion annual financing pledge from developed nations for addressing climate issues. By the morning of November 24, the most resolute group — the Small Island Developing States (SIDS) — was convinced that expecting more was unrealistic.

Additionally, COP29 fell short in strengthening commitments to reducing fossil fuel use, and the Climate Action Fund (CFAC) proposed by Azerbaijan, involving extractive companies, was not established. Instead, several European energy companies, including BP, TotalEnergies, and Shell, independently agreed to allocate $500 million for climate finance post-COP29, though without providing details.

Despite SOCAR signing over a dozen "green" agreements at COP29, discussions also revolved around Azerbaijan's role in ensuring EU energy security and potential new hydrocarbon projects involving SOCAR.

An intriguing example at COP29 was a session in Namibia's national pavilion titled "Greening Namibia through Industrialization and Value Addition in Oil and Gas." The Namibian Investment Promotion and Development Council highlighted the country's emerging oil and gas sector.

Environmental activists criticized the UN for hosting climate summits in countries associated with oil and gas extraction, such as Egypt for COP27, the UAE for COP28, and Azerbaijan with its ancient oil history for COP29. Conversely, these governments emphasized their commitment to a “green” trajectory, leveraging advanced technologies to minimize the environmental impact of oil and gas.

Leaders from OPEC member states and the organization itself underscored the necessity of hydrocarbons for maintaining energy balance, as renewable energy sources reliant on weather and climate cannot yet fully sustain global energy needs.

In summary, COP29 in Baku showcased the balancing act of the “scales” between climate ambitions and fossil fuel realities.