Key Issues at COP29: Expected Global and Local Costs of Combating Climate Change

With only days remaining until the 29th session of the United Nations Framework Convention on Climate Change (COP29), starting on November 11 in Baku, around 40,000 delegates from over a hundred countries are expected to attend. This event, running through November 22, marks an unprecedented responsibility for Azerbaijan, which holds the COP29 presidency, as the session will address issues of global significance.

As the "host" country, Azerbaijan bears responsibility for fostering a productive negotiation climate among UN countries. The session’s primary focus will be on agreeing to a "New Collective Quantified Goal" (NCQG) for climate financing, likely reaching trillions of U.S. dollars. This financing will aim to cap global warming at 1.5 degrees Celsius (relative to pre-industrial levels) until 2100, as warming beyond this point would pose irreversible climate and technological risks.

The UN has warned that each fraction of a degree in temperature rise contributes to severe weather patterns, including intense rain, drought, ocean warming, and natural disasters. The summer of 2024, the hottest on record, resulted in hurricanes and other extreme events, claiming half a million lives globally.

The primary driver of global warming remains greenhouse gas emissions, notably carbon dioxide and methane, which have been accumulating in the atmosphere and damaging the ozone layer. According to the World Meteorological Organization, the concentration of carbon dioxide (responsible for 75-81% of the greenhouse effect) has risen by 11.4% over the past 20 years. Methane, accounting for 16% of emissions, is more potent than carbon dioxide, albeit shorter-lived in the atmosphere. COP29 will also feature a dedicated "Methane Declaration."

Greenhouse gas emissions are closely tied to economic activities, especially in the energy, transport, and heavy industries such as metallurgy and cement production. Addressing these impacts requires a gradual shift from fossil fuels, development of carbon capture technologies, transition to renewable energy, and conservation of water and forests. Financing these "green" adaptation and mitigation measures is crucial, including for the development and deployment of new technologies to prevent and address natural disasters.

According to Azerbaijan's Deputy Minister of Energy and COP29 Executive Director, Elnur Soltanov, COP29 negotiations in Baku aim to establish a final amount for collective investment in climate action, as the previous target of $100 billion (set at COP15) was reached in 2022. At COP28 in Dubai, calls were made for a more ambitious NCQG.

"Negotiations are open to a range of proposals, from several hundred billion dollars to over $7 trillion (to be disbursed through various financial structures starting in 2025). Azerbaijan’s goal is to create transparent conditions for an ultimate decision, ensuring clarity on the terms of climate financing so that funds are accessible to developing nations, especially those in the Global South and small island states. As COP29 president, Azerbaijan plays the role of negotiator without interference, facilitating critical decisions," Soltanov explained to ASTNA.

Climate financing will largely rely on specialized climate funds and multilateral development banks. Last week in Washington, COP29 representatives engaged in preliminary discussions during the annual World Bank and IMF meetings. Azerbaijan has also initiated and will sponsor a Climate Finance Action Fund (CFAF), one of COP29’s 14 initiatives, with an initial budget of $1 billion. Fossil fuel-producing countries and companies, including Azerbaijan’s SOCAR and bp, are expected to voluntarily contribute to CFAF, with interest shown by nine other countries, potentially from the Arab region and the United Kingdom. Donor countries and the CFAF structure will be announced at COP29, but it has been established that at least 20% of income from CFAF investments will go toward concessional climate financing for countries impacted by environmental disasters, particularly small island developing states (SIDS) and least developed countries (LDCs).

The voluntary sponsorship model, however, is complex, as evidenced by the Loss and Damage Response Fund. Established at COP27, its operational framework was set at COP28, and the fund is expected to begin allocating resources in 2025. Currently, the fund has around $800 million, with contributions from Europe, Japan, several Arab states, and the U.S. Nonetheless, challenges in fund collection and bureaucratic hurdles raise doubts about the viability of other climate funds, as wealthier nations remain hesitant to allocate resources to countries like small island states, which face annual natural disaster threats.

Carbon Markets

One of the key issues at COP29 will be finalizing the implementation of Article 6 of the 2015 Paris Agreement, concerning carbon emissions. "Key discussions among major Paris Agreement parties focus on sub-sections 6.2 and 6.4. Sub-section 6.2 deals with bilateral carbon trading markets, while 6.4 addresses global carbon market development," Soltanov informed ASTNA. Carbon credits allow countries or companies to measure emissions reductions in specific operations, which can then be sold to others who have not met emission reduction targets. These credits are assigned numeric values and, with full compliance to Article 6, will be available for purchase by countries, companies, or individuals under international oversight to prevent double counting.

Revenue from these carbon transactions could be directed toward technological advancements to reduce greenhouse gas emissions. ASTNA will continue its coverage of COP29 discussions, where about 60 international agreements are expected to be signed. The UN Framework Convention on Climate Change (UNFCCC) was signed in 1992, with the COP sessions initiated thereafter.