Catch Up on COP29

In this newsletter:

• Quick intro to COP & the UNFCCC
• NCQG - how much is needed, what countries wanted, what was agreed on
• Global Carbon Market
• Loss and Damage Fund
• Country Announcements
• Nationally Determined Contributions (NDCs)
• Fossil Fuel related news
• More Initiatives
• Tools
• Further Reading

COP stands for “Conference of the Parties serving as the meeting of the Parties to the Paris Agreement”. That’s quite mouthful. Here’s what it means.

An international treaty to ‘prevent the dangerous human interference with the climate system’, was introduced in 1992 and signed by 154 nations states. The treaty, called the United Nations Framework Convention on Climate Change, came into force in March 1994, and has since been signed by more and more countries, bringing the total to 198 signatories as of 2024 - nearly the entire globe.

The goal of the UNFCCC is to keep greenhouse gas concentrations below a threshold to keep temperatures from rising more than the earth can sustain. To determine what that threshold needs to be the, the UNFCCC signatories rely on IPCC’s reports and data from the World Meteoreological Organisation. In 2010, the goal was set to “hold the increase in global average temperature below 2°C above pre-industrial levels.”

The COP is an annual meeting of the UNFCCC signatories. Countries that are not signatories can also join as observers. Many inter-governmental (like Asian Development Bank) and non-governmental organisations (including universities) also join as observers.

The member countries are divided in 3 categories

• Annex 1 Parties, including members of the OECD in 1992 and some central and east European countries. These were considered ‘developed’ and were expected to contribute more to emissions reduction, since most existing emissions had come from development in these countries. Here are the Annex I Parties.

• Annex II Parties are a sub-group of Annex I parties, the OECD members, who are expected to contribute financially to the global corpus for reducing emissions. The grants and loans disbursed from this corpus are managed by the Global Environment Facility.
• Non-Annex I Parties are rest of the signatories, considered ‘developing’ countries. These include 49 Least Developed Countries (LDCs) which are given special consideration under the convention, for their vulnerability to climate change and lack of economic resources to act on it independently.

COP30 will be held at Belém, Pará (Brazil) in 2025.

NCQG - Who should finance combating climate change?

That was the hotly debated question in the run up to COP29, and at the conference.

In 2021, UNFCCC signatories decided to set a New Collective Quantified Goal on Climate Finance, upwards from a floor of $100 billion that would help countries to reduce greenhouse gas emissions and pursue climate-resilient development. Discussions on the NCQG have been held over the past years, and the target was to be finalised at the COP29 summit in Baku.

How much is needed?

The Independent High-Level Expert Group on Climate Finance stated the following in its latest report

We estimate that the global projected investment requirement for climate action is around $6.3–6.7 trillion per year by 2030, of which $2.7–2.8 trillion is in advanced economies, $1.3-$1.4 trillion in China, and $2.3–2.5 trillion in EMDCs other than China. These latter countries will account for almost 45% of the average incremental investment needs from now to 2030 but they have been falling behind, especially Sub-Saharan Africa. For 2035, we estimate global investment requirements for climate action to be around $7– 8.1 trillion per year, with advanced economies needing $2.6–3.1 trillion, China $1.3–1.5 trillion, and EMDCs other than China requiring $3.1–3.5 trillion. These needs are our estimations of what is required for delivery on the Paris Agreement, and the investments will also make a vital contribution to sustainable growth and the achievement of the Sustainable Development Goals.

Here’s what various countries were pitching for

• South Africa - $100 billion annually, through 2025
• China, India, G77 - $500 billion annually for developing countries
• Small island states demanded $39B annually, Least Developed Countries (LDCs) $220B for climate action. UN

The finally agreed-on $300 billion commitment represents ~4.7% of the least estimated annual finance requirement as per the Independent High-Level Expert Group.

Other Funding Commitments (not an exhaustive list)

• World Bank and other multilateral development bank jointly estimate annual collective financing to reach $120 billion by 2030 for low- and middle-income countries.
• The UK committed ￡239 million spread across -

￡188 million funding to the Scaling Climate Action by Lowering Emissions (SCALE) programme, to support the development of high-integrity forest carbon markets to ensure the buying and selling of carbon credits to drive emission reductions, ￡48 million for blended finance to unlock private investment in sustainable forest enterprises across the tropical forest belt, ￡3 million for the UNFCCC to help countries protect their forests

A Global Carbon Market

Under Article 6 of the Paris Agreement, countries are “able to transfer carbon credits earned from the reduction of greenhouse gas emissions to help one or more countries meet their climate targets.”

There are 2 ways to do this - Bilateral trading (Article 6.2) and a centralised international market (6.4).

At COP29, decisions were made on both Article 6.2 and 6.4.

On country-to-country trading (Article 6.2), the decision out of COP29 provides clarity on how countries will authorize the trade of carbon credits and how registries tracking this will operate. And there is now reassurance that environmental integrity will be ensured up front through technical reviews in a transparent process. UNFCCC

For Article 6.4, the countries agreed on standards for the centralised carbon market. The underlying mechanism of this centralised market is called the Paris Agreement Crediting Mechanism. Essentially, you can generate carbon credits through carbon reduction/removal activities in one place, and sell them to an entity in another place. The key difference with the Paris Agreement Crediting Mechanism is that it prevents double counting of credits, which was a flaw in the previous mechanism under the Kyoto Protocol.

Japan and Indonesia have already signed the first agreement based on Article 6.2, with Indonesia as issues of carbon credits and Japan as the buyer.

A key component Article 6.4 is the Sustainable Development Tool, that requires project developers to ensure that environmental and social risks are avoided, or where they cannot be avoided, risks are minimised and key indicators are monitored. For instance, developers are to “demonstrate that measures will be undertaken to ensure the protection of soil, land use, surface and groundwater from erosion, and that these measures are in place prior to the commencement of the activity” (More on the SDT)

Also, insurance products are coming up for private investors that participate in the UN Carbon Market.

Loss and Damage Fund

The Fund will serve as a lifeline by providing critical and urgent support for those impacted by the devastating consequences of climate change… the Fund is now expected to start financing projects in 2025.

Total pledges - more than $720 million, including:

• Australia $32.5 million
• New Zealand $6 million
• Sweden $19 million

COP29 Press Release

Country Announcements

• Norway has committed $50M to ADB's Climate Action Catalyst Fund, an Article 6 carbon fund. Sweden contributed 300M krona ($27M). The fund launched in January 2024 to support carbon credit projects in Asia-Pacific. Carbon Herald
• The US is partnering with Ukraine for building SMRs - a pilot SMR to supply energy for green hydrogen and ammonia production, transitioning existing coal-fired plants to SMRs, and using SMRs for clean steel production. POWER magazine
• The UK has launched Principles for Voluntary Carbon and Nature Market Integrity to enhance voluntary carbon markets and strengthen private-sector climate action. The principles focus on transparent reporting, high-quality carbon credits, and biodiversity integration, with the UK aiming to channel up to $50 billion into VCMs by 2030. Carbon Herald
• The UK and the US have agreed to cooperate on ‘information-sharing for advanced nuclear technologies’, effective March 1 2025. UK Government
• Indonesia has received €1.2 billion from Germany’s KfW for green energy projects like hydropower & transmission systems for renewable power. Indonesia Business Post
• The Australian government has announced a $125 million (USD 80.76 million) investment to support Pacific nations in their clean energy transition and improve energy security. This will support various projects including energy transition modeling, grid studies, renewable energy feasibility studies, and workforce development. pv magazine Australia

NDC Targets

• Switzerland - reduce emissions by at least 50% by 2030, compared to 1990 levels
• The UK - reduce emissions by 81% by 2035, compared to 1990 baseline
• Brazil - reduce emissions by 59-67% by 2035, compared to 2005 baseline, target emission level 1.05-0.85 GtCO2
• UAE - reduce emissions 47% by 2035, compared to 2019 baseline
• Mexico - committed to net zero by 2050, NDC not yet submitted

Countries/Regions yet to submit NDCs - Canada, Chile, the European Union, Georgia, Mexico, Norway, Switzerland, and many more.

The World Resources Institute has a Climate Watch tracker that lets you compare the NDCs of different countries. Here’s a sample comparison of Botswana, Andorra and Belarus.

Bhutan, Madagascar, Panama and Suriname have already achieved net zero GHG emissions

Countries are also required to submit Biennial Transparency Reports by 31 December 2024. Thirteen countries have submitted this so far, here’s a continuously updated list.

Fossil Fuels

• 25 countries including UK, Canada, France, Germany and Australia have pledged at COP29 to not build new unabated coal power plants and submit national climate plans reflecting this commitment. Economic Times
• Namibia is exploring sustainable crude oil production, and seeking interest in 4 frontier basins that could potentially double GDP by 2040. Climate Home News
• At COP28, 13 countries (mostly European) had formed a coalition to end fossil fuel subsidies. Colombia, New Zealand and the UK have joined the coalition. Climate Home News
• Launch of the Climate Finance Action Fund (CFAF), which was intended to raise at least $1 billion from fossil fuel producers, has been put on hold. Climate Home News

More Initiatives

• Green Digital Action - “Encourage the development and adoption of sustainable digital technologies to accelerate GHG emissions abatement, reductions, and removal and energy efficiency across sectors and to support climate-resilient communities”
• Hydrogen - “to scale up renewable, clean/zero-emission and low-carbon hydrogen production and deployment and accelerate decarbonisation of existing hydrogen production from unabated fossil fuels”
• Climate-friendly tourism - More than 60 countries have signed the a declaration to promote climate-friendly tourism (via ESG News). There is also a new framework for ESG reporting in the hospitality sector.
• Reducing Methane from Organic Waste
• ASEAN carbon market - Thailand, Malaysia, Indonesia, Singapore and ASEAN Alliance on Carbon Market have agreed to establish a common carbon market framework. Carbon Herald
• Pumped Storage - The International Hydropower Association has launched the Global Alliance for Pumped Storage at COP29, supported by 30+ governments and agencies, to promote renewable energy storage solutions and establish intergovernmental leadership. Power Engineering International

Tools

• Climate Action Review Tool for implementing climate and adaptation plans- helps identify “actionable entry points for transformative change, drawing from adaptation actions outlined in NDCs and NAPs”, by the UNDP and FAO
• Climate Project Explorer - lets you search the full text of documents from Multilateral Climate Funds, including project documents and policies (via ESG News)
• Climate TRACE Emissions Map - “provides monthly emissions data for every country and every major individual source of emissions in the world.” (via EESI)

More Reading

• Roundup of COP29 announcements from UNFCCC
• EESI’s COP Dispatch has the most comprehensive roundups, especially on the opinions expressed by different countries.
• Good read on the current status of carbon credit trading between different countries, and what the UN Carbon Market allows, from Economic Times

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