COP29: A CSO Perspective

As is well-known, the Conference of Parties, popularly called COP, is a global convention by the United Nations Framework Convention on Climate Change (UNFCCC). It brings together world’s major economies to deliberate and decide on actions to address climate change issues. Each COP attempts to build upon the work of previous editions, aiming to progress the overall agenda towards limiting the global warming to 1.5 degrees.??

The COP29 conference, that concluded in Baku this year, focused on four major topics, among others:

• Most economies of the world, including the developed ones, are beginning to realize that transition from fossil to green fuels is not as easy as it seems, and that ‘delay in transition from fossil fuels’ is indeed a reality. All economies have economic growth and through that the betterment of the lives of their people as their primary goal. This was exacerbated in the post-COVID19 scenario, where pulling economies from the clutches of recession and gloom, caused by loss of lives and livelihood, was essential. In most developing economies, including India, and even some developed economies, fossil fuels still form a major share of the energy mix. Hence, economic growth bereft of fossil fuels seem far from reality. Green fuels have not yet been conclusively proven to be significantly better than their fossil counterparts in terms of technical feasibility, economic viability and availability. Acknowledging this reality at COP29 was a good start. However, this must also reflect in various road maps and regulatory action plans for nations.

• One of the key aspects of any project is the measurement of its progress, and this is equally applicable to climate change. However, a significant challenge has been the lack of well-developed systems and techniques, especially in developing economies, and the transparency and authenticity of such data. At COP29, discussions focused on improving the systems for monitoring and tracking of greenhouse gas (GHG) emissions. This included advancing the ‘Global Greenhouse Gas Watch (G3W)’, which provides a comprehensive global visibility, monitoring and tracking of GHG, and closing the gaps in Earth observations. The conference also deliberated on scaling up the ‘early warnings’ systems to alert countries of forthcoming climatic dangers well in advance, thus mitigating potential loss of life and property.?
• Another key highlight of the convention was the deliberation on implementation of Article 6 of the Paris agreement, which pertains to international carbon trading. Guidelines for carbon trades between countries (ITMOs) and crediting mechanisms were agreed upon, marking progress after years of negotiation.?
• While the above points were clear positive outcomes of COP29, the most heavily debated aspect has been the outcomes of the deliberation on climate financing. Addressing climate change is indeed an expensive proposition today because of the immense damage we have already caused to the environment over the past several decades. However, inaction is not an option, as the cost of tackling climate change is only expected to escalate in the years to come. An interesting analogy presented for this is that of an ‘insurance for humanity against climate change’ which requires a ‘high premium’ to be paid every year! Unfortunately, those most affected by climate change are the developing and under-developed economies, who are already on tight budgets to meet their basic social and economic needs. Hence, a decision was taken at COP29 to triple climate financing to developing economies from $100 billion to $300 billion annually. However, this is still way lower than the estimated $1.3 trillion estimated annual cost. This decision has not been well-received by most developing economies. India has openly voiced its discontent and rejected this decision, labelling it "abysmally poor" and an "optical illusion". The decision also seems to have been made without adequately considering the voices of developing nations. This decision was also criticised by others such as the Independent High-Level Expert Group on Climate Finance (IHLEG) and the World Wildlife Fund (WWF).?

While the amount of climate financing is one part of the issue, the bigger issue is the source of this funding. While we have commitments from developed economies on the funding they would provide, if majority of these funds were to be given as loans, it will only lead to greater financial stress for the recipient nations. If the economies were to depend solely on public funding, this could as well be a non-starter since most developing economies, including India, allocate the majority of public funds to food, health, education, poverty alleviation and economic development. How can these economies generate additional funds for climate financing? This would necessitate the private sector to get into the arena. However, what would be the incentive or return-on-investment for the private sector to take this up? Few ingenuous funding options, such as carbon markets, are emerging. But we need more such solutions. There doesn’t seem to be a clear answer on this yet!

Will these challenges be debated and discussed in COP30 at Bellam? Will we have progress on the various actions including financial commitments before COP30? We need to wait and watch.

Subramanian Chidambaran is the Chief Strategy Officer at Cummins India. He is responsible for driving strategic opportunities and steering the company’s future roadmap, with a focus on Cummins’ Destination Zero strategy for zero carbon emissions. Regarded as a leading voice in the industry, he regularly shares his insights on the topics of strategy, energy transition, and sustainability.