Key Outcomes and Business Implications of COP29

The 29th UN Climate Change Conference (COP29), held in Baku, Azerbaijan, wrapped up with pivotal decisions poised to influence global climate policy while presenting both challenges and opportunities for businesses.??

A New Climate Finance Goal?

At COP29, countries agreed on a new climate finance target of $300 billion annually for developing nations by 2035—a significant increase from the previous $100 billion goal. While this marks progress, it still falls short of the $1.3 trillion experts say is needed to tackle the escalating climate crisis. UNFCCC's Simon Stiell called the commitment "humanity's insurance policy" against worsening climate impacts.?

This funding aims to help developing nations transition to greener economies, unlocking major opportunities for businesses in renewable energy, sustainable infrastructure, and technology transfer in emerging markets.?

?

Advancements in Carbon Markets?

One of COP29's key achievements was the finalization of guidelines for carbon markets under Article 6 of the Paris Agreement, enabling countries to trade carbon credits with greater transparency and efficiency.?

• Paris Agreement Crediting Mechanism (PACM): Now operational, the PACM allows the UN to certify and issue carbon credits. Two essential standards—on methodologies and removals—were approved, establishing a framework for generating credits.?

• International Cooperation: Rules under Article 6.2 were refined to streamline the transfer of emissions reductions between countries. These “Internationally Transferred Mitigation Outcomes” (ITMOs) can now support national climate targets or compliance schemes like CORSIA, which governs aviation emissions.?

The operationalization of the PACM and Article 6.2 has set the foundation for a global carbon credit market projected to reach a valuation of $250 billion by 2030.?

This image explains the progress of Article 6, highlighting the gradual evolution of carbon trading systems, bilateral agreements, and the development of centralized UN-managed frameworks for climate action.?

?

Future Expectations for Carbon Markets?

The focus now shifts to scaling Article 6 mechanisms. Demand for carbon credits is expected to increase, particularly from airlines and countries aiming to meet their 2030 climate goals. Businesses looking to secure ITMOs for compliance or investment will face stiff competition. Acting early and investing in carbon credit projects will be essential to gain access to these limited resources.?

Building Momentum?

Key next steps include accelerating the development of PACM methodologies and transitioning projects from the Kyoto-era Clean Development Mechanism to the new framework. The robust standards established under Article 6.4 are set to enhance market integrity and promote global standardization.?

Companies specializing in emissions reduction technologies and climate adaptation solutions are well-positioned to capitalize on growth opportunities in the evolving carbon market landscape.?

A Path Forward?

COP29's outcomes provide a clear framework for global carbon markets to grow. To continue down this path with the capacity-building, private sector involvement and early investment will be critical. While challenges remain, these developments mark a significant step in leveraging carbon markets to achieve global climate goals.?

The dual implications of COP29's decisions for businesses are clear. Rising compliance and adaptation costs underscore the urgency of proactive strategies. Simultaneously, aligning with COP29 goals offers lucrative opportunities in the green economy, from renewable energy investments to participating in the expanding carbon trading ecosystem. Businesses ready to adapt can position themselves as leaders in the sustainable transition.?

For a closer look at key themes and challenges for COP29' and insights on voluntary carbon markets, check out our expert interview with FORLIANCE’s Market Policy Expert: https://forliance.com/news-and-insights/news-detail/cop29-kicks-off-in-baku-paving-the-way-for-decisive-climate-action

?