Reflecting on COP29

No-one can say COP29 wasn’t going to be controversial – from its location in a petrostate, to disagreements over how much annual funding should be directed toward developing countries, to some late-stage walkouts.

But while no COP is ever perfect, I don’t think we should dismiss some of the genuine progress that was made at this year’s event. Three things struck me.

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Article 6 is finally agreed

After almost 10 years of discussion and two aborted attempts, COP29 finally dried the ink on an agreement over carbon trading under Article 6 of the Paris Agreement. I think this step was truly consequential, although it has taken too long to arrive.

The newly agreed rules lay the path for credibility and expansion in the carbon markets. They set the requirements for trading between countries and the criteria for carbon reduction and removal activities under the Paris Agreement Crediting Mechanism. The first UN-backed credits could be available by the end of 2025 and should provide a much-needed foundation for the public and private sector to invest confidently in these markets. ?

In truth, a lot more work is needed to fully realize this potential. The agreed standards did not address some crucial specifics, including the minimum durability of storage for removals and how to address the risk of reversals. But, above all, I hope the next steps focus on encouraging well-defined, high quality carbon credits and penalizing those of a lower standard.

It’s also important to remember that the goal of carbon credit markets should be to lower the cost of decarbonization and help mitigate climate change. They are meant to help businesses to decarbonize faster, not provide them with excuses to not do so.

Ideally, in the coming years we will see a unification of today’s fragmented voluntary carbon markets into a high-quality global marketplace that helps achieve this goal. Indeed, Switzerland has been a leading voice in operationalizing Article 6, and we at UBS are keen to support participate in its formalization, to scale up carbon markets and to contribute by developing innovative products.

In fact, we will shortly be releasing a new white paper that includes thoughts on such carbon removals. Plus, they will be a central topic at the Building Bridges conference in Geneva, from 9-12 December.? Several of my UBS colleagues will be involved in various panels and workshops there, and I will participate in the closing ceremony.

Scaling up developing country finance

It’s an understatement to say that the decision by developed countries to ?commit USD 300bn annually for developing nations by 2035 via the New Collective Quantified Goal disappointed developing countries. They had been looking for USD 1.3trn, after all.

Yet while I understand this unhappiness, successfully agreeing to raise the annual target to three times the level of the previous USD 100bn commitment was still a definite step in the right direction.

The truth is that climate finance targets tend to be one of the biggest sticking points in any COP negotiations, and this challenge is only being exacerbated by the current geopolitical landscape. Nonetheless, the agreed increase should have real, positive effects. And I believe that it could, if combined with private finance initiatives, act as a financial multiplier that helps total annual commitments rise further still.

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COP 30 – no let-up

There were a series of unresolved disagreements from COP29, which will need to be addressed again next year, in Belem, Brazil. I’m concerned that it will be difficult to conclude these delayed negotiations on top of a packed agenda.

It’s already clear that COP30 will be significant. Crucially, most countries must submit new, hopefully more ambitious Nationally Determined Contributions (NDCs), to reduce total greenhouse gas emissions. Plus, it will be time to evaluate progress made on various pledges from previous COPs. This includes the Global Methane Pledge, with its goal to cut global methane emissions by 30%, plus the grids and storage pledge made at COP29 – its signatories have said they will build over 1,500 gigawatts of energy storage and boost grid capacity. ?

Brazil also has an understandable desire to better link nature and climate in the meeting, building on the recent COP16 held in neighboring Colombia. I agree the link between the two should be better defined; they are inextricably entwined.

In addition to all of this are the outstanding areas from COP29. They include providing more detail about how climate finance can scale closer to developing countries’ demands, and agreeing on stricter definitions of carbon removals and methodologies under the Article 6 rules. And several climate adaptation and mitigation plans also need to be resolved, after being delayed over numerous disagreements. ?

As I said, it will be challenging to cover all of this. However, it’s important to remember that progress from COPs is incremental and hard-won, often taking years of effort. It’s a process that can prove frustrating for climate activists and media onlookers.

Having worked in this field for many years, I think all of us should celebrate the successes that are achieved – and then strive to reach the next goals a little faster.