Mark Hinnells

Opinion | Did Cop29 make any meaningful progress on climate change?

Market reforms are needed to motivate investors to deliver more affordable capital and to level the playing field between fossil fuels and renewables

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An attendee reacts during a closing plenary session at the COP29 UN climate summit in Baku, Azerbaijan, on November 24. Photo: AP

Mark Hinnells

Published: 5:30am, 1 Dec 2024

At the latest UN climate conference, representatives from each of the countries present sought to establish a new global climate finance regime. Developed economies had already committed to mobilise US$100 billion annually in climate finance by 2020 to help developing countries reduce emissions and adapt to climate change. This goal was belatedly reached in 2022, but the deal expires next year.

The Independent High-Level Expert Group on Climate Finance, chaired by the British climate economist Lord Stern, set out a need for US$1 trillion in annual external finance from all sources by 2030 to assist developing countries and help deliver the Paris Agreement.

In a report this month, the expert group warned: “Any shortfall in investment before 2030 will place added pressure on the years that follow, creating a steeper and potentially more costly path to climate stability. The less the world achieves now, the more we will need to invest later … Additionally, investment needs for adaptation and resilience, as well as loss and damage and restoration of nature, will rise sharply as climate and nature risks escalate.”

After two weeks of intense negotiations, delegates agreed on a new collective quantified goal to provide US$300 billion in annual funding. Meanwhile, climate financing is meant to reach at least US$1.3 trillion annually by 2035.

There is little clarity over who pays what, whether this is public or private financing, whether it is loans or grants to governments or a loan, grant or even equity investment in particular projects. The agreement encourages developing countries – which include China and many oil-producing economies – to make voluntary contributions.

Separately, the parties also agreed on the rules for a UN-backed market to facilitate the trading of carbon credits. Article 6 of the Paris Agreement allows one country to sell its savings to another country or to sell to an international scheme for aviation or shipping which, because they are international trades, are outside any nation-state target.