COP29 – Review of Outcomes and the Road to COP30

The 29th Conference of the Parties (COP29) to the United Nations Framework Convention on Climate Change (UNFCCC) took place in Baku, Azerbaijan, between 11 and 24 November 2024. Following Clyde & Co’s COP29 Briefing Paper and building on the firm’s presence in COP29’s UN Blue Zone, we provide a review of COP29’s main outcomes, and areas to look out for on the road to COP30 in 2025.

The Main Outcomes of COP29

COP29 was described as a “finance COP”, meaning the focus of the 2024 negotiations was on developing and agreeing the processes by which climate action will be paid for. This was reflected in COP29’s two main outcomes:

1. An agreement on the New Collective Quantified Goal on Climate Finance (NCQG); and 
2. The operationalising of the international carbon trading system overseen by the UN under Article 6 of the Paris Agreement. 

1. Agreement on Climate Finance

COP29 saw the culmination of three years of negotiations on the NCQG. The final agreed NCQG Decision will now form the foundation for international climate finance arrangements after 2025. This Decision contains an agreement by the Parties to the Paris Agreement to triple the annual target for climate finance from the current USD 100bn to USD 300bn by 2035. Developed country parties will take the lead in mobilising this sum for developing country parties (to see which Parties are considered developed and developing click here).

The Decision also contains a reference to a further annual climate finance target of USD 1.3tn of financing to be provided to developing countries by 2035. However, unlike the USD 300bn target, there is no formal obligation on countries to meet this larger target (which is to be raised from a variety of sources including private finance). 

Many developing country parties have rejected in principle taking on more debt to pay for their greenhouse gas (GHG) emission reduction and climate change adaptation measures. However, the 2035 targets may be met both via the provision of grants and concession-based finance and via higher interest loans and other commercial financial instruments from both public and private sources. Further, and for the first time, voluntary financial contributions made by developing country parties will also be formally counted as contributing to reaching UNFCCC climate finance targets. This has opened up the possibility for countries categorised as “developing”, such as China, to take on more formal leadership roles in the UN climate arena. 

2. Operationalising Carbon Markets

After 9 years of negotiations, parties at COP 29 agreed on the rules and methodologies for the international carbon trading system envisioned by Article 6 of the Paris Agreement. Article 6 sets out a system in which countries can trade emission reduction credits (known as ITMOs) between themselves so that an emission reduction in one country can be counted against the emissions generated in another country. This trading system is designed to incentivise states to invest in emission reduction projects as well as meet and surpass their own emission reduction targets, thereby lowering overall global emission levels and fostering sustainable development. 

Two Decisions were issued on the new international carbon market established under Article 6.4 (one at the beginning of COP29 and the other at the end). A further Decision was also issued at the end of COP on the rules for inter-state carbon trading under Article 6.2. 

These three Decisions have set out the final steps required for the markets and trading system to be operationalised, allowing for emission reductions assessed and authorised under Article 6 to be officially counted as contributing to countries’ emission reduction plans. Article 6 carbon markets are seen as a key tool for generating financial flows from polluting to less polluting countries through Article 6.2 and a means for States with natural carbon sinks such as rainforests and mangroves to financially benefit from their preservation. 

Look out for Clyde & Co’s upcoming guide to the Article 6 carbon markets, which will explain Article 6’s implications for states and corporate entities in greater detail.

COP29’s Successes and Failures

Clyde & Co’s COP29 Briefing Paper set out four areas in which a successful COP would see significant progress: 

1. The NCQG;
2. New and ambitious NDCs;
3. Agreement on Article 6; and
4. Loss and damage.

While a climate COP’s success or failure can be assessed differently depending on each state’s negotiating goals and outlook, this section sets out what progress was made on each of those four areas as well as highlighting one further area of interest.

1. The New Collective Quantified Goal on Climate Finance (NCQG)

The agreement on the NCQG is generally considered a heavily qualified success. The USD 1.3tn climate finance goal that was demanded by many developing country parties is contained in the final agreed Decision. However, this Decision only “calls on” parties to meet this goal and therefore the does not place any obligation on states to meet the goal by the 2035 deadline.

While the new USD 300bn goal for annual climate finance to developing countries triples the previous target of USD 100bn, the wording of the decision text only requires for this funding to be “mobilised” rather than “provided” (i.e. only made available rather than actively distributed) by 2035. Controversially, the funds made available can be made up of a wide variety of public, private, bilateral and multilateral sources of finance as well as undefined “alternative sources”. It remains unclear where the required increase in climate financing between 2025 and 2035 will come from and whether developed country states will commit greater levels of grant and concession-based funding than they have already. 

While coming under criticism from many sides, and despite last minute walk outs by significant negotiating blocs, the NCQG Decision was agreed at the end of COP29. While the NCQG Decision does not mobilise as much money as many developing country parties were advocating for prior to COP29, the NCQG is a compromise between the need for greater financial support for developing nations, without which they will be unable to reduce their GHG emissions and adapt to the negative effects of climate change, and the reduced ability of developed countries to provide that support out of public funds. 

Formally opening up climate finance targets to contributions from both the private sector and developing countries was seen by many developed country parties as a necessary step. This broadening of the contributor base will also allow developing country parties, such as China, who already provide financing for energy transition projects across the developing world, to gain recognition for the efforts they are making towards meeting the world’s climate goals. If successful, the NCQG’s attempt to foster a greater role for the private sector in adaptation and the energy transition could be beneficial for both developed and developing countries. The NCQG decision also has a scheduled review in 2030, and so may be renegotiated sooner than the 2035 target deadline.

2. New and Ambitious NDCs 

Prior to COP29, we suggested that a successful COP would see a number of new and more ambitious nationally determined contributions (NDCs – essentially countries’ emission reduction and climate change adaptation plans) announced during the conference. While the deadline for countries to announce their next round of NDCs is not until the end of February 2025, early and ambitious announcements would have put pressure on other countries to not only meet the February deadline but also increase their own ambition so as not to be left behind. In the end, only Brazil, the UAE and the UK announced new NDCs at COP29. 

The absence of significant numbers of new NDCs added to the failure to progress negotiations on the outcomes of the first global stocktake (GST). The first GST, which culminated in the UAE in COP28 last year, was a process that facilitated a review of the implementation of parties’ existing NDCs so that parties could raise their ambition and improve the implementation of their next round of NDCs. However, progress on this issue stalled as countries from the Like-Minded Group of Developing Countries (LMDC) negotiating bloc, especially Saudi Arabia, objected to any agreement that would give the UNFCCC oversight over how NDCs are prepared or implemented. Failure to progress the GST negotiations, compounded by a less ambitious NCQG than many expected, may now mean that it will be impossible for developing and climate vulnerable states to prepare and implement ambitious NDCs, placing the 1.5°C warming goal essentially out of reach. 

3. Agreement on Article 6

Agreement on Article 6 has been hailed as one of COP29’s real successes. After 9 years of negotiations, parties finally agreed on the framework rules and methodologies of a worldwide carbon market and trading system. Parties have designed the new Article 6 system so that it will allow countries to create and authorise reliable emission reduction credits that countries can use to either offset their own national emissions or trade with other countries. The three decisions that made up COP29’s agreement on Article 6 allow states to start developing their national carbon markets and facilitating inter-state trades. Although past carbon trading schemes have not been as successful as initially hoped for, parties are clear that the Article 6 carbon market should be an effective tool for persuading countries to reduce GHG emissions whilst financially rewarding developing countries for developing sustainably and protecting nature. Look out for Clyde & Co’s upcoming guide to the Article 6 carbon markets, which will explain Article 6’s implications for states and corporate entities.

4. Loss and Damage

Following the establishment at COP19 of the Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts (WIM), COP27 in Sharm el-Sheikh and COP28 in the UAE saw significant progress on integrating loss and damage into the architecture of the UNFCCC process. Loss and damage can be understood as the cost of the damage that will be inevitably incurred by countries due to the negative effects of climate change. However, while some procedural outcomes were reached at COP29, no substantive progress was made in loss and damage negotiations. References to loss and damage in the NCQG simply acknowledge existing failures to provide adequate funding to address the issue. No new funds have therefore been mobilised to address loss and damage specifically. Given the importance of this issue to many developing country parties, especially those that most vulnerable to climate change, it is expected that loss and damage will be an area of contention at future COPs.

5. Negotiation Deadlock

While agreement was eventually reached on the key outcomes of the NCQG and Article 6, one under-addressed failure of COP29 was that negotiations on many other issues broke down completely without any agreement or resolution. Parties could not reach agreement on issues including the outcomes of the first GST, just transition, adaptation and other finance and technology negotiations. The result of this failure being that these negotiations were postponed for either 6 months or a year. While these failures were not critical to the UNFCCC process in Baku, the incurred delay in what has been recognised as a “critical decade” for climate action, reflects the general struggles at COP29 for parties with opposing views to achieve compromise. 

Looking Ahead to COP30

While COP29 has now concluded, there are several issues that will continue to develop between the end of COP29 and the beginning of COP30 in Belém, Brazil, in November 2025. Here we set out some key issues to watch out for in the year ahead:

1. NDCs

All parties to the Paris Agreement must submit their new NDCs before the end of February 2025, to allow time for the content of those NDCs to be reviewed and analysed before COP30 in November 2025. While most states still claim that they will meet this deadline, informally many admit that it is likely that they will fail to publish their NDCs before the 61st meeting of the Subsidiary Bodies of the UNFCCC in the summer of 2025 or indeed before COP30 itself. The greater the number of states that meet the agreed deadline, the better understanding the world will have of whether countries are on track to meet their goals under the Paris Agreement. The impact of a failure to meet the publication deadline will be compounded by parties’ failure to agree on how to implement the outcomes of the first GST and the corresponding absence of guidance on the content and form of countries’ NDCs. This means that the content and form of each party’s new NDC is entirely at each State’s discretion and until each NDC is published there is little ability to predict its contents. 

2. Climate Finance

When the Least Developed Countries (LDC) and Alliance of Small Island States (AOSIS) negotiating blocs walked out of negotiations on the final day of COP29, one of their conditions for returning to talks was for a commitment by developed country parties to provide greater clarity on how the USD 1.3tn annual climate finance goal would be achieved (for more information on these and other negotiating blocs see Clyde & Co’s COP29 Briefing Paper). The NCQG Decision consequently refers to a “Baku to Belém Roadmap to 1.3T”. This “roadmap” aims to scale up climate finance flows to developing countries to facilitate GHG emission reduction and adaptation measures with a focus on non-debt based financial instruments. Given the lack of specificity in the NCQG decision, it is currently unclear what exactly will come out of the Baku to Belém Roadmap. However, its importance to many developing country parties means that if their concerns are not addressed in this process then COP30 in Belém may see further hard-fought finance negotiations around the USD 1.3tn goal. 

3. Article 6

A new UN carbon market under Article 6 of the Paris Agreement may have been operationalised at COP29, but it will be the first year of the market’s operation which will see the first examples of the market in action and what teething problems it may encounter. Uncertainty remains over the impact of Article 6 on the voluntary carbon markets and on existing emission trading schemes, and so the next year to COP30 will see crucial first impressions made around the quality of Article 6 credits and the effectiveness of the rules and methodologies that have been agreed. 

4. An International Court of Justice Advisory Opinion

Although independent of the UNFCCC process, in early 2025 the International Court of Justice (ICJ) will publish an Advisory Opinion on climate change. As part of this process, over 100 nations and organisations will make submissions to the ICJ from 2 to 13 December 2024. The ICJ’s subsequent Advisory Opinion will provide guidance on two main issues. The first will be on the nature of states’ obligations under international law to prevent climate change and damage to the environment. The second will be on the legal consequences that states should incur if, through their acts or omissions, they have made significant contributions to climate change and past environmental damage. Although the ICJ’s Advisory Opinion will not be binding, it will carry significant persuasive and moral weight and will shape the nature and direction of climate litigation against states and corporate entities for the foreseeable future. 

5. Multilateral Development Bank Reform    

The NCQG Decision adopted at COP29 emphasises the role that multilateral sources of finance, and especially multilateral development banks (MDBs), will play in meeting the new USD 300bn climate finance goal. The Decision highlights that the world’s current multilateral financial architecture will need to be reformed so that MDBs can focus on and facilitate investment into urgently addressing climate change. Some of the reform envisaged by the NCQG Decision includes shifting risk appetites for climate finance. This reform will require the nation-state shareholders of MDBs to instigate and lead reforms of the MDBs’ operational models, channels and instruments. The IMF and World Bank’s annual meeting in October 2025, just prior to COP30, will therefore be a crucial forum where we may see concrete proposals being made as to how MDBs should and will aim to respond to the invitation made by the parties to the UNFCCC for MDBs to take a greater role in climate financing.  

6. The Organisation of COP30 

Given COP30 will be the first official opportunity for countries in the UNFCCC process to consider and take stock of the new round of NDCs, expect the host country, Brazil, to begin calling on parties to announce new and ambitious NDCs sooner rather than later. Brazil will also likely focus on the symbolism of holding a COP in the city of Belém in the heart of the Amazon rainforest, although some have raised concerns about the impact on the Amazon of holding the event there. This year, both France and Argentina withdrew their negotiators from COP29 for different diplomatic reasons and the COP process itself came under criticism from experienced negotiators. It is likely that Brazil will therefore attempt to engage more diplomatically with parties and perhaps try to shrink the numbers of people granted permission to attend. The lead up to COP30 will also likely see the resolution of the uncertainty around the US’s position on the Paris Agreement and involvement with the UNFCCC process given incoming President Donald Trump’s stated commitment to once again withdraw the US from the Paris Agreement.

Key contacts: Wynne Lawrence and Nigel Brook