The 29th Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change takes place from 11-22 November in Baku, Azerbaijan. This note summarises the impact of the US election and the significant themes business leaders can anticipate from COP29.
The impact of the US election
With a second Trump term inbound and Republicans taking control of the Senate, the US will have a lame duck delegation at COP29. The delegation will participate in negotiations and join the final decisions by consensus, but will moderate its position as it did in 2016 – disrupting the political dynamics in Baku. Other countries may question whether the US will contribute towards the new climate finance goal. As international climate action cannot depend on strong US-China cooperation, China’s role at COP29 will be more keenly felt, as will that of other major emitters.
A second US withdrawal from the Paris Agreement is likely in early 2025, as well as potentially a heavily litigated attempt to withdraw from the UNFCCC. It is very unlikely that the US will submit an NDC with new 2035 climate targets by the February deadline. During the first Trump administration, the US was able to continue engagement at the UNFCCC while shifting its rhetoric – it remains to be seen whether it can do so again.
Finance: negotiating the new global goal
§ Agreeing ‘New Collective Quantified Goal’ is a primary objective: The Azerbaijani hosts have confirmed that agreeing to a new annual climate finance goal is their ‘top negotiating priority’ for COP29. Countries are seeking to agree on a figure, the ‘New Collective Quantified Goal’, that will represent the amount of finance the developed world should provide to emerging markets and developing economies (EMDEs) each year. The new target is expected to be significantly higher than the previous goal of $100 billion annually, with several developing countries having suggested a goal of at least $1 trillion per year.
§ Private finance and ‘blended finance’ will be central: A UN-backed expert commission, the Independent High Level Expert Group on Climate Finance, has recommended that any new agreement should include an explicit goal for mobilising private capital – noting that at least $1 trillion a year of private capital will be needed in EMDEs (excluding China) by 2030. The mobilisation of private finance needs to increase across the board, but while the investment case is there for investing in climate mitigation in middle-income countries, public or concessional finance will more likely be required for investment in low-income countries.
§ Carbon markets: Carbon markets will be in focus at COP29 due to the Article 6 negotiations which will, if agreed, drive growth. As ever, transparency and confidence in the market remain key issues to address.
Energy: efficiency, renewables, storage, and fossil fuels
§ Putting the goals of COP28 into action: Negotiations in Baku will focus on measures to double energy efficiency and triple the deployment of renewables by 2030, while ‘transitioning away from fossil fuels, accelerating this decade, in line with 1.5°C’, as agreed in Dubai. Massive growth in renewables is moving the world closer to the tripling goal according to the International Energy Agency (IEA), and progress on energy efficiency saved more than three times as much primary energy as was added by the growth in solar and wind capacity in 2022.
§ Energy storage in focus: The COP29 Presidency is focused on increasing global energy storage by six times before 2030. There will be a particular spotlight on ‘powering up’ EMDEs to make clean energy available and attractive everywhere by 2030. With the accelerating electrification of transportation and residential heating, and with the fast-growing energy requirements of data centres in support of AI, there will be a growing focus on the need to expand energy grid capacity as quickly as possible.
New national targets: ‘NDCs’ – 3.0
§ New national plans: Nationally Determined Contributions (NDCs) are a core part of the Paris Agreement – representing each country's commitment to reducing emissions and adapting to climate change. New and more ambitious NDCs are required every five years and are due ahead of COP30 next year in Belém, Brazil, with a formal deadline in February 2025. Some countries, such as Brazil, Azerbaijan, the UK, and the United Arab Emirates are expected to announce their NDCs at COP29 this year. Panama is the only country to have submitted so far.
§ Making NDCs investible: NDCs cover a 10-year period, meaning this round of NDCs will cover the period to 2035 and define the contours of the real economy for the next decade. To support investment, there is a push from an alliance of NGOs, civil society, governments, investors, and corporates under ‘Mission 2025’ to make the next NDCs much more ambitious, sector-specific, and catalytic through investment-positive policies – which include quantifying financing needs and providing predictable policies that de-risk investments and scale markets.
Industry: scaling investments and demand
§ Investment to scale green industry: A big push is expected on accelerating the transition among heavy-emitting industries – such as steel, cement, aluminium, and aviation – which account for ~25% of global emissions. Currently, over 450 low-carbon projects at industrial facilities across the world are seeking investment worth $700 billion, demonstrating the industry’s willingness to move, if adequate levels of finance can be provided.
§ Demand as a lever for progress: New policy announcements are anticipated on 1) spurring demand for low-carbon products, 2) reducing green premiums, and 3) scaling financial and technical assistance to support the green industrialisation of developing countries.
Nature: aligning with climate action
§ COP16 momentum: Following COP16 (the UN ‘Biodiversity COP’) which recently concluded, negotiators in Baku will focus on the enabling conditions to scale-up investments for protecting nature and transforming food systems. A central goal is to better align investments with the climate and nature goals, as set out in the Paris Agreement and the Kunming-Montreal Global Biodiversity Framework.
§ Brazil as a flashpoint: With the G20 in November and COP30 next year both hosted by Brazil, there is a renewed focus on the role of nature in fighting climate change, and alignment between climate and nature action. Companies with a large natural footprint, for instance in food, agriculture, forestry, or fisheries, can play an important role on the road to COP30.
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