COP29 delivers hat trick with $1.3 trillion on the cards but lack of stronger mitigation and finance action seen as ‘betrayal’

With the end of a fossil fuel era perceived as an ‘economic inevitability,’ a new energy world order is slowly emerging to future-proof and diversify the energy mix in preparation for a net zero future. Against the backdrop of these winds of change in the global energy landscape, rising geopolitical tensions, high costs, and economic woes, the 29th Conference of the Parties (COP29) has managed to reach a consensus on tripling climate finance while setting a new worldwide target to direct $1.3 trillion of climate finance to developing countries by 2030.

Key takeaways:

• Overtime bears fruit as COP29 participants make progress on NCQG
• Global South and North strike a deal on climate finance
• New deal triples climate finance and puts $1.3 trillion on the table by 2030
• Climate activists wanted more climate change mitigation efforts
• Finance commitments seen as insufficient to combat climate change
• Global North accused of watering down COP’s outcome and NCQGs
• COP29 and climate action: Highlights from ‘finance COP’

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Dubbed the ‘climate finance COP,’ COP29 was expected to bring a pivotal shift in the final text to build upon the accomplishments at other COPs and turn the tide once and for all in favor of renewables by unlocking trillions required to pay the net zero bill and ensuring coal, oil, and gas growth would be stopped in its tracks.

Azerbaijan got selected as the host of this year’s COP edition and tasked with the high-stakes climate finance negotiations in Baku, which began on November 11 and were due to end on November 22. However, the participants at the UN Climate Conference, attended by global leaders from close to 200 countries, were unable to strike a deal on climate finance to end the COP on time.

As a result, they went into overtime to settle their differences and agree on a common goal, ironing out the details of a new financial target to set the stage for the achievement of Paris Agreement goals. Given the rising urgency to tackle climate change following yet another year of heatwaves, floods, and hurricanes, the UN climate negotiations were perceived as a beacon of hope to build a better future.

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Some controversy still surrounded the event, including Global Witness’ undercover analysis, which found that 1,773 fossil fuel lobbyists were present at COP29, mostly as part of individual countries and trade associations’ delegations.

António Guterres, UN Secretary-General, explained: “COP29 comes at the close of a brutal year – a year seared by record temperatures, and scarred by climate disaster, all as emissions continue to rise. Finance has been priority number one. Developing countries swamped by debt, pummelled by disasters, and left behind in the renewables revolution, are in desperate need of funds.

“An agreement at COP29 was absolutely essential to keep the 1.5 degree limit alive. And countries have delivered. I had hoped for a more ambitious outcome – on both finance and mitigation – to meet the great challenge we face. But this agreement provides a base on which to build. It must be honoured in full and on time. Commitments must quickly become cash. All countries must come together to ensure the top-end of this new goal is met.”

COP29 has managed to ensure more climate finance for developing countries, after hours of intense negotiations. COP29, aiming for at least $300 billion in public funding by 2035, also established a target of $1.3 billion by 2035 for total investments in developing countries’ climate efforts from both public and private sources.

According to the COP29 Presidency, the new climate finance target and follow-up to COP28’s historic agreement on transitioning away from fossil fuels have been central to the negotiations to secure funds to assist vulnerable countries, primarily in the Global South, in tackling climate change challenges while accelerating the worldwide switch to green energy.

The firm’s previous draft related to the new collective quantified goal (NCQG) contained a call for all participants to work together to scale up financing for developing countries’ climate action from all public and private sources to at least $1.3 trillion per year by 2035, including a decision to expand the goal of jointly mobilizing $100 billion per year to $250 billion by 2035 with developed countries taking the lead in climate action.

The United Nations confirmed that a central focus on climate finance saw COP29’s participants featuring nearly 200 countries in Baku reach a breakthrough agreement that would triple public finance to developing countries, from the previous goal of $100 billion annually to $300 billion a year by 2035 while securing joint efforts of all actors to work together to scale up finance to developing countries, from public and private sources, to the amount of $1.3 trillion per year by 2035.

While disclosing the new agreement on climate finance, Lars Aagaard, Denmark’s Minister of Climate, Energy, and Utilities, underlined: “I am pleased that last night we agreed on a new agreement on climate finance that is both ambitious and realistic, which we have been working for. More money is now coming to help developing countries with their climate action and adaptation. I recognise that the vulnerable countries had hoped for more. Just as there has also been a pain threshold for several countries that have to pay.

“From the Danish side, we will work to get more funds into play – including private funds, so that we create better certainty about the high funding target. We have also achieved the breakthrough that more prosperous developing countries now also contribute to the climate finance target, and thereby we are taking a step towards changing the division between rich and developing countries that has run out of time.”

Aagard, who described the reduction agenda result as “disappointing,” elaborated on his views by adding that the agenda failed to reach an agreement to confirm in a text how to follow up on the Dubai decision last year regarding the global stocktake, including tripling renewable energy, doubling energy efficiency, and phasing out fossil fuels.

Denmark’s Minister for Climate, Energy and Utilities, pointed out: “It is very unsatisfactory that we could not reach agreement on an agreement text on reductions. Much more climate action is needed, and this is in stark contrast to the sluggishness that has characterized the negotiations, because the oil countries have consistently resisted progress.

“There was a very thin result on the table, and it was not good enough for several parties. We will do our utmost to improve the outcome in the further negotiations next year. To create a basis for the real progress needed at COP30 in Brazil, where Denmark together with the EU Commission will lead the EU.”

Aagard outlines that the last set of rules under the Paris Agreement, which deals with trading in climate credits, was also closed at COP29, thus, it was possible to establish a framework that in practice ensures “robust and transparent” credits that deliver real reductions, thanks to an agreement on Article 6. The final building blocks are portrayed to set out how carbon markets will operate under the Paris Agreement, making country-to-country trading and a carbon crediting mechanism fully operational.

Regarding country-to-country trading, the way countries authorize the trade of carbon credits is now clarified alongside the operation of registries tracking this. Reassurance has been provided that environmental integrity will be ensured upfront through technical reviews in a transparent process. The work on carbon markets does not stop in Baku, as the supervisory body setting up the new carbon crediting mechanism has received a long 2025 to-do list and will continue to be held accountable.

These breakthroughs on the Baku Finance Goal, the full operationalization of the Loss and Damage Fund’s total pledged financial support of over $730 million, and UN carbon markets are said to be defying expectations. Following a year of intensive multilateral diplomacy led by the Azerbaijani COP29 Presidency, these mark the end of the first decade after the Paris Agreement by taking “a huge step towards reaching climate goals over the next ten years,” underlined the finance COP’s Presidency.

Mukhtar Babayev, COP29 President, highlighted: “When the world came to Baku, people doubted that Azerbaijan could deliver. They doubted that everyone could agree. They were wrong on both counts. With this breakthrough, the Baku Finance Goal will turn billions into trillions over the next decade. We have secured a trebling of the core climate finance target for developing countries each year. The Baku Finance Goal represents the best possible deal we could reach, and we have pushed the donor countries as far as possible.

“We have forever changed the global financial architecture and taken a significant step towards delivering the means to deliver a pathway to 1.5C. The years ahead will not be easy. The science shows that the challenges will only grow. Our ability to work together will be tested. The Baku Breakthrough will help us weather the coming storms.”

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The COP29 Presidency of Azerbaijan underscores the success related to these top priorities for the UN Climate Summit represents “a significant uplift from the previous climate finance goal of $100 billion and will unlock a new wave of global investment.”

With COP29 ending the decade-long wait for the conclusion of Article 6 negotiations on high-integrity carbon markets under the UN, financial flows from compliant carbon markets could reach $1 trillion per year by 2050 and have the potential to reduce the cost of implementing national climate plans by $250 billion per year.

“When combined, the Baku Finance Goal and Article 6 will forever change the global climate finance architecture by redirecting investment to the developing world. The Baku Finance Goal is the centrepiece of a package of agreements that deliver progress across all climate pillars. This includes getting the Fund for Loss and Damage up and running and ready to distribute money in 2025,” emphasized the COP29 Presidency while adding that these deliver some of the most complex and controversial tasks in multilateral climate action and mark “a critical step in putting in place the means to deliver a pathway to 1.5C.”

Since the International Energy Agency (IEA) expects global clean energy investment to surpass $2 trillion for the first time in 2024, the new finance goal at COP29 builds on significant strides forward on global climate action at COP27, which agreed to a historic Loss and Damage Fund, and COP28, which delivered a global agreement to transition away from all fossil fuels in energy systems swiftly and fairly, triple renewable energy and boost climate resilience.

Simon Stiell, Executive Secretary of UN Climate Change, remarked: “This new finance goal is an insurance policy for humanity, amid worsening climate impacts hitting every country. But like any insurance policy – it only works – if premiums are paid in full, and on time. Promises must be kept, to protect billions of lives. It will keep the clean energy boom growing, helping all countries to share in its huge benefits: more jobs, stronger growth, cheaper and cleaner energy for all.”

The UN Climate Change also acknowledged that COP29 reached an agreement on carbon markets, which several previous COPs did not achieve. As a result, the trio of agreements is anticipated to help countries deliver their climate plans faster at a less cost-intensive level and speed up progress in halving global emissions by 2030.

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Guterres further noted: “First, countries must deliver new economy-wide national climate action plans – or NDCs – aligned with 1.5 degrees, well ahead of COP30 – as promised. The G20 countries, the biggest emitters, must lead. These new plans must cover all emissions and the whole economy, accelerate fossil fuel phase out, and contribute to the energy transition goals agreed at COP28 – seizing the benefits of cheap, clean renewables.

“The end of the fossil fuel age is an economic inevitability. New national plans must accelerate the shift, and help to ensure it comes with justice. Second, we need swift action to deliver on commitments made in the Pact for the Future. Particularly on effective action on debt; increasing concessional finance and improving access; and substantially increasing the lending capacity of the Multilateral Development Banks, with adequate recapitalization.”

Not everyone is happy with the deal made in Baku, as some climate groups and organizations see it as a “betrayal,” accusing developed countries of failing people and the planet. One of these is the Climate Action Network (CAN), which “wholeheartedly rejects the outcome of COP29 in Baku,” claiming that the linchpin of the climate talks was public finance, but developed countries did not deliver despite their historic responsibilities.

Tasneem Essop, Executive Director of Climate Action Network, said: “This has been the most horrendous climate negotiations in years due to the bad faith of developed countries. This was meant to be the finance COP, but the Global North turned up with a plan to betray the Global South. In the end, we saw the same story play out, with developing countries being left little choice but to accept a bad deal.

“As civil society we called on developing countries to reject a bad deal, a deal that would betray the people in the Global South. We are not defeated; we will fight back home, we will be out in numbers and louder than ever. The fight is far from over.”

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Moreover, Climate Action Network finds the figure for the climate finance goal “wholly inadequate,” and believes that the quality of finance is missing with no equity or justice reflected in the text, as in its eyes the direction of finance from developed to developing countries did not come through.

With this at the forefront, the NGO underlines that the goal “completely missed the mark” in responding to the needs of developing countries and places the blame at the developed countries’ door, accusing them of using the U.S. election result, and the imminent return of the former U.S. President, Donald Trump, to the White House next year, as an excuse to push through “this weak outcome.”

“The US has been trying to dismantle the convention and the Paris Agreement for years, Trump or no Trump. Two years of progress on just transition, where parties were starting to shape a common vision, were trashed due to bad process, showing dismay for the millions of people concerned about their lives, jobs, livelihoods. In COP29, justice was not served on any front,” underscored Climate Action Network.

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Mohamed Adow, Director of Energy and Climate Power Shift Africa think tank and Climate Justice Advocate, highlighted: “COP29 has been a disaster for the developing world. It’s a betrayal of both people and planet, by wealthy countries who claim to take climate change seriously. Rich countries have promised to ‘mobilise’ some funds in the future, rather than provide them now. The cheque is in the mail. But lives and livelihoods in vulnerable countries are being lost now.

“At this ‘Finance COP’ not a single dollar of real climate finance has been provided right now. Not only did the global north impose a low-ball finance figure, it comes into force 11 years from now. This deal is too little, too late. The rich world staged a great escape in Baku. With no real money on the table, and vague and unaccountable promises of funds to be mobilised, they are trying to shirk their climate finance obligations. Leaving the world without the resources needed to avert climate catastrophe.”

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Adow emphasizes that poor countries needed to see “clear, grant based, climate finance that would boost their ability to deal with the impacts of the climate crisis and accelerate their decarbonisation efforts.” This, according to him, was “sorely lacking.” For Adow, climate credits equal ‘pollution permits’ that will enable “rich polluters to cheat their way out of actual emission reductions through the use of dubious pollution permit markets.”

“The carbon market rules will allow the richest to continue polluting, placing at risk the 1.5C target, while shifting the burden to developing countries. COP host – a national embarrassment This has been a shamefully led summit by Azerbaijan which deserves to be a global embarrassment for the wealthy countries and the COP president that facilitated them to dodge their obligations,” according to Adow.

The COP29 Presidency has confirmed its progress in advancing several areas it designated as a priority for propelling forward ambitious climate action, placing a significant emphasis on the importance of transparency and biennial transparency reports (BTRs) by launching the Baku Transparency Platform and calling for early submissions, which 11 participants and the European Union decided to do before the December 31 deadline.

One of the key highlights of COP29 is encapsulated in the progress toward the goal of operationalizing Article 6, which would direct resources to the developing world and reduce the cost of implementing national climate plans. To make this happen, consensus on Article 6.4 standards for trusted and transparent carbon markets was reached and negotiations on Article 6.8 were concluded to facilitate international cooperation through non-market approaches to implementing national climate plans and promoting sustainable development.  

The need to raise ambition for mitigation and adaptation has been raised and Multilateral Development Banks (MDBs) announced projections for their contributions to climate action as $170 billion per year by 2030, with $120 billion for low- and middle-income countries. Several countries—including the US, China, EU, UAE, UK, Brazil, Canada, and Nigeria—came together and announced policies focused on reducing methane from organic waste. 

While investor groups with over $10 trillion in assets united to deploy private capital into climate markets, pledges to climate finance projects and initiatives totaled $7.3 billion on Finance, Investment and Trade Day, with the largest support coming from the Asian Development Bank ($3.5 billion), the Azerbaijani banking sector ($1.2 billion), Sweden ($760 million) and Canada ($1.5 billion from the Canadian government and $290 million from philanthropies) on investments in combating impacts of melting glaciers, green taxonomies, and climate action.  

Additionally, development finance institutions pledged to support the 10 GW Lighthouse Initiative for renewable hydrogen projects in emerging markets and developing countries while more than 50 shipping industry actors agreed to accelerate zero and near-zero emission fuels by 2030, translating to at least 5 million tonnes of green hydrogen. 

The COP29 aimed to emphasize the role of cooperation and peace as indispensable to global climate action—with the COP Truce Appeal garnering support from 132 countries and over 1,200 organizations, as well as the Baku Call on Climate Action for Peace, Relief and Recovery being adopted, an initiative which will launch the Baku Climate and Peace Action Hub to address the urgent nexus of climate change, conflict, and humanitarian needs. 

With Germany’s pledge of $65.1 million and Ireland’s pledge of $13 million, contributions to the Adaptation Fund reached $133 million as Climate Investment Funds went up, collecting additional contributions from the U.S. ($325 million), Germany ($220 million), and the UK ($211 million).  

While 25 countries and the European Union indicated their intentions to put forward national climate plans that reflect no new unabated coal in their energy systems, Mexico announced its commitment to net-zero emissions by 2050, meaning all G20 members have committed to a net-zero target.  

The COP29 Presidency’s Action Agenda called on a wider group of stakeholders to contribute to global climate action by confronting some of the most pressing problems and reinforcing coherence and COP-to-COP continuity, launching its pledges and declarations on energy storage, grids, zones, corridors, and hydrogen, which were endorsed by 150 parties.  

While over 75 governments and 1,100 members of the digital tech community endorsed the declaration to use digital tools to reduce emissions and strengthen climate resilience, the COP29 Declaration on Water for Climate Action received endorsements from over 50 countries, aiming to take an integrated approach to combating climate change on water basins and water-related ecosystems and include these measures in national climate policies, including NDCs and NAPs.  

While reflecting on the events and conclusions reached at COP29, the International Renewable Energy Agency (IRENA) also recognized that progress on the energy transition is geographically imbalanced, with investments largely concentrated in a few developed countries and emerging economies. Therefore, IRENA believes the new finance climate goal reached at COP29 in Baku will help countries keep energy transitions growing and shift to a low-carbon economy.

Francesco La Camera, IRENA Director-General (DG), concluded: “Reaching an agreement at COP29 was essential to keep the 1.5°C global warming limit alive. Although the new financial aspiration falls short of what is needed to meet the Paris Agreement goals, it acknowledges the urgent need for intensified collective efforts to address geographical disparities in climate finance, with developed economies playing a more significant role.” 

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