From the editor: COP29 compromise [Global Gas Perspectives]

COP29 in Baku last month culminated with developed countries agreeing a new pledge to provide no less than $300bn annually by 2035 to the developing world, to support adaptation to climate change. 

Every COP summit needs to end with a landmark agreement to have at least the perception of success. At COP26 in Scotland, more than 40 countries signed a vaguely-worded declaration to “phasedown” coal use over an unspecified amount of time. At COP27 in Egypt, there was an agreement on the creation of a “loss and damage” fund, to support vulnerable countries hit hard by floods, droughts and other climate-related disasters. But there are still limited details on how the fund will function in practice.

At COP28 in Dubai a year ago, there was the Global Stock-Take Agreement on “transitioning away from fossil fuels” that put the onus on the demand side, which means relatively little as long as oil and gas consumption continues rising.

Dubbed the “finance COP,” COP29 strove to reach a deal between developed and developing countries on significantly scaling up climate financing. The resulting agreement on the New Collective Quantified Goal (NCQG) on Climate Finance was hard-won, following tense debates where developed countries dragged their heels, and was finally announced early on the morning of  November 24, two days after the summit was meant to conclude.

The developed countries that committed to deal comprised Annex II parties to the UN Framework Convention on Climate Change: Australia, Austria, Belgium, Canada, Denmark, European Community, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the UK and the US.

However, a lot more work is needed to determine which countries will pay how much and over what period. It may take some years for significant financing to actually materialise, especially given that the target is a decade away, which is likely to encourage complacency. 

What is more, the world’s richest economy, the US, may not contribute much at all over the next four years, given President-elect Donald Trump’s intent to pull the country once more out of the Paris Agreement.

Developed countries will not face any penalties for failing to meet the target, just as they did not for failing to meet the 2020 target of providing $100bn in annual climate financing. That goal was eventually reached, two years later, with the commitment due to expire in 2025.

There was also a notable absence of other countries volunteering to the Annex II parties in contributing, including major emitters such as China and India, as well as the Gulf oil states.

The agreement also called on parties to work together towards a broader goal of providing $1.3 trillion in climate financing annually by 2035 to the developing world that would include funding from both public and private sources. This is in line with the UN’s estimate for what would be needed for climate adaptation and mitigation by 2030. But there is likewise limited vision on how this ambition will be realised.

It is also questionable how impactful $300bn will be in financing efforts in the developing world. Certainly, developing nations were far from impressed by the result. 

“I regret to say that this document is nothing more than an optical illusion,” Indian delegation representative Chandni Raina said at the summit’s closing summit, according to Reuters. “This, in our opinion, will not address the enormity of the challenge we all face. Therefore, we oppose the adoption of this document.”

The climate envoy for the Marshall Islands, which has been made more vulnerable to tropical storms and typhoons because of rising sea levels and temperatures, said: “We are leaving with a small portion of the funding climate-vulnerable countries urgently need. It isn’t nearly enough, but it’s a start.”

Poorer nations had hoped that the bulk of the $1.3 trillion to come from public sources, supplemented with private funding, and not the other way around.

Put in context, Swiss Re estimates that total economic costs from climate-related disasters exceeded $280bn globally in 2023, which means $300bn may barely cover annual damages now, let alone the needs in a decade.

The pledged sum amounts to a mere 0.28% of global GDP in 2023, or around 13% of current global military spending. It is also half the $600bn that the International Energy Agency (IEA) estimates was spent on fossil fuel subsidies in 2023.

And under a Trump presidency, even this relatively meagre pledge from the governments of developed countries may be very slow to materialise without US leadership, given the expectation that Washington should provide the largest share of the financing.

Disappointments at one COP put even greater pressure on the next one to deliver results. Repeating sentiments that have voiced regarding past summits, Brazilian President Luiz Inacio Lula da Silva stressed that COP30 in Brazil next year must be the “turnaround COP.”

“COP30 will be our last chance to avoid an irreversible rupture in the climate system,” he said.