Climate Change Reflections on COP29: Progress Amid Political Headwinds

COP29 concluded after grueling negotiations, with final texts gaveled in the early morning more than 36 hours past the official end of the conference—a clear indication of the complexity and difficulty of the negotiations. Despite challenging global political dynamics, including shifts in leadership in key countries, the outcomes represent meaningful progress towards mobilizing the finance needed to support the green transition in developing countries.

From How Much to How

COP29 was dubbed the “finance COP” because one of the key agenda items was establishing the New Collective Quantified Goal. This goal refers to the resources that developed countries need to mobilize to support developing countries in their green transition. The current goal is $100 billion per year between 2020 and 2025.

The agreement reached in Baku has multiple layers. The most visible one has been dubbed the “quantum” or the number that will replace $100 billion. Countries agreed to a layered approach with two numbers:

• A $1.3 trillion acknowledgment of the funding needed for developing countries to combat climate change and adapt to its impacts.
• A $300 billion mobilization goal—a threefold increase from the previous $100 billion commitment. Adjusting for inflation since the $100 billion goal was first set in 2009, this represents at least a doubling in real terms.

While these figures are significant, they are only part of the story and in our view, not the most important part. One of the most significant aspects of the COP29 agreement is the increased attention to how climate finance will be delivered. This includes, first, reforming global financial institutions. Key paragraphs in the decision call for changes to multilateral development banks like the World Bank, aiming to unlock and direct resources more efficiently. It also calls for removing disenablers and providing easier access to funds. While not headline-grabbing, commitments to streamline finance access address a long-standing grievance of developing countries. Bureaucratic hurdles and reporting requirements have often delayed or diluted the impact of funds, making this development potentially one of the most important outcomes of COP29.

Who should contribute?

Another subtle but important shift in the agreement is a call for newly wealthy countries to contribute to climate finance. In order to understand this, we have to give a little background. At an abstract level, the global climate regime represented by the United Nations Framework on Climate Change and the Paris Agreement is about wealthy countries agreeing to peak their emissions as quickly as possible while helping less wealthy countries take a greener development path that peaks their emissions quickly and never produces as much as wealthy countries. The idea is that if every country goes through the same non-green process of development as the United States and most of the countries in the European Union did in the last century,  climate change will be so extreme everyone will suffer. They need both financial and technical support to do this. And in the lingo of UN Climate Negotiations, these are called the “means of implementation.”

Climate negotiations have never given thresholds or criteria for being a wealthy country instead they have taken two approaches. When countries adopted the Convention in 1992, they simply gave a list of countries who must reduce fossil fuels (Annex I) and who needed to contribute financially (Annex II). Annex I included all the countries that were obviously developed countries by common understanding in 1992 (United States, United Kingdom, Canada, European countries, Australia, Japan, etc.) and Annex II was all of these countries minus the former Soviet bloc. Importantly, China, India, and the Gulf states were not on either list; at the time, this was seen as an appropriate move.

When the Paris Agreement was adopted in 2015, the world had shifted considerably, and rich countries were no longer satisfied with the obligations fixed over twenty years earlier. But rather than give a new list, the Paris Agreement simply refers to different obligations of “developed” and “developing” countries without giving any criteria at all. In the context of finance, developed countries have a binding obligation to provide financial resources to developing countries (Article 9.1) and wealthier developing countries are encouraged to do so as well (Article 9.2). This bifurcation, however, is unquantified. A third article of the Paris agreement says that developed countries should take the lead in mobilizingresources for developing countries. This mobilization goal is what the old $100 billion goal and the new collective quantified goal of $300 billion per year by 2035 is referring to.

The most contentious issue on finance in the negotiations themselves was not the quantum, but the question of who should contribute. Developed countries argued that the world looks different 30 years after the Framework Convention was adopted and that some of the world’s largest economies (e.g. China) or largest per capita economies (e.g. Singapore and Saudi Arabia) should begin contributing. These countries argued back that the traditional list of donor countries had historical obligations because they were responsible for the majority of emissions. Developed countries countered that this is no longer true, as China’s cumulative emissions have now surpassed the emissions of the European Union and are second only to the United States.

In the final text, parties to the Paris Agreement moved a small step towards an expanded donor base. First, although in the Paris Agreement “other parties” were always encouraged to provide support on a voluntary basis, the COP29 text is a bit more explicit. It says “[The governing body of the Paris Agreement] encourages developing country Parties to make contributions, including through South–South cooperation, on a voluntary basis”. The use of the term “South-South cooperation” is notable because it is China and India’s preferred way of describing their development aid. Although this paragraph doesn’t change the legal obligations of developing countries, it does send a clearer signal that as they develop, the expectation of the world is that they contribute.

Another paragraph of the decision is worth noting. Paragraph 8 sets the $300 billion goal, and one part of it also recognizes “the voluntary intention of Parties to count all outflows from and finance mobilized by multilateral development banks towards achievement of the goal set forth in this paragraph”. This is another area of potential donor expansion. Multilateral development banks (MDBs) such as the World Bank, but also regional banks such as the Asian Development Bank and the African Development Bank, have major shareholders that include non-Annex II countries, such as China and India. To be a shareholder of an MDB is to make financial contributions to it. So this paragraph also subtly expands the donor base and does so in a way that tracks contributions to MDBs, which is country-driven determination, but which will evolve along with the fiscal capacity of countries.

Negotiation Dynamics: The Fossil Fuel Debate

As is often the case at COP, the issue lurking in the background of everything—and affecting the negotiations about finance—is climate mitigation. A significant rift emerged between countries advocating for a strong emphasis on phasing out fossil fuels (most of Latin America, small island states, least-developed countries, and the global north) and those resisting this push. While the financial aspects of the deal dominated headlines, these tensions over fossil fuels exerted pressure across the entire agenda, leading to very tough negotiations even on parts of the COP agenda that are routine.

This showed up most clearly in negotiations about the “UAE Dialogue,” which is supposed to be about “implementing the global stocktake outcomes.” The stocktake, the marquis headline of COP28, famously called for a transition away from fossil fuel systems, a tripling of renewable energy sources, reductions in fossil fuel subsidies, and so-forth. While agreed by consensus, the Arab Group and the Like-Minded Group of Developing Countries (which includes China, India, Venezuela, Iran, and Saudia Arabia) frequently opposed reinforcing these mitigation decisions by referencing them in COP29 decisions. In response, the small islands, Latin American countries, and the global north pushed back and refused to take actions that they saw as backtracking from commitments made last year.

Ultimately, the highest-level decisions at COP are made as a package deal and furious debates about mitigation often stalled progress about other key priorities including finance and adaptation. Negotiators tried to resolve these issues until the very end of COP (which ran over by nearly a day and a half) but ultimately could not reach an agreement. Instead, they agreed to forego an finalized agreement on these issues in order to preserve the progress that was made on all of the other items including finance. The discussion about the UAE roadmap will continue at the intersessional negotiation in June, hopefully to be resolved before COP30.

Looking Ahead

As with every COP, not everyone is satisfied with the COP29 outcome. Actually, this is an understatement—no one is satisfied. Many developing countries and civil society groups have expressed disappointment that the $300 billion goal, while significant, falls short of the trillions needed. For them, this feels like a failure of justice—a stark reminder of the gap between the urgency of the crisis and the pace of global action. Many developed countries, on the other hand, wanted to see stronger commitments from newly wealthy countries that they believe should begin shouldering some of the financial burden. And looming in the background was the result of the US election, as well as upcoming elections in Germany, France, and Canada, which will not make the geopolitical environment any easier to reach agreements next year.

COP decisions are never perfect—they are the product of almost 200 countries attempting to find common ground. Even the most powerful countries, or those often viewed as the most obstructive, are reluctant to scuttle the entire process. This is why we often see eleventh-hour deals like the one reached at COP29. That such deals can be made underscore the continuing relevance of the multilateral process, as countries demonstrate their commitment to remain engaged, even when it may not align with their immediate interests. In fact one measure of their success from a technical point of view is when all countries are about equally annoyed at the outcome!

The agreements reached on finance, access, and institutional reform are significant steps forward. They are a testament to the fact that it is possible, even in this fraught political environment, to make collective agreements. But agreements aren’t action, and the challenge now is to translate these agreements into tangible actions that deliver results on the ground.

H. E. Khadeeja Nasseem, a visiting fellow at Perry World House and former Maldivian state minister of environment, advised the COP president at COP29. Michael Weisberg, Bess W. Heyman professor and deputy director of Perry World House, advised Fijian Prime Minister Rabuka’s team at COP29.