The 29th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP29) occurred in Baku, Azerbaijan in November 2024. Over 65,000 world leaders, decision-makers from 200 countries, private sector organizations, and civil society members. The aim of the summit was to discuss how the Paris Agreement can be implemented to limit temperature rise, strengthen resilience against climate impacts, and ensure support for developing countries. 

Climate finance and carbon markets took center stage at COP29, which strongly focused on increasing funding and creating effective carbon market mechanisms. COP29 was also the first ever “Finance COP,” agreeing to mobilize $300 billion of climate finance, falling short of the trillion-dollar figure demanded by developing countries. While no progress was made on fossil fuel phaseout, COP29 marked a key milestone for operationalizing carbon markets.

This article is written by Annabelle van der Maarel ([email protected]) and Sefa Geçikli ([email protected]). Annabelle and Sefa are both part of RSM Netherlands Business Consulting Services with a focus on Sustainability and Strategy.  

Background 

As with previous climate summits, COP29 saw participation from a wide range of stakeholders, some held positions that appeared to diverge from the summit's stated goals, including those aligned with fossil fuel interests and scepticism toward climate action. Reports indicated the presence of 1,773 fossil fuel lobbyists in Baku, a figure that drew significant attention. Also, several key world leaders were notably absent, particularly from some of the most polluting nations. Observers raised concerns about the absence of prominent figures whose countries play a critical role in driving global emissions. Another challenge facing COP29 was the impact of the re-election of U.S. President Donald Trump, whose administration has historically adopted a more sceptical stance toward climate policies.

While COP29 has faced substantial criticism, it is also important to acknowledge that the summit achieved a number of notable outcomes.

Climate finance

COP29 significantly emphasized climate finance, as negotiators worked to set a new global climate finance target for 2025 and beyond. Building on the previous $100 billion per year commitment, delegates aimed to address critical issues such as the quantity, quality, and sources of climate finance. Key priorities included establishing fair expectations for contributors, ensuring financial support translated into tangible impacts, and mobilizing substantial private-sector investment.
The summit resulted in the adoption of a “New Collective Quantified Goal for Climate Finance” to support developing nations, which includes two primary targets:

  • •$1.3 trillion per year to be "enabled" by all actors.
  • $300 billion annually for developed nations to lead on delivering.

Both targets are to be achieved through a combination of public and private sources. However, these figures fall short of the financial needs expressed by vulnerable countries, who had called for over $1 trillion in direct aid. Developing nations described the agreement as insufficient and expressed frustration, arguing that the funding commitments fail to provide the resources needed to address the escalating complexities of the climate crisis.

The divide between developed and developing nations became a major point of contention during the negotiations. Developed countries, as the largest contributors to greenhouse gas emissions, face increasing pressure to shoulder greater financial responsibility. Meanwhile, representatives of the least developed nations and the Alliance of Small Island States (AOSIS) walked out of talks in protest, signalling deep dissatisfaction. UN Secretary-General António Guterres stressed the urgency of translating commitments into actionable cash while emphasizing the need to reform the global financial architecture to make climate finance more accessible and affordable for developing nations.

Initiatives such as the Bridgetown Initiative, which aims to mobilize over $1.5 trillion annually in green investments, gained traction as part of broader efforts to support vulnerable countries. Meanwhile, COP29 highlighted the importance of addressing inevitable climate impacts through mechanisms like the Loss and Damage Fund and scaling up early warning systems to protect lives and economies. The "Early Warnings for All" initiative, aiming for universal coverage by 2027, promises high returns on modest investments.

Though an agreement was reached on supporting least developed nations in implementing national adaptation plans, the overall finance deal remains a foundation rather than a solution. Many obstacles persist, including the absence of explicit commitments to phase out fossil fuels. Nonetheless, COP29 underscored the pressing need to bridge divides, build trust, and mobilize the substantial resources required to confront the climate crisis.

Carbon credits

Historically, the carbon credit market has been characterized by a lack of standardization, regional inconsistencies, and widespread concerns about fraud, such as double-counting emissions reductions and the issuance of credits for projects with questionable environmental benefits. This disjointed framework created barriers to participation for private sector actors, discouraged investment in high-quality climate projects, and undermined trust in carbon markets as a tool for achieving global climate goals.

COP29 marked significant progress in implementing Article 6 of the Paris Agreement, which aims to create a framework for international carbon markets to facilitate emission reductions and support sustainable development.

1.International Trading of Mitigation Outcomes (Article 6.2):

  • Clear guidelines were established for how countries can authorize and track carbon credit transactions.
  • Tracking registries were introduced to ensure transparency and accountability in the trading process.
  • Technical reviews will be conducted upfront to safeguard environmental integrity, creating a transparent and credible system.

2. Paris Agreement Crediting Mechanism (Article 6.4):

  • The mechanism includes mandatory safeguards to protect both the environment and human rights, requiring informed consent from Indigenous Peoples for projects to proceed.
  • A supervisory body was tasked with implementing a comprehensive action plan by 2025 to oversee the mechanism’s rollout.

These developments culminated in a consensus on standards and rules for a UN-backed global carbon credit market. For the private sector, these developments could mark the beginning of a shift from a fragmented system to a more uniform, transparent, and accountable global carbon market. Such a market would enable companies to meet voluntary or regulatory emissions targets more reliably while providing a clear framework for pricing carbon and fostering competition among high-quality credit providers.

Energy

The global commitment during COP29 to transition away from fossil fuels remained deeply polarized, while COP28’s final outcome notably omitted explicit references to “transitioning away from fossil fuels.”

Achieving energy targets will require collaboration between the public and private sectors. During the meetings, businesses have emphasized the need for demand-side actions, such as translating efficiency goals into actionable sector-level plans and implementing policies to drive efficiency in key areas like buildings, industry, and transport.

To meet the tripling of renewables targets, removing barriers to transition is critical. Priorities include shortening permitting times, enhancing grid readiness, and increasing project financing in developing countries—essential steps for advancing future COP goals.

Various energy pledges related to energy storage and grids, green energy zones, and hydrogen were made. The energy storage and grids pledge is critical for another COP goal: tripling renewable generation capacity globally. Additionally, the new finance goal should help nations share in the vast benefits of the clean energy boom.

AI and Climate

COP29 highlighted the potential of digital technologies like AI and big data to optimize energy use, improve climate monitoring, and support adaptation and mitigation efforts, as the Green Digital Action Declaration emphasized. The rapid growth of digital technology increases energy consumption, water use, and e-waste, raising concerns about its environmental impact despite its potential benefits. Over 1,000 stakeholders endorsed the COP29 Declaration, underscoring the need to balance leveraging digital tools for climate action with reducing their environmental footprint, paving the way for sustainable digital transformation.

Transparency

Transparent climate reporting was another focus area of COP29. Efforts were made to build a stronger evidence base to strengthen climate policies over time and facilitate identifying financing needs and opportunities. As part of the Enhanced Transparency Framework, 13 parties have submitted their first Biennial Transparency Report, which is due by the year's end. As a result of this framework, reporting tools, technical training, and support for developing countries have been established.

Gender and climate change

The underrepresentation of women at COP29 is clearly visible in the official opening photo: only eight of the 78 heads of state and government are women. Gender is a crucial matter to take into account when discussing the climate crisis. The effects of the climate crisis disproportionately affect women, while at the same time, women are key in offering effective solutions to combat global warming. To better integrate women into climate policies, governments were expected to approve a new work program on gender equality at COP29. Consensus was reached on gender and climate change, and the enhanced Lima Work Programme on Gender and Climate Change was extended for another ten years. Additionally, a new gender action plan is to be developed for adoption at COP30, which will set the direction for concrete implementation.

Forward Thinking

All in all, this year’s COP has received varying reactions. To quote UN Secretary-General Guterres, “The agreement provides a base on which to build.” During the summit, former leaders, climate experts, and scientists published an open letter calling for the COP process to be reformed, arguing it "cannot deliver the change at exponential speed and scale, which is essential to ensure a safe climate landing for humanity." In this regard, the outcomes of COP29 have laid the groundwork, but the journey toward global climate goals is far from complete. The agreement reached in Baku did not meet all Parties’ expectations and significantly more efforts will be required at next year’s COP30 in Belem, Brazil.

COP29’s advancements under Article 6, particularly in creating a global carbon credit market, provide businesses with a clearer framework to offset emissions and invest in high-quality carbon reduction projects. The tripling of renewable energy capacity by 2030 is a massive opportunity for companies in energy storage, grid infrastructure, and renewable energy technologies. Businesses in these sectors can capitalize on increased public and private investments.

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