Inside COP29: Key themes from week one

Following the first week of the "finance Cop", we reflect on the main developments so far. The week saw slow progress with the first day largely spent discussing and debating agenda items and the rest of the week featuring disagreement between nations over the New Collective Quantified Goal (NCGQ) which means there will be increased pressure to finalise this over week two. The week did however see some key announcements aimed at driving forward global investment in carbon markets and sustainable development.  

Voluntary carbon markets and article 6 of the Paris Agreement

Diplomats endorsed the UN supervisory body's methodological standards for the trade of carbon credits and guidelines on which types of projects should be eligible under article 6.4 of the Paris Agreement. As standards had previously failed to be agreed at prior conferences, the supervisory body set standards ahead of Cop 29 in October 2024, meaning that delegates controversially did not debate on this topic before approving it. The new system, which has now been renamed the "Paris Agreement Crediting Mechanism", will require carbon project developers to set out how projects contribute to sustainable development goals; and conduct an externally audited risk assessment that includes potential negative impacts of projects and how these will be mitigated. 

State parties also reached agreement by the end of week one on the work programme for article 6.8, which provides for non-market-based cooperation for countries to implement mitigation and adaptation actions, and sustainable development. This was officially approved this Monday.

Several developments in the voluntary carbon market space have followed since the approval of the Paris Agreement Crediting Mechanism:

• Key organisations including the World Bank, the Integrity Council for the Voluntary Carbon Markets, the United Nations Development Programme, the Global Green Growth Institute, and Japan's Article 6 Implementation Partnership have partnered up to co-ordinate technical assistance for countries wishing to participate in the carbon markets.
• Many African nations are progressing legislation and new frameworks to engage in the voluntary carbon markets, for instance Nigeria is preparing regulation for the implementation of bilateral agreements with other nations under Article 6.2 of the Paris Agreement.
• Norway launched a Norwegian Global Emission Reduction Initiative under which parliament mandated €684.7 million for emissions trading through bilateral agreements with other countries under Article 6.2. Additionally, Norway and Switzerland have confirmed that they will aim to finalise a comprehensive bilateral agreement under Article 6.2 to begin trading carbon credits in spring of next year.

The Presidency is pushing for further developments under article 6, which are highly anticipated. A new text for article 6.2 relating to international registries for bilateral carbon trading agreements between countries was debated but this is currently in draft form with no agreement as yet. Likewise, a new text for article 6.4 is still in draft form with significant areas yet to be agreed such as the transition of clean development mechanism projects to the new mechanism. Negotiations are expected to continue during the second week of Cop 29, with a current deadline set for the end of Wednesday.

Climate and sustainable development funding

Agreement for the New Collective Quantified Goal (NCQG) is a highly anticipated deliverable for Cop 29 given that it will determine the scope of funding available for developing countries to transition towards a sustainable economy. The current goal of $100 billion per year of financing was set in Copenhagen in 2009 and is due to be reset next year. Draft texts for a new climate finance goal were deliberated on throughout the week, however negotiations have proved challenging and progress has been slow.

The cover issues countries disagree over are highly sensitive from a political perspective. Debates relate to (1) the amount of funding to be collected; (2) which countries should contribute to the funding; and (3) to which countries funding should be channelled. Developing countries, urge that a sum of $1.3 trillion per year is required from contributing nations. Developed nations have so far not indicated a quantum and while they may be prepared to accept this sum, they seek to include large private companies and stronger emerging economies, such as China and the Gulf States, as contributors of climate finance which has been a key area of contention.

In addition, a series of technical issues are still to be agreed such as maintaining transparency over the levels of finance contributed and a mechanism for eligible states to claims for funding. 

While the outcome over the NCQG negotiations remains uncertain, several other sustainable development programs received some attention and additional financial commitments from state parties and NGOs during week one:

• Several Multilateral Development Banks (MDBs) including the World Bank, European Investment Bank, Asian, Inter-American and African development banks, put out a joint statement on Tuesday in which they pledged that by 2030 they will collectively provide $120 billion of climate financing to low- and middle-income countries each year and $50 billion to high-income countries. While this will not be an increase from the levels of climate finance that high-income countries are currently receiving, low- to middle- income countries will see a significant increase from current levels which were at $74.7 billion in 2023 and $60.7 billion in 2022.  MDBs also stated that they will mobilise $130 billion a year from the private sector, an increase from the 2023 level of $101 billion.
• Sweden pledged $763 million to the Green Climate Fund (GCF). The GCF is the world's largest climate fund backed by the UN and aims to provide investment to middle- and low- income countries with climate investments for reduced emissions. With Sweden's replenishment, the fund now totals over $13.5 billion for the years 2024–2027.
• The Climate Finance Action Fund (CFAF) was expected to be announced during the first week in Azerbaijan but was removed from the agenda and de-prioritised over negotiations to agree the NCQG. The CFAF was aimed at loaning money to developing countries at commercial lending rates through voluntary contributions from fossil fuel producers. However, campaigners were critical of the intended fund due to greenwashing concerns.

New NDC announcements

Several nations revealed their new Nationally Determined Contributions (NDCs) in the first week of Cop 29 with others expected to follow over the course of week two. Within their new NDCs countries party to the Paris Agreement must lay out their national decarbonisation and resilience plans to 2035 by the UN's deadline of 10 February 2025.

• The UAE was the first country to announce its new NDC before the start of Cop 29 with a target to reduce emissions by 47% between 2012 and 2035. Its climate plan consists of measures including increased installations of solar and nuclear power and investment into carbon capture and storage.
• Keir Starmer announced the UK’s new NDC target under which the UK commits to an emissions reduction of 81% on 1990 levels by 2035, a change from the previous target of 68% on 1990 levels by 2030. While full details of the UK's national climate plan are yet to be released, Starmer has also pledged to cease issuing new North Sea oil and gas licences.
• Brazil revealed the full details of its updated NDC which aims to cut emissions by between 59% and 67% from 2005 levels by 2035, mostly relying on carbon storing forests. It is also the first time Brazil has aimed to reduce its dependence on fossil fuels.

The just transition

As new targets are set and funding for sustainable development increases, the conversation also continued surrounding the just transition, though progress in this space was also slow in week one. The UAE Just Transition Work Programme, which was set up at Cop 28 to focus on how to ensure a just transition for workers and affected communities whilst achieving the goals of the Paris Agreement, held two dialogues earlier this year in June and October following which an annual summary was published. This documented key discussions over national adaptation plans; long-term low-emission development strategies; and ensuring support for people-centric and equitable just transition pathways. Discussions during week one at Cop followed on from this, covering topics such as the importance of skill development for workers; capacity constraints affecting less developed small-island states; and international cooperation for facilitating a just transition. A new draft informal text was published on Friday which covers the discussion so far and is set to be further deliberated on during week two. Further discussions on the just transition were led by the International Labour Organisation but again, progress was limited.