Although every recent Conference of Parties (COP) seems plagued by political grandstanding, argumentative nitpicking, plenty of ‘oops, I shouldn’t have said that’ moments and, in the case of this year, even a dramatic walkout, COP29 in Baku was contentious from the start.
Held from 11–22 November, the conference drew criticism from the outset due to its host country, which generates a significant portion of its GDP – and over 90% of its export revenues – from oil and gas. The controversy deepened during Azerbaijan President Ilham Aliyev’s opening address, where he reiterated that natural resources, including oil and gas, are “a gift from God” and defended their extraction.
While he noted that Azerbaijan contributes just 0.7% to global oil production and 0.9% to gas, such comments may have been better avoided. The criticism was exacerbated when Azerbaijan’s Deputy Minister of Energy and COP29 CEO, Elnur Soltanov, was caught agreeing to include discussions on oil and gas investment opportunities during the summit. Adding fuel to the fire, there was widespread backlash over the heavy presence of fossil fuel industry lobbyists.
Trading up
Despite the controversies, COP29 did deliver some positive outcomes. Dubbed the ‘finance COP,’ the event finalised long-awaited rules for the Paris Agreement’s global carbon trading system under Article 6. In essence, this mechanism allows polluting countries and companies to purchase credits to offset their emissions from lower-polluting nations that earn credits through climate-positive projects.
Although many agree this system could help countries achieve their climate targets, critics argue it risks enabling heavy polluters to continue business as usual rather than actually reducing their emissions. Still, the framework opens up opportunities for UK firms to engage in a global ‘stock market’ of green investments – either by supporting sustainable projects or using carbon credits to balance emissions.
The carbon trading system could prove instrumental as the UK announced a new target at COP29 to slash GHG emissions by 81% by 2035. This upgrade from the previous Nationally Determined Contribution (NDC) target of a 68% reduction by 2030 sends a strong signal from the Labour government that tackling the climate crisis is firmly back on the national agenda. Stricter policies are expected to follow, pushing businesses to accelerate their net zero strategies.
Commenting on the announcement, Secretary of State for Energy Security and Net Zero Ed Miliband said: “Britain is back in the business of climate leadership, with an ambitious new target that will protect our environment, deliver energy security and restore our global climate reputation. We will cut emissions across the country, delivering for our environment and ending our exposure to spiking fossil fuel markets.”
The UK also made additional commitments during the two-week summit, including £239 million to combat deforestation and funding for 20 projects aimed at safeguarding marine environments and supporting coastal communities globally.
Fury and furore
The conference’s most dramatic moment came as negotiators worked through the night and over deadline on the New Collective Quantified Goal – specifically, how much developed countries would give to developing nations in annual climate finance.
With the current $100 billion commitment expiring next year, a new deal needed to be struck at this COP. Talks turned fiery when an initial proposal of $250 billion caused members of the Alliance of Small Island States to stage a walkout as tensions reached boiling point.
After prolonged and contentious discussions, the final Baku Finance Goal was set at $300 billion a year, with a global target of $1.3 trillion by 2035. However, many countries remain deeply unhappy as the figure constitutes a fraction of what is actually required and the final text lacks details on how the larger figure will be achieved. There was also widespread disappointment that the final text failed to up the ante on last year’s pledge to ‘transition away’ from fossil fuels.
Next year’s summit, hosted by Brazil, now carries high expectations to outshine its predecessor in both outcomes and organisation. The main theme of COP30 will revolve around the new NDCs, which are due for submission in early 2025.
For all its faults, COP remains pivotal for global climate negotiations. While the policies may seem a world away, they have ramifications for UK businesses as their ripple effects are felt through every corner of the economy.
