From a US$300 billion climate finance deal to global carbon trading

The petroleum-laden dust has settled on this year’s United Nations climate summit, COP29, held over the past fortnight in Baku, Azerbaijan. Climate scientists, leaders, lobbyists and delegates are heading for home. 

The meeting achieved incremental progress. Negotiators agreed on a new climate finance target of at least US$300 billion a year by 2035 (A$460 billion), up from US$100 billion now. These funds would help developing nations shift away from fossil fuels, adapt to the warming climate and respond to loss and damage from climate disasters. 

Nations also agreed on the essential rules for a global carbon trading market, the last agreement needed to make the 2015 Paris Agreement fully operational.

As UN climate chief Simon Stiell said in the final session, the 29th Conference of the Parties (COP29) meeting showed the Paris Agreement was delivering on climate action, but national governments “still need to pick up the pace”.

I attended COP29 as an expert in international climate law and litigation. I observed the finance negotiations firsthand and represented a new alliance of Australian and Pacific universities supporting international climate cooperation. 

At the outset, expectations for the conference were low. The United States had just voted for the return of climate denier Donald Trump. And Azerbaijan President Ilham Aliyev declared oil and gas a “gift of God” at an opening event. 

But even with these considerable headwinds, progress was made.

The world’s rich countries currently contribute US$100 billion a year to climate finance for developing nations. It pays for measures to reduce greenhouse gas emissions and adapt to climate change by making systems more resilient. 

Two years ago, countries agreed to create a new “loss and damage” fund for nations dealing with climate disasters, launched at the summit in Dubai last year. 

At these COP29 talks, Australia announced it would contribute A$50 million (US$32 million) to this fund. Climate change is already costing developing countries huge sums, estimated atUS$100-$500 billion a year.

These flows of funding from rich countries are essential for developing nations to increase their emissions reduction, as well as respond to climate damage. 

The COP29 deal sets a target of at least US$300 billion per year by 2035, with richer countries leading delivery. 

While this goal represents a tripling of the previous target, it falls far short of the $400-$900 billion many developing countries had called forin finance from rich governments. 

Disappointed developing country representatives labelled it “a paltry sum” and a “joke”. It also falls short of what experts say is needed by 2035 to meet global climate finance needs. 

Recognising this gap, the text calls on “all actors to work together” to scale up finance from all public and private sources to at least US$1.3 trillion per year by 2035. Ways this might be achieved will be presented at COP30 in Belém, Brazil, a year from now.

By February 2025, all 195 Paris signatories have to announce more ambitious emission targets. Some countries announced their new plans at COP29. 

The most ambitious was the United Kingdom, which upped its 2030 goal of a 68% cut to reducing 81% below 1990 emissions by 2035. 

Next year’s host, Brazil, released new targets for a 59%–67% drop below 2005 levels by 2035. 

But Brazil didn’t amend its 2030 ambitions and plans to boost oil and gas production 36% by 2035. 

The United Arab Emirates announced target cuts of 47% before 2035, ahead of net zero by 2050. But this pledge was criticised by climate campaigners because the UAE is projected to boost oil and gas production 34% by by 2035.