The international climate talks in Azerbaijan ended Sunday with the adoption of a deal on climate finance, amidst protests led by India and supported by climate-vulnerable countries Bolivia, Nigeria and others over the scale of the funds committed by developed countries.
The Conference of Parties 29 (COP29) also agreed on the much much-awaited carbon credit deal and is expected to facilitate the setting up of a carbon market in India. The Bureau of Energy Efficiency (BEE) has launched guidelines to shape the future of the Indian Carbon Market (ICM).
Even as the deal was gavelled in the early hours of Sunday, Indian negotiator Chandni Raina said: “I regret to say that this document is nothing more than an optical illusion. This, in our opinion, will not address the enormity of the challenge we all face. Therefore, we oppose the adoption of this document.”
Against the demand of $1.3 trillion for climate finance, the New Cumulative Quantitative Goal (NCQG), the COP29 deal puts the number at $300 billion to be provided annually by the developed countries to poor countries by 2035.
“The only positive feature is that the developed countries have agreed to triple the amounts to be channeled through the Global funds like Green Climate Fund and others while recognising the need to reform the institutions for easier access to finance, and agreeing to drop the insistence on counting voluntary contributions of developing countries as part of NCQG,” said R.R. Rashmi, India’s former chief climate negotiator.
Here are the key takeaways from Baku
Finance
COP29 was dubbed as a finance COP for it was to agree on a climate finance goal beyond 2025 to be given by developed countries to climate vulnerable countries annually for climate action. The COP agreed on $300 billion a year to be delivered by 2035, from $100 billion now.
Developing countries have set a $1.3 trillion goal and there were categorical objections from countries including India, Nigeria, Bolivia, and Cuba and a walk out staged by the Alliance of Small Island States (AOSIS) and Least Developed Countries (LDCs).
The COP29 agreed to a Baku to Belem (COP30 venue) road map to assess progress towards the $1.3 trillion goal, with reports in 2026 and 2027. It will periodically take stock of progress and review this decision in 2030.
The parties acknowledged the need for public, grant-based, and highly concessional money to be made available to the poor countries but there was no commitment.
Dipak Dasgupta, the former principal economic advisor to the Government of India, says the $300 billion agreed, if firmly in the form of a grant or highly concessional public money from developed countries as a group and not from loans from multilateral development banks or private sources, as was also agreed, is welcome.
“If the goal of $1.3 trillion remains firmly intact, again as agreed, and to be now spelled out concretely in the Baku to Belem road map, that is welcome, especially as it incorporates many other critical paragraphs spelled out explicitly in the agreement—from first loss to guarantees and other innovative financing, and to search for additional climate financing revenue instruments,” he says.
Carbon markets
A deal on government-to-government carbon markets was agreed at COP29, ending years of stasis. The newly adopted rules under Article 6 of the Paris Agreement create two different types of markets, where countries will trade emissions reductions and discount them from their national climate plans.
The market under Article 6.2 regulates bilateral carbon trading between countries while Article 6.4 creates a global crediting mechanism for countries to sell emissions reductions.
India is set to operationalise a carbon trading market by FY27 but facing delays in defining the terms, structure, and compliance measures. The delay is attributed to the non-finalisation of rules under Article 6.
Experts remain wary of the agreement and bilateral trades under Article 6.2 could open the door for the sale of junk carbon credits – one of the weaknesses of the previous Clean Development Mechanism (CDM).
Trade barriers
At Baku, India along with several developing countries argued that their ability to transition to a low-carbon economy was undermined by costly trade policies imposed by the developed countries.
The developing countries pushed for discussions on climate-related trade barriers with a focus on Europe’s planned carbon border tax (CBAM) and US President-elect Donald Trump’s prospect of introducing broad tariffs on all imports.
In what brought some hope, the United Nations climate body agreed to add the issue to future summit agendas.
Over to COP30
The next climate change meeting is scheduled to be held in Amazon Gateway Belem, Brazil. As the COP29 talks stretched over two nights, Brazil pleaded for at least some progress and said it would seek to build on it when it leads COP30 next year.
“In short, we have elements of some importance agreed, although the fine print leaves much missing and details will need to be filled in. This is about as much as might have been possible from a very difficult situation. The wick of hope remains, even if flickering,” adds Dasgupta.