COP29 grand finale: Carbon credits as a way to a clean conscience?

The COP29 climate summit was supposed to officially end on November 22. However, the participants extended their deliberations by one day, allowing two key decisions to be made: on carbon credits and the new Common Financial Target. The agenda for the final days of the meeting also included important decisions on water. What will change in the world after the Azerbaijan summit?

Carbon markets are a fact of life

According to Article 6 of the Paris Agreement, one of the key tools for combating climate change is to be the development of so-called carbon markets. The idea is to have a mechanism for fair and transparent trading of greenhouse gas emission credits. Unfortunately, despite the laudable assumptions, the exact rules for buying and selling credits have not been established over the past decade, and a lot of controversy has grown up around the topic. It was not until the final day of the COP29 meeting that the long-awaited breakthrough on the issue was achieved.

As a result of the two-track political and technical negotiations that took place throughout the year, the summit participants managed to work out the final details for operationalizing carbon credits. Recall that earlier summits in Glasgow (COP26) and Sharm El-Sheikh (COP27) had developed principles and procedures for the implementation of Article 6 – but it was only in Baku that the negotiating impasse was resolved.

What does this mean for the world? Under transparent and integrated carbon markets, countries and companies that are struggling to meet their own emission commitments will be able to buy carbon credits from countries that fall within the chosen targets. According to analysts, this will save as much as $250 billion annually in implementing national climate plans (NDCs), and trigger the flow of as much as $1 trillion in credits by 2050. Emission reductions in carbon markets will have to be real, measurable and verifiable, which is expected to stimulate global investment.

COP29 chief negotiator Yalchin Rafijev commented on the success with the words: Today we unlocked one of the most complex and technical challenges for climate diplomacy. Article 6 is difficult to understand, but its results will be obvious in our daily lives. It means more coal mines closed, more wind farms built and forests planted. It’s a new wave of investment in developing regions of the world.

$300 billion in climate aid annually

Another landmark decision that was agreed upon in the COP29 overtime was the setting of a new level of the Financial Target. This is about the aid that richer countries allocate each year to combat climate change as part of global solidarity – emissions are generated mainly in developed countries, while developing countries experience their effects most severely.

Until now, financial aid has amounted to $100 billion a year, but it was already clear before the Baku summit began that this amount was far too low. Reaching a consensus on an increase in support was not easy, especially in view of the geopolitical fragmentation that has taken place over the past year. Contrary to the opinions of skeptics who denied the possibility of an agreement, the so-called Baku Financial Target (BFG) was adopted on Saturday, November 23, after 48 hours of intensive talks.

Participants at the COP29 summit agreed to triple the existing amount, pledging $300 billion in annual support for climate action in developing countries. The commitment is to last until 2035 and is estimated to generate annual investments of up to $1.3 trillion globally. Government aid in this case is expected to act as a catalyst for broader capital commitment.

The final agreement on the Financial Target emphasizes the need to guarantee easy access to support and its transparency. Assistance is particularly targeted at island states, where weather extremes related to climate change are making their greatest mark, and the least developed countries.

The Baku Financing Goal is considered the most important part of the aid packages adopted at COP29. It is designed to stimulate progress across all pillars of climate action to meet the increasingly elusive 1.5°C target. Combined with integrated carbon markets, the initiative is expected to revolutionize the global architecture of climate finance.

COP29 and water management

In addition to the pressing issue of financing global adaptation, the Baku summit also focused on substantive issues of managing the Earth’s critical resources. The Water for Climate Action Initiative was one of the topics on which consensus was reached, and a final declaration was signed by nearly 50 countries.

The global hydrological cycle is undergoing severe disruption as a result of climate change, from drought and deterioration of drinking water quality to melting glaciers and catastrophic flooding. Figures presented at COP29 show that already one-fifth of the world’s catchments are experiencing drastic changes affecting regional water management. Approx. 2.2 billion people still lack access to drinking water, and half of the earth’s population is living under so-called water stress. At the same time, more than 90 percent of people and 95 percent of infrastructure affected by natural disasters have suffered precisely because of water. By 2050. In some regions, GDP is expected to fall by as much as 6 percent as a result of the impact of climate change on water resources.

To avoid a black scenario, COP29 participants established the Water for Climate Action initiative, which aims to integrate water resources management with national climate plans. The international cooperation is expected to facilitate data sharing and the creation of transboundary scenarios for individual basins. Summit President Mukhtar Babayev stressed that. Water is the link between the climate crisis, the biodiversity crisis and desertification. By improving cooperation between countries, the Water for Climate Action initiative will allow us to act on all three fronts.

UN Environment Program (UNEP) Undersecretary Inger Andersen agreed, saying that never before has the management of the world’s freshwater resources been so important.

Other important provisions of COP29

The end of the summit is, of course, a time to take stock. In addition to carbon credits, a new Financial Target and promising pledges of cooperation on climate change, COP29 yielded tangible results in the opening of the Climate Loss and Damage Fund and the establishment of the Climate and Health Coalition – public health issues are expected to become a key component of the climate agenda at future summits. In addition, more than 50 countries, including 8 of the 10 largest methane emitters, have pledged to reduce emissions of the controversial greenhouse gas from organic waste as part of future National Climate Commitments (NDCs).

Despite the successes on paper, not everyone is happy. Representatives of 45 countries most vulnerable to climate change, including Bangladesh, Haiti and Ethiopia, have vociferously criticized the rich countries’ new financial commitments, saying that this is not simply a failure, it is a betrayal. In a similar vein, WWF representatives spoke out, calling the new financial target a climate failure.

Antonio Guterres, UN Secretary-General, was a bit more cautious with his words, but while thanking participants for their commitment, he admitted that he had hoped for more ambitious results. At the same time, he reminded that the commitments made must be implemented fully and on time, quickly becoming a real cash flow.

pic. main: UNclimatechange / flicker