COP29 lookback: New global climate finance goal, advancements for Article 6

Last month, private and public sector leaders from around the world gathered in Baku, Azerbaijan at COP29, a global climate summit hosted by the United Nations Framework Convention on Climate Change (UNFCCC). The attendees at the gathering were focused on aligning policies to limit global temperature rise and mitigate the worst impacts of climate change. Historically, COP events have catalyzed groundbreaking developments, such as the 2015 Paris Agreement. Two key outcomes from COP29 are summarized as follows.

The top agenda item at COP29 was the New Collective Quantified Goal (NCQG) on climate finance. After contentious negotiations, developed countries ultimately agreed to provide a minimum of $300 billion annually by 2035 (with an overarching, aspirational goal of $1.3 trillion from both public and private sources) to fund climate action in the Global South. While this represents a three-fold increase from the previous $100 billion goal, it was met with significant criticism from developing countries, who foresee needing substantially more climate finance over the next decade.

Separately, global leaders made long-awaited progress on Article 6 of the Paris Agreement, which permits countries to use carbon markets to meet their national emission reduction goals. This was the first time in almost a decade that certain topics related to Article 6 saw significant progress. Negotiators agreed to key standards and requirements for Article 6 carbon trading, paving the way for operationalization of new international carbon markets. Specific progress was made on:

• Article 6.2, which allows for bilateral (country-to-country) emissions trading. While Article 6.2 trading has been underway for quite some time, negotiators were able to come to decisions on outstanding questions around registries and host country authorization processes. These new rules provide the certainty and standardization needed to scale this market further.
• Article 6.4, now called the Paris Agreement Crediting Mechanism (PACM), which creates an international, new carbon credit registry and marketplace (similar to the Clean Development Mechanism, or CDM). Negotiators approved overarching standards for carbon methodologies and carbon removals projects, which will allow the PACM to develop a registry, approve protocols and projects, and begin issuing credits within the next two to three years. There has been little progress on Article 6.4 since the inception of the Paris Agreement, so the adoption of these standards represents a large step forward in creating an UN-endorsed, international carbon market. This progress will unlock new finance and crediting opportunities for carbon projects around the world in coming years

If you have any questions about the COP29 developments, or would like to talk with someone about your organization’s climate strategy, please feel free to reach out to connect with a 3Degrees advisor.