Baku Pact must be start of work on climate upgrades everywhere

COP29 promises new finance, but not enough to stop climate devastation. Expanding access will be crucial for both justice and practical climate progress. The hard work of mobilization is still ahead.

Nov 26, 2024

New finance commitments are meaningful progress, but funding targets must be seen as a floor, not a ceiling.
Much more is needed to achieve justice and the practical resourcing of the needed global transformation.
Expanding access, accelerating delivery, and including all of society in climate upgrades will be essential.
Cooperative activation of climate-smart trade and finance, and real-world action needed to legitimize outcome.

Difficult progress, more to do

The COP29 round of UN Climate Change negotiations has closed in Baku with some important progress in key areas. The long-awaited global standards for carbon markets, 9 years in the making, and a new climate finance mobilization goal of $300 billion per year, with $1.3 trillion per year from all relevant sources, were agreed. Both are generally understood by all participating countries to be major steps forward but also less ambitious than they should be, given the worsening risk, harm, and cost of climate disruption.

Climate disruption is getting worse and costing more, and we are not accelerating our anticipated rate of action in line with the evolving need. All nations are, in terms of climate risk and resilience, more connected to each other’s choices than they are used to believing. That will only become more of an overriding reality over time.

As the UNFCCC Executive Secretary Simon Stiell noted, the COP29 advanced some key statements of ambition agreed in Dubai last year by providing new means of implementation. The COP28 called for “transitioning away from fossil fuels” and for tripling renewable energy. The COP29 expanded the pools of finance available for climate action, including tripling key funding commitments and expanding modes of access to finance, including an emphasis on financial arrangements that do not induce added debt burdens.

The COP29 closing plenary went past midnight on Saturday, into the pre-dawn Sunday morning hours. Many areas of work, incuding action on the outcomes of last year's Global Stocktake, were pushed to the mid-year meetings in Bonn, or to the COP30 in Brazil a year from now. Photo: UNFCCC webcast.

We welcome that expansion of funding; as more funding moves into climate innovation and upgrades, the resilience economy will start to take root. We also note that due to inflation, for many countries, the value of the funding on offer will not rise significantly.

The $300 billion per year from wealthy countries and the $1.3 trillion from “all actors” should both be treated as a floor, not a ceiling. As noted in Paragraph 3 of the Finance Goal decision, adequate action on developing country NDCs will require USD 455–584 billion per year to 2030 and adaptation finance needs are estimated at USD 215–387 billion per year to 2030.

It is instructive to compare the $1.3 trillion per year from “all actors” by 2035 to the total invested directly and indirectly by governments in the fossil fuel sector.

The International Monetary Fund estimates total fossil fuel subsidies in 2022 reached $7 trillion, or roughly 7.1% of all global economic activity.
With a projected rate of inflation of 2.55%, $7 trillion in 2022 dollars translates to $10 trillion in 2035.
$1.3 trillion would mean the total projected landscape of climate-related finance and investment would be just 13% of standing fossil fuel subsidies, which are not reduced by any COP29 legal decisions.
Considering it is the $300 billion that is more directly comparable to subsidies, that would equate to just 3% of the projected business-as-usual subsidies in 2035—unless subsidies shift dramatically, as they need to.

There are very important improvements to the overall global framework for delivery of climate finance and other forms of assistance in the new agreement, including:

A new call for efforts to reduce "existing constraints, challenges, systemic inequities and barriers to access to climate finance”;
Expanding beyond multilateral development banks for catalytic funding assistance, grant-based, and debt-alleviating arrangements;
Emphasizing the need for "non-debt-inducing instruments”;
Increasing “highly concessional finance” generally and “grant financing” to SIDS and LDCs;
“Scaling up and prioritizing direct access”, which some read as opening up direct-to-community funding options, which is reinforced by “Increasing, as appropriate, support for locally led approaches and institutions, in particular for adaptation measures...”

The text also announces creation of a new process called the “Baku to Belém Roadmap to 1.3T”, intended to devise strategies for:

"scaling up climate finance to developing country Parties to support low greenhouse gas emissions and climate-resilient development pathways and implement nationally determined contributions and national adaptation plans, including through grants, concessional and non-debt-creating instruments, and measures to create fiscal space."

All of these measures can make more funding available in real time for the raising of ambition and for accelerating implementation, including at the local level and to sustain green job creation. There is, however, no specific guarantee in the text about the timing or conditions in which these funds will be delivered, which means implementation will be the responsibility of all relevant states and institutions.

View of intensive discussions around final outcomes in the COP 29 closing plenary. (Credit: UN Climate Change. Photo: Vugar Ibadov)

These improvements need to be actionable, not theoretical, but the general language of the agreement provides significant flexibility to allow for experimentation and innovation. Advocates, experts, and policy-makers will now haggle over details of these improvements to access and delivery; 2025 needs to see real progress toward a much more open, everyday landscape of climate value-focused investment.

Notes on process

The vehement complaints of numerous countries about the way in which the finance goal was adopted deserve real attention. Many nations had ongoing objections to the final outcome on finance, and India was vocal about having requested the floor to voice its complaints and call for improvements to the final text.

Consider a few more numbers:

The COP29 finance goal commits wealthy countries to providing $300 billion per year in climate finance to developing countries by 2035.
India has a population of 1.5 billion.
That means if India received 1/4 of all the committed funds, without further population growth, that would be equivalent to about $50 per person for India—a very low number for a country with hundreds of millions of people who still lack electricity.

Nigeria has a population of 232.68 million, roughly two-thirds the size of the United States. It is also experiencing extreme desertification, involuntary displacement, and resulting armed conflict. Its energy system results in serious waste, as industrial capacity and trade dynamics have long forced the government to subsidize high-cost fossil fuel imports—which it often does with debt, even as it produces the oil and gas that are refined elsewhere and sold back.

In September, Nigeria moved for a second time to end fuel subsidies. The savings can be invested in infrastructure and other priorities, but to get off fossil fuels and develop an inclusive green economy, Nigeria will need the overall global economic landscape to undergo serious upgrades. The finance decision offers new ways to deliver foreign investment into the economy, but not with enough funding or enough levers to hold back the globalized influence of fossil fuels.

Nigeria's protest that too little funding will lead to less ambition, more climate breakdown, and harm to the rights of women and girls, and to all people in vulnerable or frontline conditions, needs to be heard and considered in both moral and practical terms. As climate ambition and action are held back, real-world harm and cost from climate impacts are degrading capability and pushing countries further into debt. That means the same level of future climate impact will cause more harm to people and to their wider societal circumstances.

The first objection was raised by Cuba, citing "ecological and humanitarian debt" incurred by historic leading emitters of climate-disrupting pollution. Science and observation of impacts make clear these are real costs, but related values have been left out of conventional economic and fiscal policy calculations. While work on indicators of need and safety is advancing, we still need a stronger commitment to measure, account for, and deliver climate value—as a core ingredient of mainstream commercial and financial activity.

The COP makes international law by consensus. That means questions about the unity behind a decision matter. The legitimacy of the COP outcome rests in part on the process; it also rests on follow-through. If the COP29 outcomes do as intended, if they lead to a boom in new work to upgrade climate transformation everywhere, then this pact will gain support it has not yet earned.

We recognize the need for reform, both at the grand scale of the overall process and in the procedural work toward specific material outcomes, and we join with those calling for constructive reform to ensure the UNFCCC process can be an engine for discovery of the most effective, actionable modes of climate crisis response.

Building momentum

Future COPs can expand the pools of financing available in material, actionable terms, including by ambitiously acting on specific new provisions in the Baku decision, which can create leverage for finance and investment through the local, everyday economy, everywhere.

Access is essential: If access improves, then the real-world impact of this new committed finance will be greater and more positive. The Baku outcome does create important opportunities to improve access to climate finance.

We welcome the increased recognition of the need to support locally led initiatives and direct access to finance and climate crisis response resourcing.

While the COP shapes international legal consensus around climate response, and national governments must organize the levers and incentives at their disposal, local communities and local governments are essential for shaping climate law and sustainable practice all of society can activate.
We view civics as a crucial lever of ambition, transparency, optimization, and action, for shaping and realizing the boldest climate response with the best outcomes for people, including the most vulnerable.
In future negotiations, there needs to be less controversy and more universal solidarity around the need for urgent immediate action and for the recognition and active protection of human rights in all areas of action.
Division on these matters makes the entire climate crisis response less ambitious, less optimal, and less efficient, creating real-world costs and risks for all nations.

CCI Executive Director Joe Robertson wrote during the COP29 that the global process is tasked with building the foundations for future peace, prosperity, and wellbeing. About the COP29 outcome, he reiterates:

Climate risk reduction is not a political question; it is an operational imperative, for all nations. Future costs will be intolerably high, if we continue to let uncompetitive polluting industries take the lion's share of incentives and embedded profits across whole economies.
As we move forward from Baku, this operational imperative—on which the wellbeing, rights, and everyday dignity of all people everywhere depend—must be the driver of real climate-resilient development. It is time to start shaping the best possible future for humankind.

Shift to implementation

The Baku Pact signals the start of work on the urgently needed acceleration of global climate action. As that work gathers momentum, we will emphasize insights brought to us by climate stakeholders contributing to the Livable Future report and emerging from the Earth Diplomacy Leadership workshops:

Get local: Whether in terms of development finance, philanthropy, or foreign direct investment, far more money becomes available if it can go to investable activities outside of government. Governments can address climate change, implement national plans for decarbonization (NDCs) and adaptation (NAPs), grow their economies, and improve lives and livelihoods, by welcoming the Capital to Communities approach.
Move toward a Zero Harm standard to upgrade ambition at all levels. This will incentivize economy-wide mobilization of resources, across all areas of climate concern—including mitigation, adaptation, resilience, loss and damage, nature-restoration, food systems, capacity-building, technology development and sharing, data-sharing and translation into local services, including the needed expansion of early warning systems.
Mainstream: The project of mainstreaming climate action is by its nature layered, cooperative, and involves scaling innovative business models across diverse economic conditions. It is also about ensuring more people have access to quality services and products that make their lives easier, improve affordability and clean development, and create opportunities for new local investment and job creation.

Consider that food systems, with their daunting complexity and thin margins, present major opportunities to do all three of these while building a solid foundation for sustainable development, poverty eradication, conflict reduction, and enhanced cooperation. Food systems got more time and attention in Baku than previous COPs; the US-UAE Agriculture Innovation Mission for Climate is mobilizing billions in new investment to support bold innovations at all levels, and a new G7 Collaborative and a recently launched G20 Alliance both aim to mobilize resources to support resilient food production, and related trade flows.

On the road to COP30 in Belém, Brazil, a year from now, there will be many opportunities to expand the scope of future planning, to raise ambition, and to formulate bold cooperative arrangements that allow for economy-wide acceleration. We will work with partners and with our network of stakeholder advocates around the world to identify, support, and bring about those transformative efforts.

CCI reporting from COP29

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