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Progress and challenges of COP29: what to expect for the future?

02/12/2024 17:49
Progress and challenges of COP29: what to expect for the future?

COP29, held in Baku, the capital of Azerbaijan, has come to an end after two weeks - which lasted two days longer than expected. The event brought together representatives of states and civil society from all over the world to discuss ways of combating global warming.

This edition was particularly marked by discussions on climate finance. The “Financing COP”, as it has come to be known informally, sought solutions to make it possible for developed countries to contribute financially to environmental initiatives in developing nations.

What were the main agreements reached at COP29 and what progress did they represent? What are the prospects for climate action after this congress? Check out this article for details on the present and future of global and national plans.

New agreement on climate finance

Countries left COP29 with the certainty of a breakthrough and an impasse in relation to climate finance: an agreement was reached that raised the annual amount invested by developed countries, but there is still a big divergence between what nations in different blocs want.

Negotiations on climate finance were held up during the first week of the COP, awaiting the progress of the G20, a meeting between representatives of the world's largest economies that took place in Rio de Janeiro. The summit signaled that an agreement in Azerbaijan was necessary and specifically mentioned that the amounts should rise from billions to trillions of dollars.

A New Collective Quantified Goal (NCQG) was drawn up in Baku. In this way, the developed countries that are signatories to the Paris Agreement will aim to contribute $300 billion a year to climate finance from 2025, with the ambition of reaching $1.3 trillion by 2035.

Brazil's opinions

The contribution has increased, given that the previous annual target was $100 billion. However, the urgency of action to contain global warming means that developing countries, including Brazil, do not consider this increase to be sufficient. The group is demanding U$1.3 trillion a year as the basis for the target.

The responsibility for climate finance lies with the developed countries, as they have historically been the main contributors to the increase in greenhouse gas emissions. “It's not charity, it's 100% in the interest of all nations to protect their economies and their people from unbridled climate impacts,” said Simon Stiell, the UN's executive secretary, in a speech during the negotiations.

There is also the question of how the resources will reach developing countries. The NCQG is not specific, mentioning that they can come from various public or private, bilateral or multilateral sources. In the “Baku to Belem Roadmap for 1.3T” - a primer aimed at putting the target into practice - priority is given to non-reimbursable resources and concessional instruments that do not generate debt.

Sufficient or not, an agreement on climate finance has finally been reached. The next step is for countries to draw up their new NDCs (Nationally Determined Contributions) based on the new budget and publish them by February 2025, setting more ambitious targets to curb global warming.

Creation of an international carbon market 

COP29 was the scene of progress on an agenda that had been stalled for several editions of the conference: the establishment of an international carbon credit market. While discussions on climate finance were awaiting a position from the G20, the COP29 presidency quickly proposed this agenda and reached resolutions.

The countries agreed to create a voluntary market, which should be implemented by 2025. The Supervisory Body Mechanism (SBM) will be responsible for managing it. The mechanism established in Article 6.4 of the Paris Agreement will generate the credits traded by private and public institutions. The body will later detail which types of projects will be able to operate on the international market.

Article 6.2, also 'unlocked' at COP29, regulates bilateral agreements between nations. In this way, large carbon emitters will be able to achieve their NDCs by buying credits from countries that exceed their own targets.

The carbon market is a strong bet by the UN to make climate finance viable. The international body predicts that it could generate U$ 1 trillion a year by 2050, and that it has the capacity to reduce the cost of implementing environmental initiatives by up to U$ 250 billion.

Energy transition will need more discussion

An essential topic for climate action to have effective results, the energy transition did not make significant progress during COP29. After the historic congress the previous year, which for the first time recognized the need to promote a transition away from fossil fuels, this year's NCQG did not repeat the mention.

Azerbaijan, therefore, has not been fertile ground for energy transition debates, and part of this can be attributed to its own interests. Oil is the main export product of the Azeri economy. Ilham Aliyev, the country's president, called the fossil fuel a “gift from God” and said that nations should not be penalized for possessing it or making it available on the international market.

Brazil took the agenda to Azerbaijan. At COP29, the Federal Government presented the UN Energy Pact, a document consolidated on the basis of the meeting between G20 energy ministers held in October. The text contains commitments aimed at increasing energy security and promoting fair reformulation.

For the energy transition to progress at the pace needed to mitigate the climate crisis, countries like Brazil will have to take a leading role. The nation will have a great opportunity to fulfill this role in 2025, when it hosts COP30 in Belém. Forging international agreements is an essential path towards this much-needed progress.

Brazil’s positions at COP29

As well as presenting the energy pact, Brazil was an active participant at COP29. The country stood out by being the first G20 member to present its new NDC, outlining targets for reducing carbon emissions by 2035. The nations must disclose their intentions by February 2025.

In the document, Brazil pledged to reduce its greenhouse gas emissions by between 59% and 67% by 2035, compared to 2005 levels. Sectoral targets will still be defined in the Climate Plan, due to be drawn up next year. As such, the ultimate goal remains to achieve climate neutrality by 2050.

Signing an international treaty

Brazil was one of the 35 initial signatories of the Declaration on the Reduction of Methane from Organic Waste, an international treaty that brings together those responsible for 47% of the planet's methane emissions. The substance, which comes from sources such as livestock waste, contributes to intensifying the greenhouse effect.

The countries that have signed the treaty are committed to setting sectoral targets for reducing methane emissions in their NDCs. The international pact aims to strengthen the Global Methane Commitment, launched at COP26, which set the goal of reducing emissions by 30% by 2030, compared to 2020.

COP29 accelerates discussions on national carbon market

While the international market for carbon credits will finally get off the ground after COP29, Brazil has simultaneously made progress on its domestic market. The Senate and House of Representatives took advantage of the moment to vote and approve Bill 182/2024, which now only awaits presidential sanction to become law and subsequent regulation by the executive government.

The model proposed in the bill stipulates that activities with emissions of more than 10,000 tons of CO2 per year must submit a monitoring plan to the regulatory body, and companies or individuals with emissions of more than 25,000 tons of CO2 are subject to sanctions and fines. Organizations that capture or neutralize carbon can monetize their green initiatives.

Sustainable projects beyond COP29

The year 2024 is being marked by the launch of government projects aimed at attracting investment and making climate finance viable at national level.

One of these projects is Eco Invest Brasil. The currency protection program aims to attract private foreign investment to support ecological transformation. Its strategies include, for example, blended finance - the use of public resources to reduce borrowing costs - and liquidity for companies - financial support during exchange rate difficulties.

Another project, yet to be launched, is the Brazilian sustainable taxonomy. The initiative was created to classify economic activities according to their environmental impact. By defining metrics and considering ecological and social objectives, it aims to decarbonize the productive sector. The first version of the document is due to be published at the end of this year.

There is also work to improve existing projects. The Climate Fund, managed by the BNDES, finances projects to mitigate climate change and its effects. Following the government's contribution of R$10.4 billion in April this year, the results can already be seen: in seven months, the Fund has approved R$7.3 billion for operations, more than double the resources distributed over the ten years of the program (R$3 billion between 2013 and 2023).

Conclusion: cooperativism connected to post-COP29

Always a protagonist in the COPs by taking its projects and examples of success to the world, Brazilian cooperativism will also be impacted by the new advances and challenges of global climate action.

The creation of the international carbon market represents an opportunity for the sector. Operations brokered by the UN are likely to increase demand for carbon credits and facilitate the entry of foreign capital into Brazil. This is yet another reason for cooperatives to believe in the financial viability of sustainable projects.

Regulating the domestic market is also a decisive step towards expanding the segment. By setting emissions targets that can lead to fines and sanctions if exceeded, the government is promoting increased demand for carbon credits.

Specific sectors certainly need to pay attention to the repercussions of COP29. In order for Brazil to achieve the carbon emissions reduction target presented in its new NDC, the country will draw up sectoral targets. 

This is expected to happen at the beginning of 2025, with the drafting of the Climate Plan, which promises to involve civil society. The economic sectors, including cooperatives, must take an active part in these definitions.

A long road to 1.5ºC

All the discussions at the COPs, the projects drawn up by the Brazilian government and the sustainable actions of cooperatives have a common goal: to limit global warming to 1.5ºC compared to pre-industrial levels, the temperature listed in the Paris Agreement as the limit for mitigating the effects of the climate crisis.

However, ensuring that this goal is met will not be simple. The global climate finance agreement established at COP29 shows that there are still difficulties in mobilizing resources and promoting transformative actions for the environment.

Achieving the goal will only be possible if individuals, organizations and governments act. COPs are always opportunities to promote progress in the right direction, and Brazil will be in a privileged position to make a difference next year.