A complex COP was held in Baku, Azerbaijan, characterized by a delicate international context, high tensions, and difficult negotiations. It took many more hours than planned to discuss agreements, which, amid strong disappointment from developing countries and civil society, nonetheless came in the end.

In the hottest year since surveys have existed, despite geopolitical turmoil stemming from global conflicts and transformations, and despite Donald Trump’s re-election to the U.S. presidency, nearly two hundred countries managed to secure the first pieces of climate finance.

What happened at COP29?

In Baku, a broad front composed of both the world’s most fragile and emerging economies called for more aid to accelerate the transition and better address the impacts of climate change. The old global climate finance target of mobilizing $100 billion a year to developing countries by 2025 was tripled. Developed countries have committed to mobilize up to $300 billion a year by 2035. The goal is part of broader global, multi-actor increase in climate finance, referred the Baku-Belem Road Map, which will aim to provide at least $1.3 trillion a year by 2035, combining public, private money and resources from Multilateral Development Banks.

Climate finance: who gives and who receives

Who should be considered a contributor and who, on the other hand, a recipient of climate finance aid? This is a fundamental question that is cyclically debated around the COPs. Countries retain the status they had when the UN Climate Change Convention was created in 1992. Therefore, countries such as China, Singapore, South Korea and the Gulf countries are to this day still considered developing countries for negotiation. The reality of the world has changed, however, and this is evident even to these same countries. In the early days of COP29, it was China itself, through the words of Vice-Premier Ding Xuexiang, that acknowledged this evidence. In the plenary session, Ding stated that since 2016, China has voluntarily mobilized $24.5 billion for the transition of developing countries. China referred to climate finance with a developed country approach and not with the logic of South-South cooperation. Ding’s statement reflects China’s ability and willingness to place itself at the same level-if not higher-than the contributions of many developed countries. 

What about mitigation?

But the focus on finance has completely muted the warnings of science, which urges decarbonizing now to avoid the worst climate disasters. Emissions are still going in the wrong direction; more than half a million people have died in the 10 deadliest weather events of the past 20 years attributable to climate change. Despite this evidence, no progress was made at the COP on the decisions made at COP28 on moving away from fossil fuels. Much of the challenges at this COP will come again in February 2025, the deadline for countries to submit their emission reduction plans.

Fossil interests

What emerges, or rather returns, at this COP is the presence of realities pressing to block the exit from fossil fuels. The Azerbaijani presidency-third consecutive COP in a country with huge oil & gas interests, of which Italy is also a large part-has been unable to contain the countervailing action of fossil interests. Saudi Arabia has attempted to divide the global coalition in support of climate action and, with its decision to postpone most of the mitigation discussions to Bonn and Belém, has succeeded in slowing progress already made toward the energy transition. The good news is that it has not succeeded in stopping it altogether.

Renewables are there and they are cheaper

The world now invests nearly twice as much in clean energy as in fossil fuels. Investment in photovoltaics now exceeds all other generation technologies combined. Clean energy has grown twice as fast as fossil fuels, demand for which is expected to peak by 2030, according to the International Energy Agency (IEA). In many countries, solar and wind power are already more cost-competitive than fossil fuels. China has increased investment in clean energy technologies by 40 percent in 2023 compared to 2022. Investors seem to be betting on the transition: 4 out of 5 globally expect to increase the level of investment in renewable energy in the next three years. The same percentage (81%) believe the fossil fuel sector is not attractive beyond the next five years, according to a recent survey of senior managers of more than 1,300 institutional investors worldwide.

The outcome of COP29 also sends a signal in support of the decisions already made in stock markets, boards and government departments around the world. The United Kingdom and Brazil presented ambitious national climate plans in Baku. At the same time, the G20, which took place during COP itself in Rio de Janeiro on November 18 and 19, demonstrated an understanding of the need for reform of the international financial system and taxation of polluters to provide more and better quality funds. Indeed, reforms of the Multilateral Development Banks (MDBs) are showing results: the banks estimate that they will be able to disburse $120 billion annually by 2030 to low- and middle-income countries, including $42 billion for adaptation (plus $65 billion from the private sector).

Toward COP30

COP30 in Brazil-10 years after the Paris Agreement-will be the test case for who is serious about avoiding even more catastrophic climate scenarios. The only way to avoid exceeding 2.5°C global warming is to implement truly ambitious National Emission Reduction Plans. This means setting clear exit policies from fossil fuels and implementing the transformation of the financial system to unlock the trillions needed for the transition. 

Financial system reforms are underway, although not yet to the extent and at the pace needed. Developing countries have put a number of proposals on the table, starting with the Bridgetown Initiative, followed by solutions to address the debt crisis. However, private sector investment accounts for most of the $1.3 trillion mobilization target. That is why it is important to remove regulatory barriers that prevent private individuals from investing in countries of the Global South due to lack of security, stability and guaranteed return on investment.

A new climate geopolitics

A renewed collaboration between Europe and China could drive global climate action. With the U.S. exiting the scene, Europe and China will need to embark together on a path of transformation that keeps alive the possibility of not exceeding the 1.5-degree climate limit by moving away from coal, gas, and oil through electrification. A transformation that must be combined with reform of the domestic and international financial system. But this will only be possible if both are able to overcome trade and security tensions. Europe and China share a common interest in reducing dependence on fossil fuel imports, building global green markets, and creating partnerships for development in less advanced economies. It is an alliance that can benefit everyone if Brussels and Beijing are able to build a common front with the other emerging G20 economies, without excluding the most vulnerable countries that made their voices heard in the final hours of the COP. This new alliance could act as a brake on power groups that have obvious interests in maintaining the status quo of the fossil economy and lead the world toward a transition, one that is safe, equitable, and functional to achieving climate goals.