The world’s nations are heading to the 2024 UN Climate Conference (COP29) in Baku, Azerbaijan. The key question hanging over the event is how can we continue to step up and build on progress made at previous conferences, especially at last year’s COP28 in Dubai?
In Dubai, countries concluded the first global stocktake on their decarbonization efforts, showing how they were individually and collectively performing on their Nationally Determined Contributions (NDCs) ahead of revising those NDCs to resubmit in early 2025. COP29 will provide an opportunity to recalibrate and accelerate those efforts to meet ambitions.
ERM will be actively engaged in discussions with business leaders, policy makers and NGOs on how to ensure those ambitions translate into robust action and delivery. After engaging a broad range of stakeholders during Climate Week New York in September and the Biodiversity COP16 in Cali, Colombia, in October, we expect three key themes to take center stage at COP29.
1 - Financing the just energy transition
In 2015, developed nations committed to provide $100 billion per year to support climate action in developing countries, but nowhere near that has been delivered. Current estimates peg the required amount to implement developing countries’ climate action plans by 2030 at $6 trillion USD.
To help get progress back on track, this year’s COP will discuss setting a ‘new collective quantified goal’ (NCQG) to provide finance and funding for critical global climate action in all regions. ERM is working with the international finance community to help identify where capital can be deployed to decarbonize economies and industries, invest in alternative technologies, provide the amount of renewable energy required, and invest in a just transition.
Progress on trading carbon credits between countries is also high on the COP29 agenda. Voluntary carbon credit markets have been through major redesign and many parties hope a UN-backed carbon credit market will bolster investor confidence and accelerate much-needed activity in this critical area.
Our new Climate Markets team is focused on ensuring high integrity, high quality carbon credits are available to those wishing to use them to complement robust net-zero plans. ERM experts will be actively involved in the emissions trading and carbon market discussions and activities at COP.
2 - Businesses are unveiling climate - and nature - transition plans
While nations reconsider their NDCs and climate efforts, more corporations and companies are realizing that climate-related extreme weather events can impact business operations and damage the bottom line. As a result, more organizations are exploring how they can limit liability by taking climate as well as nature, water, and people into consideration as they navigate this complex and interconnected landscape.
Leading the charge are insurance companies, who know more than most the price of unpredictable natural events when they intersect with human interests. Other corporations and governments are taking note and will begin to assign appropriate importance and more accurate valuations to climate- and nature-related risk. This in turn may open climate investment opportunities. Banks and investors will need to weigh climate, nature, and social- related risks in their lending decisions so that decarbonization finance can be approved and cash can begin flowing to projects.
As national decarbonization plans become more ambitious, opportunities for the business sector to support their implementation will increase. Organizations that work climate, nature and just transition considerations and disclosure into their operational fabric and strategic plans will be better situated to satisfy regulatory requirements.
To that end, corporate transition planning is of growing importance to outline and activate organizations’ climate efforts. Transition planning forces companies to structure their transition to low-carbon, nature-positive and people-focused business operations as well as specifying short-, medium- and long-term, goals, actions, budgets, and capacity. Regulators and investors are demanding such plans. While challenging to develop, these plans can benefit companies with the structure they impose – but successful execution still depends on having the capital to finance it.
During COP29, we are releasing a report on how to develop an effective transition plan with the World Business Council for Sustainable Development (WBCSD). We have engaged many large businesses on the challenges they face in developing integrated, robust, and resourced plans, and offer practical guidance on how to prepare more effective plans.
3 - Tripling Use of Renewables and Doubling Energy Efficiency
The Paris Agreement’s target of limiting global warming to 1.5°C requires global emissions to be cut by around 45% from 2010 levels by the year 2030 and reaching net-zero emissions by 2050. After the sobering results of the global stocktake at COP28, a lengthy roster of nations pledged to double energy efficiency and triple use of renewable energy by 2030 to accelerate global decarbonization.
COP29 will offer a chance to evaluate how that pledged action is developing and what will be required of each country to meet this shared goal. According to an assessment by the International Energy Association (IEA), progress to date has been significant but not sufficient: Even if all signatory countries were to fully implement their current stated ambitions, the world would still fall 30% short of tripling global renewable capacity by 2030.
Because developing countries have rapidly growing electricity demand, global efforts to triple renewable energy use will hinge on significant development of renewable energy in these areas. We expect Baku to feature much conversation around the implementation of national and corporate renewables strategies, redirecting public capital from fossil fuels to renewable energy, and mobilizing public and private finance to help minimize investment risks and provide access to low-cost financing, especially for countries with an energy-access deficit.
ERM is a member of the Global Renewables Alliance and actively working with all those engaged in the manufacture, deployment, distribution, and management of renewable energy.
The climate crisis continues to unfold amid shifting geopolitical dynamics. As important elections are held across the world, they indicate at least two things. First, the shape of the international climate coalition should be expected to change over time; and second, climate policy must be taken up not only as a national priority, but also at regional and local levels. While climate efforts may no longer necessarily be safeguarded by the same levels of governmental commitment or mandate, the warming of the planet continues at an alarming rate. Nations, companies, and individuals must continue to step up and meet the decarbonization challenge, at COP29 and beyond.
We look forward to meeting those of you who will be at COP29 and engaging with others keen to understand the business implications of the activities in Baku over the next 2 weeks.
