Experts React: COP29 Highlights, Challenges, and Emerging Trends in Global Climate Policy

Commentary by Jane Nakano, Noam Unger, Ray Cai, Mathias Zacarias, Wilder Alejandro Sánchez, Quill Robinson, and Zach Slotkin

Published November 26, 2024

The 29th United Nations Climate Change Conference (COP29) brought heads of state, diplomats, climate experts, business leaders, nongovernmental organizations, and activists to Baku, Azerbaijan, to assess global climate efforts and discuss opportunities for cooperation. Amid a series of new pledges and commitments, parties agreed on a global carbon market framework, enabling countries to trade emissions credits under the Paris Agreement. Additionally, after some heated exchanges and a run into overtime, developed countries agreed on a 300 billion USD annual climate finance target. The so-called New Collective Quantified Goal (NCQG) will support climate actions in developing countries.

CSIS experts react to some of the conference's most notable highlights and preview an era of uncertainty for international climate efforts.

Nuclear Tripling Keeps the Momentum a Caspian Oil Capital | Jane Nakano

A Signal Amid Noise: Resilience Solutions and Insurance Set to Rise on the Agenda | Noam Unger

Climate Leadership with Chinese Characteristics | Ray Cai

Carbon Markets to the Rescue? | Mathias Zacarias

Do SIDS Have a Chance after COP29? | Wilder Alejandro Sánchez

The Biden Administration's Curtain Call | Quill Robinson and Zach Slotkin

Nuclear Tripling Keeps the Momentum a Caspian Oil Capital

Jane Nakano, Senior Fellow, Energy Security and Climate Change Program

Nuclear energy was an area of continued momentum at the COP29, underscoring the sense of urgency for climate mitigation among many established nuclear power-using countries, as well as the aspiration of others to secure a path to meeting their growing energy needs. Following the commitment to triple the global nuclear power capacity by 2050 ("Declaration to Triple Nuclear Energy") at COP28 in Dubai last year, six additional countries joined the United States and 24 others and expanded the coalition of countries to 31. They range from established nuclear users like the United States, France, and Japan to prospective newcomers like Ghana and Kazakhstan. No doubt that the momentum was boosted by the Financing the Tripling of Nuclear Energy Leadership Event that brought together leaders from major financial institutions, industries, and governments to discuss nuclear financing issues during the New York Climate Week two months earlier.

Roughly the same day that the COP29 highlighted nuclear, the U.S. government announced some detailed targets for domestic capacity additions and outlined necessary actions in the "Framework for Action" document. Adding 35 gigawatts (GW) of new capacity by 2035 and deploying 200 GW of net new capacity by 2050 are highly ambitious goals. But the nation faces an unprecedentedly strong outlook for electricity demand growth from datacenters and artificial intelligence, and its reliability and zero-emitting attributes render nuclear a powerful contender.

These global and U.S. domestic developments come at a time when climate change is set to drop as a national priority under the incoming U.S. administration. Whether for decarbonization or energy security, however, nuclear energy continues to be integral to the global power mix. This is a development that the United States cannot afford to sit out. Expanding the domestic fleet is key to safeguarding U.S. supply chains and maintaining the leadership in the technology that has significant geopolitical and nonproliferation implications as well as climate security benefits.

A Signal Amid Noise: Resilience Solutions and Insurance Set to Rise on the Agenda

Noam Unger, Director, Sustainable Development and Resilience Initiative and Senior Fellow, Project on Prosperity and Development

While official delegations negotiated in Baku, an interesting crescendo was taking place across many various meetings interwoven into the broader phenomenon that drew more than 50,000 people to COP29 (the second largest COP in history following COP28 in Dubai). Building on the last few COPs, this one in Baku featured a growing number of discussions on the emerging resilience economy and the related role of insurance. Across pavilions, a steady stream of conference participants attended discussions on blended finance and private-sector investments that support adaptation and resilience in the Global South. Among many others, these included the Resilience Hub, with its sessions on enabling private sector action and incentivizing climate-resilient investments; an International Development Finance Club session featuring leaders from Swiss Re, Howden, the Insurance Development Forum, and others on collaboration between public development banks and the insurance industry; and a session at the South Africa pavilion hosted by the Africa Climate Foundation that featured representatives from Marsh McLennan, Pula, and others, for a discussion on unlocking climate risk insurance for resilience. The U.S. Center at COP29 also featured related panels, convening insurance leaders, like African Risk Capacity Ltd., among others, for discussions on climate-resilient infrastructure, mobilizing investment at scale, and advancing private investment in adaptation.

The dialogues on the nexus of insurance and the emerging resilience economy were not just limited to gatherings at the busy pavilions. The Sustainable Innovation Forum, a prominent side event, featured multiple sessions and productive private roundtable meetings on insurance innovations and derisking investments in resilience. Related speakers and topics also pervaded meetings convened by the COP presidency as part of its action agenda. And this year, there was a groundbreaking official Marrakech Partnership session on the role of the insurance industry in unlocking capital. It featured the launch of an important report by Howden, the Boston Consulting Group, and the UN Climate Change High-Level Champions, as well as an announcement of a new "Enabling Insurance Breakthrough" that will be developed in the run-up to Belem next year to advance progress across a range of international climate-related goals.

Developing countries are coming away from COP with a profound sense of disappointment associated with the official negotiations related to collective public finance commitments. But as the world continues to fall short against ambitious emissions targets, and as vulnerable, debt-stressed developing countries seek partnerships to strengthen their resilience toward increasingly extreme impacts of climate change, the United States and its allies could attempt to build on at least one thread of international discussions focused on private sector development by leveraging more risk mitigation associated with insurance underwriting and the investment potential associated with insurance capital pools.

Climate Leadership with Chinese Characteristics

Ray Cai, Associate Fellow, Energy Security and Climate Change Program

With the United States poised for a retreat from global climate efforts, China is facing mounting calls to step up to the plate. But what will Chinese climate leadership look like? COP29 offered some clues.

On one hand, China is unlikely to "lead from the front" at the expense of its own strategic interests. Remaining firm in its classification as a developing country, China resisted further funding obligations towards a NCQG, a focus of this year's negotiations. Trade has become a central point of contention, as predicted by a recent CSIS simulation on climate clubs, with China spearheading the pushback against carbon tariffs. A proposal it submitted on behalf of the BASIC country group (Brazil, India, South Africa, and China) over "climate-change related unilateral restrictive trade measures," for instance, led to a drawn-out agenda fight at the conference.

Nevertheless, China's presence in Baku was constructive and "unusually cooperative" across the board, according to a high-level attendant. Behind closed doors, Chinese delegates were reported to have mediated between blocs to help reach the final finance deal. In public, they hinted at the country's vision for leadership by drawing from its climate bona fides at home and abroad. Vice Premier Ding Xuexiang reiterated China's pledge to reach carbon neutrality by 2060 and confirmed that its updated 2035 Nationally Determined Contributions (NDCs) would cover all sectors and greenhouse gases. At China's well-attended pavilion, climate envoy Liu Zhenmin touted Chinese clean tech exports while brochures were distributed to highlight south-south cooperation and the Green Belt and Road Initiative.

Notably, Ding adopted the UN parlance of "provision and mobilization" for the first time to announce that China has provided 177.0 billion CNY (24.5 billion USD) for developing countries since 2016, an amount on par with that of many developed countries. The decision to release and emphasize this figure again signaled China's increasing willingness to drive global climate finance efforts, albeit on a voluntary basis instead of binding commitments that many countries had hoped for. If initial reactions from COP29 were any indication, however, this approach is still set to find support.

Carbon Markets to the Rescue?

Mathias Zacarias, Associate Fellow and Energy Transitions Fellow, Energy Security and Climate Change Program

The fight for a climate financing pledge to help developing countries clean up their economies has sucked all the oxygen out of the COP29 negotiations. However, considerable progress was made on the sidelines on another long-awaited element of the Paris Agreement: the adoption of Article 6, which establishes a framework for countries to trade carbon credits to achieve their climate ambitions. The deal has led to developments on two fronts. First, on an UN-recognized structure to enable countries to bilaterally or multilaterally trade carbon credits under Article 6.2. Second, on establishing a global carbon market overseen by a UN Supervisory Body under Article 6.4.

As estimated by an International Emissions Trading Association report cited by the negotiators, this breakthrough could yield savings of up to 250 billion USD a year by 2030 through improved economic efficiency enabled by the trading of carbon credits. Article 6 has already claimed a few victories during the two-week span of the negotiations. Norway launched a 740 million USD initiative to meet its NDC target by funding carbon crediting projects in partner countries, having already signed agreements with Benin, Jordan, Senegal, and Zambia. Meanwhile, Ghana has raised up to 800 million USD by trading carbon credits from projects hosted within the nation's borders.

Nonetheless, as it tends to be the case for contentious agreements, the deal has also garnered criticism. Detractors have been quick to point out ambiguous rules surrounding accounting methodologies, specifically on the permanence of credits and the removal of credits. Coupled with vague accountability guidelines for noncompliance with Article 6.2, the lack of clarity could continue to threaten the integrity of an already opaque system.

While imperfect, the final Article 6 deal does present a step towards renewed confidence in carbon markets. Beyond their promise to galvanize the flow of capital towards climate-forward investments, will carbon markets be able to finally overcome enduring shortcomings to deliver guaranteed emissions reductions? Only time-and implementation-will tell.

Do SIDS Have a Chance after COP29?

Wilder Alejandro Sánchez, Senior Associate (Non-resident), Americas Program

An important meeting under the COP29 banner was the Leaders' Summit of the Small Island Developing States (SIDS) on Climate Change. Small island nations, like the Caribbean states, Mauritius, and the Maldives in the Indian Ocean, or the Solomon Islands and Micronesia in the Pacific, face an existential risk due to climate change and global warming and its effect on rising sea waters.

SIDS delegations must have a voice at the table of negotiations regarding climate change so that decisions will be specifically aimed at ensuring that their nations survive. The Baku Declaration on Amplifying SIDS' Voice at COP29 for a Resilient and Sustainable Future was adopted during the summit.

Part of the Canadian pledge during the Global Methane Pledge ministerial meeting at COP specifically addressed SIDS, as Ottawa committed 7.5 million USD over four years to reduce methane emissions from the waste in Belize, Grenada, Guyana, Saint Lucia, Fiji, and Samoa. Similarly, the United Kingdom pledged 6.7 million USD to the Pacific Catastrophe Risk Insurance to ensure "more Pacific countries have the insurance they need in place" before catastrophic weather events.

Baku was eager to provide the SIDS states with a voice at COP. During the preparations leading up to the conference, President Ilham Aliyev met with the governor-general of Tuvalu, the prime minister of the Kingdom of Tonga, and the minister of foreign affairs of the Commonwealth of The Bahamas. The Azerbaijani government also reportedly financially supported the participation of SIDS delegates at COP and preceding meetings.

The SIDS are the first to experience the devastating consequences of climate change. For them, climate change-exacerbated weather events, particularly rising sea waters and hurricanes, are national security and existential threats. COP29 and future iterations of COP must focus more on protecting SIDS and helping their populations.

The Biden Administration's Curtain Call

Quill Robinson, Assistant Director and Associate Fellow, Energy Security and Climate Change Program and Zach Slotkin, Intern, Energy Security and Climate Change Program

Questions about the future of U.S. climate leadership loomed large at COP29, which began just days after former president Trump's victory.

But Trump's reelection wasn't an elephant in the room-instead, Biden administration officials addressed it directly. Throughout the two-week conference, White House advisers and cabinet secretaries argued that U.S. economic interests make a climate policy U-turn unlikely, pointing to the bipartisan support of several Inflation Reduction Act (IRA) provisions. Governors, mayors, and CEOs reassured conferencegoers that if Trump exits the global climate conversation, subnational actors and private companies will ensure the U.S. stays engaged.

Still, engaging in global climate negotiations will not be a national priority for the incoming administration. Trump's team has reportedly prepared an executive order to withdraw from the Paris Agreement, distancing the U.S. from global climate collaboration. Trump may scale back the United States' COP29-related climate commitments, especially as he directs U.S. strategy away from renewables adoption toward oil and gas deregulation.

But while Trump is poised to take a backseat on climate at the international level, his trade and economic policies might deliver substantial progress. Efforts to de-risk supply chains from China-a focal point of his presidential campaign-could invigorate the clean energy industry in the United States, especially if he keeps in place IRA tax incentives for domestic manufacturing. Chris Wright, his pick for energy secretary, has expressed support for nuclear energy and liquefied natural gas exports. His trusted trade adviser, Robert Lighthizer, has signaled interest in climate-linked trade policies, such as a carbon border adjustment mechanism.

The last COP of the Biden era highlighted the outgoing president's achievements, but now, Trump is about to take center stage. His "America First" agenda promises a sharp pivot in international climate engagements, but it's less clear what that means for progress at home.