COP 29: Key achievements and ongoing challenges

Although the COP 29 conference in Azerbaijan in November 2024 may not have made as much progress as had been hoped for in certain areas, such as on phasing out of fossil fuels, there are nevertheless grounds for optimism. It is clear that non-state actors are moving in a constructive direction in terms of addressing key challenges, such as mitigation and adaptation. While finance was a major topic on the agenda, another critical issue which dominated discussions was the requirement for signatories to the Paris Agreement to produce third generation Nationally Determined Contributions (NDCs) and for these to be ambitious. There was also considerable focus on aligning NDCs with local country corporate transition plans, highlighting the interaction between climate finance and climate policy. 

There was a general understanding that there must be an underlying value proposition if progress is to be made, i.e. that the value of climate change mitigation must be clearly understood. One positive development is that there was growing awareness at COP 29 that the transition to a low carbon economy represents an important economic opportunity. So tackling climate change is not just about extra costs or the implementation of complicated measures - it also presents positive possibilities for growth. There was also recognition of the need for greater collaboration and harmonization across the climate change agenda, so that the different aspects of climate change mitigation strategy fit more closely together. Furthermore, there was a recognition among businesses that developing resilience is important, both in terms of the challenges of transition and also in relation to the effects of climate change. 

1. Climate finance was a key issue, with a focus on attracting investment to support the New Collective Quantified Goal (NCQG) agreement and NDCs. COP 29 also saw increased private sector interest in investing in emerging markets.
2. Climate transition plans. Here the main themes were increased disclosure, collaboration across value chains, interoperability across different standards (e.g. ISSB, TPT, EFRAG), and honesty.
3. Demand led decarbonization. Many companies are facing challenges in meeting their interim targets by 2030 and their full net zero targets by 2050. Hence there is now an increasing focus on demand-led decarbonization initiatives.
4. Initiatives for industrial decarbonization. Some industries face particular difficulties in meeting transition targets, notably steel, cement, aluminum, aviation, shipping, etc. Hence the Industrial Transitions Accelerator has been established to bring capital, technology and policy together to support the emerging technologies that will be central to industrial decarbonization.
5. Supporting the technology of energy transition. The deployment of key energy transition technologies is critical, but has been slow for several reasons, including cost-competitiveness. There is a broad consensus that significant policy intervention is required. New global pledges on storage and grid will help to meet this objective, and it is also recognized that much more progress is required with respect to the complementary objective of doubling energy efficiency installations by 2030.
6. Expected Developments in climate policy. The requirement for all major countries to produce revised NDCs by February 2025 is likely to lead to a significant increase in new climate policies and incentive measures around the world. Existing policy measures, in particular the EU Carbon Border Adjustment Mechanism (CBAM), was a major area of focus at COP29, as it is clearly having a material impact on those companies affected.
7. More ambitious and investable NDCs. A key takeaway from COP 29 was making the new NDCs ambitious. The UK, Brazil and the UAE published their NDCs at COP 29, which provided encouragement to others. Moreover, there is a clear understanding that for NDCs to be effective, they need to be designed around attracting investment.
8. Development of carbon markets. At COP 29, Article 6.4 of the Paris Agreement was formally adopted, establishing a UN based central mechanism for carbon trading - the Paris Agreement Crediting Mechanism (PACM), under which countries can voluntarily cooperate on meeting NDCs through carbon market trading and corporates can transact directly in the carbon market. Agreement was also reached under Article 6.2 which allows countries and corporates to trade credits (ITMOs) through bilateral agreements, and on developing voluntary carbon markets.
9. Adaptation and Resilience. Adaptation and Resilience (A&R) was a key part of negotiations during COP29. One of the key issues here is the Adaptation Financing Gap, and the need to attract public-private finance from Multilateral Development Banks (MDBs) was acknowledged. However, the COP29 stock take of National Adaptation Plans (NAPs) was deferred to COP30, and progress still needs to be made in this area.
10. Reporting developments - moves to greater harmonization. The key standard setting bodies (ISSB, CSRD, GRI, SBTI, ISO, GHGP etc.) continue to debate their role in driving the disclosures and related actions required to deliver on the transition. At COP29, there was a significant focus on harmonization and interoperability of existing and emerging standards, as well as ongoing clarification of the roles of different standard setting bodies.

KPMG in Romania has an experienced and dedicated team who can support your efforts to negotiate the energy transition, comply with new reporting requirements and meet climate targets. We work with a wide variety of industries and can offer a broad range of services.