More than 100 heads of state and government are expected to land in Baku, the capital of Azerbaijan, over the next few days and the first thing they are likely to notice is the smell of oil. The odour hangs heavy in the air, evidence of the abundance of fossil fuels in this small country on the shores of the Caspian Sea.
Flaring from refineries lights up the night sky, and the city is dotted with diminutive “nodding donkey” oil wells raising and lowering their pistons as they draw from the earth. Even the national symbol is a gas flame, epitomised in the shape of three skyscrapers that tower over the city.
Azerbaijan has been built on oil since the mid-19th century, and fossil fuels now make up 90% of its exports. There could be no starker reminder of the core question that world leaders have come to Baku to decide: whether the planet will burn so that fossil fuel producers can continue to make money, or whether to take a different path.
That the world’s biggest economy, the US, is about to shift away from the focus on clean energy fostered by Joe Biden towards the “drill, baby, drill” policies of Donald Trump will be a main topic of conversation for the tens of thousands of delegates at the Cop29 UN climate summit. However, many will point out that no country has ever produced as much oil and gas as the US does now, with 20% more oil and gas licences issued during the Biden administration than during Trump’s first term.
Climate leaders reacted with defiance to the US election outcome. “The result from this election will be seen as a major blow to global climate action but it cannot and will not halt the changes under way to decarbonise the economy and meet the goals of the Paris agreement,” declared Christiana Figueres, the former UN climate chief who is a co-founder of the Global Optimism thinktank.
Trump will not be at Cop29, a fortnight-long meeting that is the latest in a near annual series stretching back to 1992 when the UN framework convention on climate change – the parent treaty to the 2015 Paris climate agreement – was signed.
Those talks may appear to have achieved little, as greenhouse gas emissions are still rising and the losses from extreme weather – record hurricanes in the Atlantic, dramatic floods last week in Spain, drought in Africa that has threatened millions with famine – are becoming daily more apparent. Last year was the hottest on record and this year is likely to be hotter still.
Just 15 years ago, however, matters looked much worse. Renewable energy was then expensive and scarcely used, and the world was headed for 6C of global heating above preindustrial temperatures, a level that would barely support human life. Today, after years of talks – during which fossil fuel interests have repeatedly spread disinformation, blocked agreement, captured politicians and choked investment in renewables – we are heading for “only” 3C.
Global heating on that scale would still be devastating, scientists have made clear. So countries meeting at Cop29 from Monday will reaffirm their commitments to limiting temperature rises to 1.5C, which will require reaching net zero emissions in the next two decades. Scientists say there is still a chance of avoiding the worst ravages of climate breakdown if the world acts now.
“The reality remains that unless the world collectively steps up its efforts, the impacts of climate change will become increasingly severe and frequent and will be felt by an increasing number of people in all countries, including in the US,” said Kaveh Guilanpour, a vice-president for international strategies at the Center for Climate and Energy Solutions, a US thinktank. “The reality is that there is no prosperous or safe high-carbon future for anyone.”
The prospects of a strong outcome from the Baku summit may appear dim, with the far right and anti-net zero voices on the rise in the US, Europe and elsewhere. But there is hope that Cop29 will address at least one of the major issues preventing action: money. Shifting to clean energy makes economic as well as scientific sense, but the incumbency of fossil fuels is so strong that massive investment will be needed to shift the world on to that lower-carbon, lower-waste, more productive and healthier path.
How much? About $3.5tn a year between now and 2050 to transform energy systems, according to the Energy Transitions Commission thinktank. The UN, through its climate champions network, estimates $125tn in total by 2050, or about $5tn a year, for the whole global economy. A McKinsey report two years ago put the total at $9tn a year, but that analysis has been debunked for using too-high cost estimates and ignoring existing investments.
Where to get that money from? Most of it is already there. Trillions of dollars sounds like a lot but the world already spends $3tn a year on energy, according to the International Energy Agency, and more than that on other industries in the fossil fuel-based economy. If investment was geared away from high-carbon infrastructure and towards cleaner alternatives, the sums could easily be met.
For developed countries, all that is needed to achieve the switch is strong governance that directs investment away from dirty infrastructure and into low-carbon technologies. That is tricky enough – witness the election of Trump on a clear anti-net zero ticket. But for the developing world the problem looks much harder. Poor countries already face high barriers to gaining the investment they need to lift people out of poverty, develop industries and fund basic services.
For instance, Africa has the most abundant resources of solar power and wind energy. But data from the International Energy Agency last year showed there were more solar panels in Belgium than in the whole of the African continent. Setting up solar and wind farms in Africa is far more costly than in rich countries, despite the lower physical and labour costs, because investors charge far more to lend capital and demand higher repayments.
At the same time, the impacts of climate breakdown are wreaking havoc on poor economies, frequently wiping out any development gains. Tinaye Mabara, a Botswana-based activist from Zimbabwe, said people were suffering the consequences. “Southern Africa, where I’m from, is in the bottom tier of African regions that receive climate finance, so I want to see drastic climate finance reforms taken at this Cop to ensure that local adaptation efforts actually receive the necessary funding, because they are the ones on the ground doing the work.”
Daniel Lund, a senior adviser to the Fijian government, said developing countries urgently needed help, with a greater quantity of climate finance and also through better systems to make it easier to access. “Addressing the complex impacts of climate change through existing fragmented and volatile climate financing arrangements can feel like fighting a raging fire with dozens of tiny fire extinguishers,” he said. “None of the tools currently available are sufficient for the scale of the problem.”
That is why money will be the core focus of Cop29. Under the Paris agreement, countries must agree a “new collective quantified goal” (NCQG) for climate finance, to flow from the rich to the poor, to help developing countries cut their greenhouse gas emissions and adapt to the impacts of the climate crisis.
This is something that has never been tried before in three decades of talks. Until now, the only climate finance target has been a promise made in 2009, at Cop15 in Copenhagen, for $100bn a year to flow to the developing world by 2020. That target was only achieved two years late – a delay that damaged the faith of developing countries, according to Alok Sharma, the president of Cop26 in Glasgow and now a member of the UK’s House of Lords. “Not reaching the previous $100bn goal on time sapped the confidence and trust of developing nations, and that’s why any future finance goal has to meet the deliverability test,” he said.
No Cop has ever discussed a finance goal before, let alone any tested of its rationale. The $100bn figure was “plucked out of the air”, said Rachel Kyte, the UK’s new climate envoy, speaking before her appointment to the role. The offer was made – largely at the instigation of the then US secretary of state, Hillary Clinton – based on political calculations of what developed country governments thought their electorates would stand for.
At Cop29, more rigorous systems are in place. Two years ago the economists Nicholas Stern and Vera Songwe led an in-depth analysis of climate finance needs. They came up with a number: $2.4tn a year was needed for developing countries, excluding China, to cut their greenhouse gas emissions and protect themselves against climate breakdown.
Of that sum, about half could come from countries’ existing budgets and domestic private investment sources, the economists estimated. That would leave roughly $1tn to come from the developed world, a large chunk of which Lord Stern believes could come from reforming the World Bank and its fellow institutions, to enable them to lend more, and on easier terms, to climate-related efforts.
Most analysts and developed country governments agree on these estimates. Most developing countries broadly accept them, a stance reflected in the proposals for the NCQG that they have submitted to the UN this year. For example, India submitted a demand for $1tn a year, and the Alliance of Small Island States is targeting a similar number, while the Africa group wants $1.3tn.
But these figures are a statement of need. Few believe all of this money could come from the exchequers of developed countries without risking a backlash. Joe Thwaites, of the NRDC thinktank in the US, said: “There is a keen awareness of the fragility of the political consensus on this.”
For the Azerbaijan presidency, it was clear from early in the talks that reconciling these two approaches – one based on need, the other on what developed countries are prepared to stump up – means including at least two key numbers in the NCQG. What has emerged from pre-Cop talks in recent months is a “layered approach”. These layers have led some participants to call it an onion, others a camembert (because the sources of cash will be divided up into wedges), while a few prefer comparisons to a pie or a sandwich.
Culinary metaphors aside, the core concept is fairly simple: the NCQG will include the needs expressed by developing countries; an agreed goal for finance coming from existing developed countries plus an expanded contributor base; and ideas for how to fill the gap between the two.
No developed countries are yet prepared to be specific about how much the “quantum” of contributions should be, and the goal will be a collective one, so individual countries will not need to submit their own targets. The Guardian understands that overall sums in the region of $400bn to $600bn by 2035 are being discussed. Much if not most of that funding is likely to come not directly from developed world taxpayers but through multilateral development banks such as the World Bank and the International Monetary Fund, which will require sweeping reform before they are capable of meeting the challenge.
In order to agree to such sums, rich countries are also demanding a redrawing of donor terms to expand the list of contributors. The global economy has changed drastically since 1992 when the UNFCCC was signed, which divided the world starkly into developed countries with obligations to cut emissions and provide finance, and developing countries that carried no such obligations. China is now the biggest economy and biggest emitter but has no obligation to offer climate finance, and other middle-income countries such as South Korea and Singapore are also booming. Petrostates such as Saudi Arabia, Qatar and the United Arab Emirates are classed as developing, despite their vast oil wealth.
China will not agree to have its developing country status changed and insists that it already provides de facto climate finance in the form of loans to poorer countries. There may be a compromise available in counting some of these forms of finance, on a voluntary basis, towards an expanded donor base. The UAE and Azerbaijan have also made gestures, pledging relatively small quantities. Saudi Arabia, however, is firmly set against being tapped as a donor.
To bridge the gap of hundreds of billions of dollars a year, countries are pinning their hopes on what are being termed “innovative sources of finance”. These include potential taxes on high-carbon activities, such as oil and gas extraction; wealth taxes, such as the billionaire tax proposed by Brazil; levies on frequent flyers and on global shipping; proceeds from the sales of carbon credits; and redirecting harmful subsidies to fossil fuels and agriculture towards more sustainable options.
The US under Biden was lukewarm on some of these ideas – the Treasury secretary, Janet Yellen, said a firm no to any wealth tax, for instance – but was at least a participant. Under Trump, the US may try to stymie any prospect of global levies.
Yet the impact of a Trump government on the NCQG is likely to be smaller than feared. The US provided just $1.5bn in climate finance in 2021, $5.8bn in 2022 and $9.5bn in 2023. These sums are paltry compared with the US’s historical responsibilities as a carbon emitter, according to activists. The EU is a bigger provider of climate finance than the US.
Alden Meyer, of the climate change thinktank E3G, said: “The US contribution has not been what it should have been, under any government. There will be some impact but not that much.”
Answering the money question would be a huge boost to climate action, and to climate justice for the world’s poorest and most vulnerable people. But it will not be enough to make Cop29 a success. Current plans from national governments to cut greenhouse gas emissions – called nationally determined contributions (NDCs) – are inadequate and urgently need to be strengthened.
Under the Paris agreement, the next round of NDCs are due in February, before the Cop30 conference to be held in Brazil next November. Some countries will file theirs early – the UK has promised to announce its plans at Cop29 – and Brazil wants to use the summit in Baku to ensure countries come up with NDCs that are strong, detailed and contain targets commensurate to the task of reaching net zero by mid-century.
Harjeet Singh, the global engagement director for the Fossil Fuel Non-Proliferation Treaty Initiative, said: “For communities facing the harshest impacts of climate change, the stakes have never been higher. Developing countries should amplify diplomatic and economic pressure, underscoring global interdependence and holding wealthier nations accountable for their historical emissions and responsibilities.”
Owing to Trump’s victory, these efforts may seem futile. Simon Lewis, a professor of global change science at University College London, spoke for many scientists in saying: “We can say goodbye to the Paris agreement goal of limiting warming to 1.5C above preindustrial levels. Increasingly deadly climate impacts will escalate. It’s as simple as that.”
Activists and governments are not ready to give up yet. Abandoning the 1.5C target would give too much ground to those – including Saudi Arabia and its allies – who already argue for a retreat to the much easier 2C limit that was also set down in the 2015 Paris agreement. Yet scientists have warned that a rise of 2C would be disastrous, for small islands in particular, bringing more droughts and more floods, and would risk triggering calamitous tipping points – such as the collapse of the Atlantic meridional overturning circulation that brings warm weather to northern Europe.
Rather than do that, Brazil – backed by developed countries including the UK, the EU, and developing countries including members of the Alliance of Small Island States – will keep the focus on 1.5C and push all countries – even the US – to come up with NDCs that could achieve it.
Oscar Soria, the director of the Common Initiative thinktank, said: “The difference between 1.5C and 2C could mean the difference between manageable and unmanageable conditions for many vulnerable populations. While the challenge is daunting, abandoning the 1.5C target would be a collective suicide. We cannot and should not do that.”
One final fight at Baku will be over the future of the world’s energy systems. At the previous climate summit, Cop28 in Dubai last year, countries made a historic commitment to “transition away” from fossil fuels – incredibly, thanks to the strength of the fossil fuel lobby, the first time in 30 years of talks this resolution has been made. According to high-level participants in the talks, already in pre-Cop meetings some oil-producing countries, including Saudi Arabia, have tried to unpick it. They will try harder now, emboldened by the prospect of at least four years of US climate backsliding.
Simon Stiell, the UN climate chief, who this summer spoke movingly of the impacts of climate breakdown from the ruins of his grandmother’s house in Carriacou, destroyed by Hurricane Beryl, promised to protect the progress that had been made. “Ambitious outcomes in Baku remain vital, because unless all countries can cut emissions and build more resilience into global supply chains, no economy – including the G20 – will survive unchecked global heating, and no household will be spared its severe inflationary impacts.”
