CISL's COP29 Asks
COP29 is being hosted by Azerbaijan in Baku this year against a backdrop of geopolitical turbulence and growing urgency as the impacts of climate change are increasingly felt the world over.
While globally the rollout of solutions continues to grow, we are failing to keep pace with the climate and nature crises, and trends continue to head in the wrong direction. This year, the climate COP falls just a week after the biodiversity COP has concluded in Colombia, and it is now more important than ever that world leaders take an integrated approach to nature and climate to accelerate action for a sustainable future.
Challenges and opportunities
Finding common ground at COP29 will be more challenging than ever given the continued growth in populist and nationalist politics, political instability, with key election outcomes yet to be announced, and significant intergovernmental tensions. Discussions around climate have suffered from polarisation, misrepresentation and conspiracy thinking, meaning achieving effective climate action is increasingly challenging.
In light of this, COP29 presents an important opportunity for the international community to demonstrate strong climate leadership. The United Nations (UN) climate change negotiations have the legitimacy and participation to bring together global efforts on climate change and to send a clear signal about the scale and speed of action required. Globally, deep structural changes are needed to create thriving markets for net zero, nature-positive, circular products and to drive down damaging economic activity.
Last year, at COP28, countries agreed to transition away from fossil fuels for the first time, and committed to key goals such as tripling renewables and operationalising a new funding mechanism for loss and damage. Now government leaders at COP29 must provide clarity; setting out a vision for a 1.5°C future, backed by the domestic policies required to achieve it.
The University of Cambridge Institute for Sustainability Leadership (CISL) is attending with four key policy ‘asks’ of the Parties, designed to unlock private sector ambition and galvanise the private sector’s participation in delivering a net zero and nature-positive economy.
CISL's four 'asks' for COP29
A robust and inclusive New Collective Quantified Goal on climate finance (NCQG)
Ambitious and investable Nationally Determined Contributions (NDCs)
A high-integrity carbon market infrastructure
A working Loss and Damage Fund that leverages private risk markets
Ask 1: A robust and inclusive NCQG
Climate finance is a critical enabler of climate action and will be particularly relevant at COP29 because the New Collective Quantified Goal on climate finance (NCQG) is set to be agreed. The NCQG is a key element of the Paris Agreement, designed to set a new financial target to support developing countries in their climate actions post-2025, replacing the previous goal of US $100 billion a year.
The NCQG must be robust and inclusive, and COP29 negotiations should agree clear commitments on the quantity, scope, instruments and source of finance, including from the private sector.
- Quantity: Multiple analyses have identified an investment gap to address climate change in the trillions. The Independent High Level Expert Group on Climate Finance suggests international finance flows should be in the order of US$1 trillion a year. Given the delay in reaching the current US$100 billion goal, it is clear that a step-change level of commitment will be needed to achieve this.
- Scope: Currently international climate finance mostly covers climate mitigation activities. Future financing needs to have clearly articulated subgoals to ensure a balance between mitigation, adaptation, and loss and damage to meet the needs of the most vulnerable countries.
- Instruments: Climate finance must be provided in terms that support good outcomes for climate and development, which means prioritising non-debt instruments and ensuring any lending provides sufficiently concessional terms which do not add to unsustainable debt burdens.
- Contributors: Broadening the contributor base beyond the traditional industrialised donor countries to all those capable of contributing would help to increase the total value of the NCQG.
- Leveraging private finance: Public finance will not provide sufficient finance levels to meet international finance needs. The NCQG must include plans and measures to use public financing to catalyse greater private sector investment. CISL’s Everything, everywhere, all at once report sets out potential solutions to unlock private capital for nature and climate in the international financial architecture.
“Our task is to invite the private sector into climate finance as much as possible – it’s a very good source for new initiatives, new formats, [and] new mechanisms for finance.”
Mukhtar Babayev, COP29 President
Ask 2: Ambitious and investable NDCs
Nationally Determined Contributions (NDCs) are submissions outlining countries’ climate action plans. All countries which are signatories to the Paris Agreement are required to develop new NDCs on a five-year cycle of increasingly ambitious climate action, with updated targets for 2030 and new targets for 2035 due by February 2025.
COP29 is a major milestone to secure the first new NDCs and set the tone and ambition for this round. Ambitious and investable NDCs will raise market confidence and help to unlock new finance flows to achieve ambitious 2035 emissions reduction targets. They should include:
- Steep emissions reductions: To deliver the globally agreed ambition of limiting global warming to 1.5°C, new NDCs should set stronger 2030 and 2035 emissions targets. Businesses can support this effort by setting credible net zero targets and implementation plans.
- Sectoral and timebound targets: NDCs should include timebound targets, broken down to sectoral level to accelerate the systems change transformations needed. Key high-emitting sectors which should be addressed include energy, buildings, transport, food, agriculture and land use.
- Address adaptation: NDCs should build countries’ resilience to the irreversible impacts of climate change, working to reinforce and complement tools like National Adaptation Plans. This round of NDCs comes after the adoption of the first Global Goal on Adaptation and will be important for cementing national priorities.
- Investable: Lastly and above all, NDCs must be investable and therefore deliverable. Financing climate action is one of the main challenges countries have experienced in setting and delivering their NDCs. Businesses are increasingly calling for consistency and clarity in climate policy to provide the certainty needed to invest and act. See the Corporate Leaders Group UK's policy briefing, Making it happen: UK climate leadership through five actions in five years, for more on this.
“This next round of NDCs may be the most important documents to be produced in a multilateral context so far this century.”
Simon Stiell, UNFCCC Executive Secretary
Ask 3: A high-integrity carbon market infrastructure
COP29 has an opportunity to progress efforts to build a high-integrity international carbon market. Article 6 of the Paris Agreement enables countries to co-operate in implementing their climate targets by transferring emissions reductions between countries, as well as supporting other forms of collaboration with non-party stakeholders, like business.
A high-integrity carbon credit should ensure genuine, measurable reductions or removals of greenhouse gas emissions, while maximising environmental and social co-benefits. Too many credits and related projects fail to meet these standards, creating real concern about the potential for such projects, even as the urgent need for investment in climate action grows.
Carbon markets can only work if they are underpinned by standardised accounting measures and supported by transparent, well-governed and well-regulated mechanisms to ensure projects meet strict criteria like additionality, permanence, and avoidance of double counting and biodiversity loss. See the Integrity Council for the Voluntary Carbon Market’s (ICVCM’s) 10 Core Carbon Principles for more on how to ensure integrity in the voluntary carbon market.
If this can be secured, Article 6 has the potential to provide a robust carbon crediting mechanism to trade high-integrity credits, offering incentives for countries and businesses to increase their climate ambitions and lowering the cost of emissions reductions. However, these negotiations are contested and technical – leaders at COP29 will need to step up to navigate these challenges and deliver a high-integrity outcome.
"We need to use every ready, proven and scalable tool now to address the global climate crisis."
Ask 4: A working Loss and Damage Fund that leverages private risk markets
At COP28, countries agreed to fund and operationalise the landmark ‘Loss and Damage Fund’, designed to support countries dealing with unavoidable climate damage. For vulnerable developing countries – that have usually done the least to contribute greenhouse gases to the atmosphere – climate damage represents a new burden that they will struggle to cope with.
At COP29 the test will be whether this new fund is given the support and finance needed. This will require new public finance, but private finance can also be leveraged in. Risk-sharing systems have a crucial role to play, as they can create pools of shared capital sourced from public sectors, private and mutual insurance sectors, and financial markets. With this approach, financial risks associated with climate events can be transferred from the Global South to insurance and capital markets, providing an important part of the emerging mosaic of solutions for loss and damage.
More detailed recommendations are set out in CISL’s Risk Sharing for Loss and Damage report.
"The amount currently pledged to the still-forming Loss and Damage Fund […] is tiny compared to estimated loss and damage needs worldwide."
Conclusion
Global action is largely off track to achieve the original Paris Agreement goal of keeping warming below 1.5°C alive. This COP provides an opportunity to raise ambition that the world cannot afford to miss and build momentum on globally agreed goals on the transition away from fossil fuels, tripling renewables and doubling energy efficiency.
To be a success, COP29 must deliver a robust and inclusive NCQG, ambitious and investable NDCs, a high-integrity carbon market infrastructure, and a working Loss and Damage Fund.
The private sector has a key role to play in the outcomes of these negotiations through calling for greater ambition, both in the lead-up to and during the COP. Businesses and financiers can accelerate climate action in the real economy through their own actions and investments, and through advocating the stronger policy and regulatory environment from governments that can truly structurally shift the markets.
Business Leadership: changing the story
About this briefing
The University of Cambridge Institute for Sustainability Leadership
CISL is an impact-led institute within the University of Cambridge that activates leadership globally to transform economies for people, nature and climate. Through its global network and hubs in Cambridge, Cape Town and Brussels, CISL works with leaders and innovators across business, finance and government to accelerate action for a sustainable future. Trusted since 1988 for its rigour and pioneering commitment to learning and collaboration, the Institute creates safe spaces to challenge and support those with the power to act.
Contributors
Aoife Blanchard, Katherine Quinn, Eliot Whittington, Beverley Cornaby, Nina Seega, Jessica Attard, Ursula Woodburn, Anum Sheikh, Laura Cochrane-Davies, Tsvetelina Kuzmanova, Annabelle Roblin-Sserwanja.
Copyright
Copyright © 2024 University of Cambridge Institute for Sustainability Leadership (CISL). Some rights reserved. The material featured in this publication excluding photographs is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International Licence (CC BY-NC-SA 4.0)
Built with Shorthand