In the last issue we explored important developments in both compliance and voluntary carbon markets from China to the US, as well as the negative impacts of climate change, which affects the full spectrum of global security, economics, and politics. In this issue, we focus on developments coming out from the COP29 Summit taking place in Baku, Azerbaijan, as well as the challenges and glimmers of hope in the fight against climate change. COP29 Developments COP29 Negotiators Agree on Global Carbon Market Mechanism John Ainger, Bloomberg The push for climate taxes gets real in Baku Pilita Clark, The Financial Times Four Takeaways from COP29 Week One Climate Reality Project Global GHG Emissions, by Sector Bruno Venditti, Visual Capitalist The COP29 climate summit in Baku, Azerbaijan, began with a significant breakthrough on the first day: an agreement on rules for an UN-administered global carbon market. This new market is expected to set the standard for emissions trading and attract billions of dollars in funding for projects aimed at reducing emissions in developing countries. Wealthier countries will be able to achieve their climate targets by purchasing credits from projects that successfully reduce pollution. This agreement, referred to as “Article 6.4,” had been a point of contention for years, making its passage a notable achievement. However, the summit also highlighted a growing sense of urgency and frustration with the pace of global climate action. Source Global greenhouse gas emissions hit a new record of 57.1 gigatons of carbon dioxide equivalent in 2023, a 1.3% increase from 2022. The power sector was the largest contributor to emissions, accounting for 26% of the total, followed by the transport sector at 15%. These trends underscore the need for a rapid transition away from fossil fuels. The incoming US administration’s anticipated withdrawal from the Paris Agreement casts a shadow over the proceedings, leaving a leadership void that China is poised to fill. This potential shift in geopolitical power dynamics could significantly impact the future of global climate action. Despite the progress made on the carbon market, several issues continue to hinder progress toward the Paris Agreement’s goals. The host nation, Azerbaijan, faced criticism for agreeing to new gas deals with European partners and for a perceived lack of leadership in driving the transition away from fossil fuels. The summit’s agenda lacked any explicit mention of phasing out fossil fuels, further fueling concerns about the conference’s commitment to addressing the root causes of climate change. Over 1,700 fossil fuel lobbyists were present at the talks, raising questions about the influence of these industries on the negotiations. Looking ahead, many countries are setting their sights on COP30, which is scheduled to be held in Brazil in 2025. This summit represents a crucial opportunity for nations to submit more ambitious national climate action plans. The UK, for example, pledged to cut fossil fuel emissions by 81% by 2035 compared to 1990 levels, and Brazil announced a new target to reduce emissions by 59-67% by 2035 compared to 2005 levels, largely through efforts to halt deforestation and restore native vegetation. However, securing a new agreement on climate finance, particularly regarding the commitment of wealthy nations to assist vulnerable countries in adapting to climate change and transitioning to clean energy, remains a major challenge. The question of how to bridge the gap between the existing $100 billion annual commitment and the estimated $2.3 trillion needed annually by 2030 in developing countries remains a major point of contention. Proposals for “solidarity levies” on activities like aviation, shipping, and financial transactions have gained traction as a potential source of funding. Challenges in the Fight Against Climate Change The world acted too late to avert climate catastrophes. Now the US effort to deal with them is struggling. Zack Colman & Jessie Blaeser, POLITICO Methane Emissions Keep Rising Aaron Clark & Zachary R Mider, Bloomberg Mega-polluter China believes it is a climate saviour The Economist The global fight against climate change is a multifaceted and challenging endeavor, as illustrated by recent efforts such as President Joe Biden’s ambitious climate resilience investment, which has faced delays, undermining its potential impact despite the urgency of addressing climate-induced disasters. At the same time, methane emissions from the fossil fuel industry continue to surge, highlighting the disparity between reported reductions and actual progress. Meanwhile, China, a key player in the green energy sector, navigates both commendation and criticism for its extensive investment in clean technologies amid accusations of insufficient support for global climate initiatives. These examples underscore the intricate balance of economic, political, and environmental factors that complicate global climate action. With Donald Trump securing victory in the election, the future of President Joe Biden’s historic $33.6 billion investment to protect against climate change-induced disasters is uncertain. This funding, part of the 2021 bipartisan infrastructure law, was intended to harden the electrical grid, prevent wildfires, flood-proof communities, and stabilize water supplies. Despite the urgent need for these projects, nearly three years later, most of the money remains unspent, with only $10.3 billion of the $24.4 billion allocated to 80 federal programs awarded by September. The slow progress in spending the resilience funds has significant implications, especially with the increasing frequency and severity of climate disasters. The Biden administration’s efforts to expedite the spending are crucial, as the unspent money leaves communities vulnerable to future disasters. The infrastructure law also includes additional funds for drought, dam safety, and ocean programs, but their spending status remains unclear. Trump’s victory adds another layer of uncertainty to these efforts. He could redefine “resilience,” redirect funds, and halt Biden’s initiatives to support long-neglected communities. The slow pace of spending and the potential political shift highlight the challenges in building national resilience to climate change. Despite the ambitious goals and significant funding, the real-world impact of these efforts remains to be seen. Meanwhile, world leaders and fossil fuel executives have prioritized tackling methane emissions, with many signing pledges since 2021 to enhance their environmental credentials. Despite claims of progress, including the Oil and Gas Climate Initiative’s assertion of halving emissions since 2017, methane emissions from fossil fuels remain near record levels. Atmospheric methane concentrations have surged, with significant discrepancies between reported emissions and scientific estimates. Methane, a potent greenhouse gas, is seen as a critical target for emission reductions to combat global warming. COP29 in Baku has touched on methane, with Azerbaijan committing to the Global Methane Pledge. However, despite numerous agreements, significant progress in reducing methane pollution remains elusive. On another note, at COP29, a major question is which countries should contribute more to climate change mitigation. China, the world’s second-largest economy and leading carbon dioxide emitter for nearly two decades, faces criticism from Western countries for not doing enough to help poorer nations. However, Chinese officials argue that China is still developing, has fewer historical emissions than Western countries, and is investing heavily in clean-energy technologies. Between 2018 and 2023, China accounted for nearly 90% of the $378 billion global investment in green technology manufacturing. Last year, coal was the top electricity fuel in 10 states, down from 32 states in 2001, with natural gas and wind power gaining prominence, especially in the Midwest.  Experts emphasize that more needs to be done to achieve zero emissions in the power sector, a goal set by President Biden. Melissa Lott from Columbia University notes that while switching from coal to gas reduces emissions, it doesn’t eliminate them. Rapid development of renewables and other technologies is essential to meet climate goals. The 2022 Inflation Reduction Act, aimed at boosting renewable energy and supporting technologies like nuclear energy and carbon capture, faces uncertainty in an election year, with potential repeals by Republicans. State-level actions also play a crucial role in the pace of new energy development. This investment has made China a leader in producing and deploying clean energy, driving down costs through economies of scale and fierce competition among its firms. Despite backlash from the U.S. and the EU over accusations of unfair competition and trade tariffs, China continues to evolve its policies, reducing state support as industries mature but maintaining a significant focus on renewable energy due to its economic and strategic importance. China’s clean energy efforts, championed by President Xi Jinping, are set to play a crucial role in the global transition to sustainable energy, provided international cooperation continues. The collective struggle against climate change requires more than isolated efforts and declarations; it demands coordinated, transparent, and persistent action across all sectors and nations. Biden’s infrastructure plans, the handling of methane emissions, and China’s green energy investments each reveal significant hurdles that must be overcome to achieve meaningful progress. As global leaders convene at summits like COP29, the importance of genuine collaboration and accountability becomes increasingly clear. Only through united and sustained efforts can the world hope to mitigate the devastating impacts of climate change and secure a sustainable future for all. Glimmers of Hope Everything about climate change may seem grim. It isn’t The Economist The energy transition will be much cheaper than you think The Economist US Unveils Plan to Triple Nuclear Power by 2050 as Demand Soars Jennifer A Dlouhy, Bloomberg While the challenges of climate change can often seem insurmountable, recent developments offer a glimmer of hope. Advances in renewable energy technologies are driving down costs and increasing deployment, making a significant impact on global emissions. Moreover, the economic burden of transitioning to a zero-emissions world may be much lower than initially anticipated, thanks to technological advancements and strategic investments. Adding to this optimism, the US has unveiled plans to triple its nuclear power capacity by 2050, reinforcing the commitment to a sustainable, carbon-free future. Together, these efforts highlight the potential for meaningful progress in the fight against climate change. Despite the seemingly unrelentless barrage of dire news about the status of climate change, there is good news in the consistent reduction of renewable energy costs, particularly solar panels. Each year, the installed base of renewables grows, driven by significant investments, especially from China, which added more solar capacity last year than the entire world had in 2015. This trend suggests that emissions can and will fall as clean energy becomes more affordable and widespread. However, the transition to a clean-energy world requires more than just technological advancements; it necessitates a comprehensive overhaul of energy grids to accommodate new sources of power and manage their intermittency. Additionally, financial support for poorer countries is crucial to help them adopt renewable technologies and move away from coal. While the goal of limiting global warming to 1.5°C may be out of reach, keeping it below 2°C is still achievable with coordinated global efforts and a shift away from fatalism. Many believe that decarbonizing the global economy will be prohibitively expensive, with some estimates suggesting costs of up to $12 trillion a year. However, some experts believe that these figures may be exaggerated due to assumptions about rapid emissions cuts, unrealistic growth projections, and underestimations of how quickly technology costs can fall. The reality is that the incremental cost to cut emissions might be less than $1 trillion a year, which amounts to under 1% of global GDP. This figure becomes more manageable when considering that substantial investments in energy infrastructure will be necessary regardless of whether the world transitions to clean energy or continues relying on fossil fuels. Investing in renewables, despite requiring significant upfront capital, promises long-term savings and is becoming increasingly affordable as technologies like solar power and batteries continue to decrease in cost. The International Energy Agency (IEA) notes that clean technology now receives almost twice as much investment as fossil fuels, with solar power alone accounting for $500 billion this year. This shift in investment patterns signals a growing recognition of the economic viability of green technology and its potential to meet energy demands sustainably. Moreover, the cost of transitioning to a clean-energy world is further mitigated by the falling prices of renewable technologies, which have consistently outpaced expectations. Innovations and economies of scale have driven down costs, making it financially feasible to achieve significant emissions reductions. The eventual decline in investment needed for fossil fuels will also contribute to operational savings. Therefore, transitioning away from fossil fuels is not only necessary for environmental reasons but also a financially sound decision that can lead to a more sustainable and cost-effective energy future. On another hopeful note, President Joe Biden’s administration plans to triple the US nuclear power capacity by 2050, aiming to add 200 gigawatts through new reactors, plant restarts, and upgrades. In the short term, the goal is to have 35 gigawatts of new capacity within a decade. The administration is addressing challenges such as skilled labor shortages, domestic fuel supply, and regulatory infrastructure. This strategy has bipartisan support and aligns with President-elect Donald Trump’s campaign promises. The nuclear industry is seeing increased demand as nations seek low-emissions power sources, with major companies like Microsoft and Google showing interest. The initiative coincides with the COP29 climate summit, where the US and other countries pledged to triple nuclear capacity by 2050. The plan includes steps to rebuild the US’s nuclear technology capacity and ensure global competitiveness in clean energy. The path to a sustainable future is fraught with challenges, but the recent strides in renewable energy, cost-effective decarbonization, and expanded nuclear power capacity demonstrate that significant progress is possible. These hopeful developments underscore the importance of continued innovation, investment, and international cooperation. By embracing these opportunities and building on the momentum, the world can move closer to achieving its climate goals and securing a safer, greener planet for future generations.