EU lists climate finance, carbon markets as key priorities for COP29

The EU will push for significant progress on defining the climate finance framework known as the New Collective Quantified Goal (NCQG) at the upcoming 29th UN Climate Change Conference in Baku, it said Oct. 15.

Brussels revealed its negotiating mandate for COP29 calling for an ambitious outcome building on the commitments made in Dubai last year, laying the groundwork for the next round of more ambitious Nationally Determined Contributions ahead of COP30 in Brazil.

World leaders are under pressure to deliver a new effective, achievable and ambitious target on climate finance, replacing the $100 billion/yr finance target with post-2025 goals.

“The new goal should be designed on the basis of a broad, transformative and multi-layered approach, including various flows of finance and a broader group of contributors,” the European Council said in a statement.

“This would reflect the evolution of respective economic capabilities and increasing shares of global greenhouse gas emissions since the early 1990s.”

The limited progress on climate finance over the years has fueled mistrust between developed and developing parties.

Developing nations have continuously raised concerns, saying they are unable to pledge further action unless they receive sufficient funds, while developed nations have shown a reluctance to significantly ramp up climate finance.

Analysts have noted there will be significant and complex challenges for countries to find a consensus on the thorny issue of “climate finance.”

“Ongoing geopolitical instability, differing national priorities and the pressing need for comprehensive climate finance results will require innovative solutions and collaborative effort underscore the complexity of reaching a consensus,” analysts at S&P Global Commodity Insights said in a recent note.

Article 6, fossil fuels

At COP28, world leaders agreed on a final text of the global stocktake at COP28, which included "transitioning away" from fossil fuels and working "toward the phasedown" of unabated coal.

The Council also said it will reiterate the call “to transition away from fossil fuels in energy systems in a just, orderly and equitable manner.”

Finalizing the negotiations under Article 6 on international carbon credit trading will also be another priority for Baku, the Commission said.

The EU has taken a very strong stance on Article 6.4, calling for greater measures to tackle environmental integrity issues.

This comes after the UN body responsible for formulating the guidelines for a global carbon market under Article 6.4 of the Paris Agreement agreed on a standard for project methodologies and carbon removals, to kickstart the operationalization of this key carbon crediting mechanism.

The Article 6.4 Supervisory Body will also provide further recommendations, which will need to be approved by world leaders at COP29 in Baku, which is taking place from Nov. 11-22.

Negotiations to activate Article 6.4, which will create a new market, opening up fresh demand for credits, have been fraught in recent years due to integrity concerns and issues related to carbon removals and project methodologies.

Article 6.4 specifically allows a company in one country to reduce emissions domestically and have those reductions credited so that it can sell them to a different company in another country, according to the UN.

Article 6 sets the rules for global trade in greenhouse gas emissions reductions, and under Article 6.2, countries can adopt to allow cross-border exchanges of credits.