COP29 Baku, Azerbaijan—Another Developed Versus Developing Region Stalemate?

Once more, this year’s COP disappointed, both in the level and nature of agreed commitments. COP29 focused on financing the transition toward a carbon-free economy, especially as it relates to the financial support offered by developed countries to developing countries. After a lot of back and forth and finger pointing, widening the gap and the lack of trust between developed and developing countries more than anything else, commitment was reached on increasing public financing to a lackluster US$300 billion by 2035 with combined public and private financing aimed at increasing to US$1.3 trillion, falling far short of what is required to stay below the 1.5 degrees of temperature increase agreed to at COP15.

Additionally, COP29 doubled down on even more reporting and better organized carbon markets, presented as a flexible tool to offset delays in the energy transition that some countries are facing, but essentially offering another excuse not to do what is required. All in all, COP29 essentially postponed decisions to future COPs, starting with COP30 in Belém, Brazil in November 2025.

Keeping global warming below 1.5 degrees has been a climate change target since COP15 in Paris. The 2015 Paris climate agreement set a limit on the global temperature rise of 1.5 degrees Celsius (C) above pre-industrial levels. This required global emissions was to peak by 2025. By now, everybody knows the 1.5 degrees objective will not be met. However, nobody seems to have the courage to admit it and be honest and realistic about climate change. On the contrary, it is still being used by the United Nations (UN) as the main incentive to urge countries to accelerate efforts and increase investments in the energy transition. This approach is increasingly becoming dysfunctional. Blindly imposing accelerating efforts trying to reach an increasingly elusive target risks alienating support, rather than winning it.

While COP remains stuck in climate change obsessions, enterprises are struggling to cope with the increasing burden of national and international sustainability regulations, with reporting requirements becoming particularly cumbersome. What is really needed is a shift from a government-imposed set of targets and a single focus on climate change toward promoting the business and technological aspects of sustainability in a way every country and, more importantly, every company can commit to. Sustainability should become a matter of good business practice in terms of efficient and cost-effective operational management. Ultimately, the energy transition toward renewables should be driven by business prerogatives and become firmly embedded in next-generation technology-enabled economies. In other words, sustainable practices should be adopted, regardless of climate change pressures.

For example, electrification in transportation and within industries makes good business sense and will happen despite climate change-related imperatives. Electric equipment is fundamentally more energy efficient, requires less maintenance, can be operated at a much lower lifetime cost, and can be designed for circulatory. It will be more critical to build awareness around these incentives than engaging in another round of dysfunctional climate change debates leading nowhere. China understands this very well. It has established itself as the global technology leader in and mass manufacturing center of batteries, solar panels, Electric Vehicles (EVs), and wind energy infrastructure (just to name a few) driven by economic rewards, rather than climate change considerations. Ironically, China could well emerge as the climate change champion in a not-so-distant future.

Let’s be clear, climate change poses a very real threat, but we need a different way to fight it and it's not going to be through heavy-handed top-down regulation and unrealistic targets. The climate change challenge can only be addressed fundamentally and durably by adopting economically viable and globally acceptable approaches. As with anything else in human history, the law of economics always prevails with technology as its key enabler. It won’t be any different with climate change.