COP29 Preview
In this blog post, Castlefield Investment Analyst David Gorman previews the upcoming UN Climate Conference COP29 taking place in Baku, Azerbaijan later this month.
The climate conference COP29 takes place in Baku, Azerbaijan between 11th and 22nd of November (COP29 Azerbaijan - United Nations Climate Change Conference.) This will be the first high-level global gathering after the US Election and it is a chance for countries to gather and coordinate a response to rising global temperatures.
Some observers are calling COP29 the Finance COP
COP events bring together the governments which have signed up to environmental action as part of their membership of the United Nations. Governments or ‘Parties’ attend the climate change Conference of the Parties COP if they are part of the United Nations Framework Convention on Climate Change or UNFCCC , or the international environmental treaties the Kyoto Protocol (1997) or the landmark and legally binding Paris Agreement (2015). Building on the work of previous conferences, including COP26 in Glasgow, this year’s event has three main objectives;
- Limit global warming to below 1.5 deg C.
- Increase international commitments to address climate change, i.e. more money for “climate-vulnerable countries”
- Ensure an inclusive process
COP29 will aim to pick up where COP28 left off. That Conference, held in the UAE, produced the first global agreement to transition away from fossil fuels, secured agreement to a very large expansion of clean energy and saw further progress on the Loss and Damage Fund agreed at COP27. However, it shied away from agreeing to the full phase-out of fossil fuels, which is an objective sought by many participating countries. COP29 negotiators now have the task of formulating agreement on these challenges.
Some observers are calling COP29 the Finance COP, because negotiations for a new climate finance goal will dominate the agenda. The global green transition is estimated to cost around US$9 trillion a year1, yet in 2021/22, committed funds equated to just $1.3 trillion. Mr. Babayev has announced that at COP29, Azerbaijan will seek to agree a ‘new collective quantified goal’.2 At the Conference, there should be opportunities for climate-vulnerable countries to secure the resources and commitments crucial for transitioning to low-emissions economies and building resilience against the impacts of climate change.
Over 40,000 attendees are expected in Baku
To support continuity and progress across the three COPs, the UAE (COP28 – last year), Azerbaijan (COP29) and Brazil (COP30 – next year) have formed a COP presidential Troika or group of three.3
Over 40,000 attendees are expected in Baku and COP events are proving so popular that organisers have tried to limit attendee numbers.4 Tens of thousands of dignitaries jetting into Baku to discuss reducing carbon emissions is not a good look.
COP hosts are chosen by regional group members of the UN. The host country and COP presidency usually rotate among these five groups and the COP President is usually, but not always, a senior government official from the host country. This time around, the President is Mukhtar Babayev, Azerbaijan’s Minister of Ecology who previously spent 26 years at SOCAR, the state oil company.
It is easy to be cynical about the choice of COP hosts. After Egypt and the UAE, this is the third year in a row that the event has been held in a country with an authoritarian regime as well as the second successive time it has been hosted by a country which is heavily reliant on oil and gas revenues. Accusations of greenwashing are, of course, vigorously denied by COP29 organisers.
The President of Azerbaijan, Ilham Aliyev, succeeded his father in 2003 and is close to Vladimir Putin. Azerbaijan, currently in bitter dispute with neighbouring Armenia, is a petrostate and a member of OPEC+. Currently, more than 90% of its export revenue comes from Oil & Gas. Azerbaijan is expanding production of Oil & Gas largely, it says, to supply EU states seeking to fill the hole left by Russia.
The theory behind holding such events in places like Azerbaijan is to shine a light on the regime to encourage it to behave better. Also, it will be impossible to succeed in reducing carbon emissions globally without buy-in from producers of hydrocarbons.
There are some reports of notable absentees from the event this year and the timing, a few days after the US elections, will probably mean fewer American delegates than usual.
Castlefield clients know that, as thoughtful investors, we avoid investing in companies exposed to the Oil & Gas industries because we want to see the world move away from a reliance on fossil fuels and we would like to see this transition done in a way that is fair to all. So, any new agreement to cut emissions and to allocate more cash to the energy transition is to be welcomed. Let us hope that we hear good news from Baku.
We will review COP29 once the event has concluded.
Written by David Gorman