Rho Motions' Key Takeaways from COP29 (Industry Update)

COP29 concluded in Azerbaijan after nearly two weeks of deliberations and negotiations. The start of the conference drew criticism following remarks by the Azerbaijani president, who described oil and gas as a gift from God. The work began with a two-day summit of world leaders, attended by around 100 world leaders. Notable absentees included Chinese President Xi Jinping, US President Joe Biden, Indian Prime Minister Narendra Modi, German Chancellor Olaf Scholz and Brazilian President Luiz Incio Lula da Silva. However, the UK and Brazil, both G20 members, have committed to strengthening climate actions in their respective climate strategies. Despite these commitments, the main focus of the conference remained on climate finance.

Global carbon market and financing

At the start of the conference, delegates reached agreement on international carbon market standards under Article 6.4 of the 2015 Paris Agreement. The agreement establishes a centralized supervised global carbon market mechanism by the UNFCCC. UNFCCC Executive Secretary Simon Stiell described it as a revolutionary tool for directing resources to developing countries, with the potential to save up to $250 billion a year in implementing the plans. climatic.

Climate finance, covered by Article 9 of the Paris Agreement, has proven to be a controversial issue. The agreement requires developed countries to provide financial support for climate actions and adaptation efforts in developing countries.

As part of the Collective Quantified Goal (CQG), countries agreed to mobilize at least $100 billion per year from 2020 to 2025. This goal was achieved in 2022, two years late. At COP29, a new framework was agreed, setting a target of $300 billion per year by 2035. Poorer countries have argued that these commitments remain insufficient to meet the scale of measures required. However, the framework also calls for collaborative efforts to increase funding to $1.3 trillion per year by 2035, integrating both the public and private sectors.

Read: Rhos, key points to remember from COP28

Energy storage and clean networks

The COP29 presidency announced its commitment to increase global energy storage capacity to 1,500 GW by 2030, six times 2022 levels, and to add or refurbish 80 million kilometers of electricity grids by 2040. This aligns with the COP28 global commitment on renewable energy and energy efficiency, which sought to triple renewable energy capacity by 2030 compared to 2022 levels. While the commitment on renewable energy brought together 118 signatories, the commitment on storage was supported by five countries: the United Kingdom, the United States, the United Arab Emirates, Brazil and Saudi Arabia. Several non-state actors also signed the agreement. That said, Rho Motion predicts that by 2030, global BESS capacity alone will reach approximately 1,600 GW. Given that the industry is already expanding rapidly, this goal is not overly ambitious.

The storage and grid commitments coincided with pledges from 26 countries to refrain from relentlessly building new coal-fired power plants. Signatories included the United Kingdom, France, Canada, Germany and Australia.

Additionally, the International Hydropower Association launched the Global Pumped Storage Alliance, supported by 14 countries, including the United States, Indonesia, Spain and Brazil. The initiative aims to promote pumped hydropower as essential infrastructure to facilitate the deployment of renewable energy.

Critical minerals

Critical minerals have been highlighted as essential for battery production, which underpins renewable energy targets. Lithium, cobalt and nickel have been designated as essential to the energy transition.

UN Secretary-General Antnio Guterres has called for stricter monitoring of the supply chain of critical minerals, warning against exploitation and environmental degradation. We are seeing a rush for resources, with communities exploited, rights trampled and environments trashed, he commented, adding that the mistakes of the past were being repeated in a rush of greed.

This follows the COP16 biodiversity summit which called for a global treaty on the traceability of critical minerals, a proposal revisited at COP29. Colombia is expected to present a proposal to this effect at COP30 next year.

All eyes are now turning to COP30 which will be held in Brazil next year. COP30 represents the deadline for countries to submit new nationally determined contributions providing the roadmap to decarbonization. These submissions will be reviewed to assess global emissions trajectories.

More information

For more information on COP29 and the energy transition, see our research or contact us.

Image credit: COP29

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