CoP 29 in Baku: Are climate policies running out of steam?

Events worldwide have understandably drawn our leaders’ attention away from the politics of climate change even as dramatic weather events have reminded us how real are the dangers. COP 29 in Baku in November got far less attention than COP 28 in Dubai, and the outcome was disappointing. But the problems now facing effective ‘climate action’ run deeper than that, and not just because of President Trump.

The last year of Joe Biden’s presidency has been overshadowed by the continuing war in Ukraine, Israel’s ’War on Seven Fronts’, the collapse of coalition governments in Germany and France, and the overthrow of the Assad regime in Syria. And the election of Donald Trump has tended to eclipse the optimism of Biden’s Inflation Reduction Act and other climate-friendly measures.

It was not a surprise that attendance at COP 29 in Baku fell back to 40,000 delegates and there were no VIPs like King Charles, John Kerry or President Macron, nor a message from the Pope. Climate activists criticised the holding of the third COP in a row in the capital of an oil and gas producer; and the chair, Mukhtar Babayev, did not help by pronouncing oil and gas a ‘gift from God’. Papua New Guinea stayed away, saying that it was a ‘total waste of time’; while the Argentine President, Javier Milei, left after three days, declaring that climate change was ‘a socialist lie’.

Consensus proved hard to achieve. COP 29 was billed as the ‘Finance COP’. Paris 2015 set a climate finance target of $100bn a year by 2020, though that was not achieved until 2022. At Baku the G77 + China pressed for a total of $1.2 trn a year by 2035. After protracted sessions, a target of only $300bn (now known as the New Collective Quantified Goal, or NCQG) was agreed, with the balance to come from private sector finance, development agencies, and voluntary contributions from Middle East (ie wealthy) countries and China. The Indian delegate declared this a betrayal; but it was a sobering reminder that many OECD states are facing huge budget challenges of their own as well as public disillusionment with climate policies.

Attention now turns to COP 30 to be held in Brazil (Belem). The UK and Brazil are to work together on the submission of revised NDCs (Nationally Determined Contributions) with a deadline of February 2025. This underlines the UK’s continuing prominence in climate politics. Meanwhile, hosting COP 31 remains a toss-up between Turkey and Australia-plus-the-Pacific States. Given the increasing concerns of island states the latter might seem an obvious choice.

Back in the real world, the messages from the International Energy Agency are mixed. They expect to see 5,500 GW of new renewables by 2030, giving renewables 50% of global electricity generation. Photovoltaics and wind power are now the cheapest options in almost every country. On the other hand, use of coal for power may not now peak until 2026: demand may be rising by 1% in 2024 to 8.77 bn tonnes (more than half in China and 15% in India). Since 2021, China’s electricity demand has been rising faster than its GDP, driven mainly by EVs and data centres. Data centres affect the West, too, but it is encouraging that META, Amazon and other tech giants are now looking at nuclear power (either Small Modular Reactors or even the reopening of Three Mile Island) as a low-carbon option.

So annual Green House Gas emissions continue to creep up rather than down. Meanwhile, 2024 is expected to edge out 2023 as the hottest year on record and we are presented with an array of dramatic weather events: from floods in Spain to wild-fires in Canada and Los Angeles. But in the West our public finances are under pressure from the increasing demands of the welfare state and a perceived need for increased defence spending.

Moreover, the consensus around climate policies seems to be shrinking. The UK government is still aiming for Net Zero 2050. But Shell and BP have been torn between climate protesters on one side and activist investors on the other. Their returns on capital have trailed behind their multinational competitors, and they have reacted by diluting their 2030 carbon reduction targets and pulling out of a number of renewable energy projects.

These trends have been mirrored in the financial sector. Just last month, JP Morgan became the sixth major US bank to withdraw from the Net Zero Banking Alliance set up after COP 26; and Blackrock, with $11.6trn under management and an early pioneer of ESG principles, has now back-tracked under pressure from Republican politicians.

As part of a wider backlash against climate policies, the UK pioneer of feed additives which reduce methane from dairy cows by up to 30% expected to be feted by the public but, instead, has faced a ‘Twitter storm’ and calls for their products to be boycotted. And farmers in France and Germany have fiercely resisted surcharges on agricultural diesel, and limits on methane emissions from livestock.

Wind and solar power may be competitive, but climate-friendly policies are not always self-financing. Huge enhancements are needed in power grids to transmit renewables and to provide charging points for Electric Vehicles. It was hoped in the UK and in the EU that the EV sector would develop by itself with the simple announcement of deadlines to discontinue petrol or diesel cars (by 2030 or 2035). But sales have faltered: drivers are worried about the shortage of charging points, the poor resale value of EVs (because the batteries need replacing after 6-8 years) and, in some cases, the ending of price subsidies.

EU manufacturers now also face increasing competition from China. EU governments need to decide whether to rely on the Chinese for their EVs (as they now have for their solar panels) or to raise tariffs (perhaps in the form of a Carbon Border Adjustment Mechanism) to protect their own industries. Battery plants have recently gone into receivership in the UK and Sweden.

Into this gloomy mix has come President Trump. Immediately following his Inauguration, he withdrew the US from the 2015 Paris Climate Accord (“the one-sided Paris Climate Accord rip-off”), issued Executive Orders freeing up domestic oil and gas drilling, revoked President Biden’s directive targeting 50% EV sales by 2030, and banned any further off-shore wind farms. He frames this in the context of the fight against high prices: “Drill baby drill, and bring those prices down”. His nomination for Energy Secretary, Chris Wright of Liberty Energy, has been a pioneer of “fracking” and has said “There is no climate crisis”.

Boosting US oil production by two or three million barrels a day could slow US efforts to reduce its own GHG emissions; more importantly, withdrawing from the Paris Accord will weaken the pressure on coal-burning countries like China and India and on “bad boys”, such as Russia and Iraq, who have taken very few steps to reduce leaks of methane from their natural gas production. President Trump’s policies will also curb the growing US share of renewable energy markets. However, if prioritising oil and gas drilling is successful, the policies are likely to force a number of domestic producers out of costlier and more energy-intensive gas and oil fracking.