Having hit the halfway mark on this year’s edition of the world’s most important annual climate conference, the mood in Baku, Azerbaijan, is decidedly mixed. With high-profile walkouts, slow-moving progress on key issues along with some causes for cautious optimism, it’s hard to tell how COP29 will ultimately play out.

Climate financing dominates: Unsurprisingly, a sizeable majority of talks in the opening week of COP29 have revolved around money. Specifically, finding more of it for national and international climate responses. The central yardstick of success for this year’s summit is whether the member states can agree on concrete measures for boosting annual funding for developing countries to cope with climate change up to $1 trillion by 2030. This is a 10-fold expansion on the previous pledge of $100 billion, which expires at the end of 2024.

Carbon markets: A big breakthrough came early on, as the second day of the conference saw the Azerbaijani presidency confirm new carbon market standards. This was a sore spot at COP28, where agreements failed. Under Article 6.4 of the Paris Agreement, countries can now either set up carbon trading arrangements bilaterally, or trade carbon credits using a UN-backed carbon market. Already, international financing institutions have welcomed this change, saying it should drive confidence in carbon as an asset, and in the trading mechanisms around carbon as a whole.

UAE, UK and Brazil reveal NDCs: The Nationally Determined Contributions (NDCs) set the pace for climate transition as each nation outlines its plans and timelines to achieve net zero economies and lower emissions overall. The UAE, UK and Brazil, among others, have laid out their latest targets (NDCs 3.0) early to try and show leadership globally and in their respective regional spheres of influence.

Fossil Fuels: The transition away from fossil fuels remains as politically sensitive as ever, with developing nations reserving the right to utilise their oil and gas resources to deliver economic growth. The President of Azerbaijan described oil and gas a “gift of god” during his opening address, underlining how the economic realities of hydrocarbon reliance will not simply disappear, even in the face of growing climate disaster.

Renewables: The goal of global goal of tripling renewable capacity and doubling energy efficiency by 2030 is seeing firm support already at COP29. The Utilities for Net Zero Alliance (UNEZA) announced a doubling of its membership since its launch at last year’s summit, along with increased annual investments on grids and renewable power generation capacity. The COP29 Global Energy Storage and Grids pledge is another crucial part of the puzzle to integrate renewable energy in an efficient and reliable manner, as it aims for 1,500 GW in energy storage and 25 million kilometres of grid infrastructure by 2030.

Decision on New Collective Quantified Goal (NCQG): Determining the amount, the contributor structure and the funding mechanisms of the new NCQG will be the make-or-break measurement of COP29. Climate financing is central to building momentum on all transition progress, relief efforts and the broader integration of global capital into the climate struggle. How (and whether) the assembled nations decide to approve a $1 trillion annual fund will set the pace of investment and participation for years to come.

More NDC announcements: All participating member states are expected to present their re-evaluated NDCs by February 2025, but some have already announced them at COP29 and no doubt more will follow in the second half of the conference. While the NDCs set by all major global economies will provide vital signals on their respective prioritising of the climate crisis, some nations’ targets will be more revealing than others. The US is the obvious example, as it is poised for a second Trump presidency and all the resultant climate policy uncertainty that will entail.

New pledges on Renewables: While it’s impossible to say whether we will see new commitments, or even more robust language, regarding fossil fuel transition, the upscaling of renewables is an area of firmer ground for progress. The NDCs will help show where different nations will commit to renewables, but the wider pledges and ambitions will also help generate greater confidence across both the public and private investment spheres. 

Several milestone agreements have already been hammered out at Baku, with more in the works. The agreement on carbon markets alone will be music to the ears of its proponents who have been waiting years for a confidence and clarity-boosting policy endorsement at this level.

Similarly, there is a growing sense that timely investments on the climate financing and renewables fronts will pay dividends. UN climate chief Simon Stiell spoke convincingly of how “climate change is fast becoming an economy killer”. With a renewed focus on climate transition as an economic safeguard for all, this may quickly translate into higher combined contributions and swifter action.

However, it is hard to look past the raft of diplomatic spats and disengagements from the wider process. Several world leaders are notable by their absence. Argentina walked out only two days into the summit. France’s climate minister has skipped the conference entirely after disagreements with the host nation. Grievances old and new are being aired at COP29, with a tangible dampening effect on the atmosphere.

Entering the second week, greater urgency will be injected into the dialogue as we the build up to the final days and the window for ratified solutions closes. With national, regional and global pledges hanging in the balance, this second week will determine the overall impact of COP29 and its influence on Brazil’s upcoming presidency of COP30 next year.