Hope springs anew amid a thick haze over climate talks in Baku

The first cause for worry is the relentless rise in emissions in both advanced and emerging economies, projected to be higher in 2024 than 2023, despite nations promising at Abu Dhabi CoP-28 to reduce their burning of fossil fuels.

The second spectre hanging over the climate talks is the visage of US president-elect Donald Trump, who pulled the US out of the Paris Agreement during his first term. He is expected to repeat that withdrawal this time as well.

Also read: COP29: The climate funds math that needs to be reset, explained

When all seemed lost, a ray of hope appeared. The opening day of CoP-29—or Conference of Parties (CoP) to the United Nations Framework Convention on Climate Change (UNFCCC)—saw nations ratifying ground rules for a global carbon trading mechanism, as well as quality and audit standards for carbon credits that can be traded.

This is crucial for an efficient carbon market and eventually for reducing emissions. The operationalization of carbon markets has been hanging fire for many years, but the Baku presidency made it a key negotiating priority.

Carbon credits are generated from projects which either reduce carbon in the atmosphere (such as the creation of carbon sinks) or use technologies that emit reduced carbon (such as solar energy).

They are usually measured in tonnes of carbon dioxide equivalent (tCO2e) and can be traded. The carbon market had been suffering from credibility issues with projects either over-estimating the climate benefits or under-reporting emissions, thereby distorting the market’s functioning.

This concern has now been addressed with CoP-29 welcoming the supervisory body’s standards for the creation of carbon credits. The supervisory body, a part of the UN, met in Azerbaijan in October 2024 to finalize the standards; the CoP-29 presidency then evangelized these with all parties through a pre-CoP meeting and pushed for early adoption.

A press release from the CoP-29 presidency claimed: “These standards will ensure that international carbon market is high integrity, and that emissions reductions and removals are real, additional, verified and measurable."

Also read: Mint Primer: Your two-minute guide to COP29... and dystopia

A carbon market, a decade on from the Paris Agreement, was the only bit left that was yet to become operational. A host of issues blocked the market from becoming a reality, including finalization of universally acceptable standards. While the Baku meeting takes care of some standards, there is still some distance to go before carbon markets become a reality.

And yet, the progress made—even if marginal—inspires hope, especially when weighed against the uncertainty arising from Trump’s re-election. A well-functioning carbon market (expected to become operational from 2025) is bound to attract buying and selling interest for carbon credits from US corporations, which have already set themselves voluntary emission reduction targets.

There are currently over 1,500 US-based companies with such targets and it is unlikely that, inspired by Trump’s repudiation of the climate crisis, they will all abandon their emission reduction plans. Some corporations might certainly choose to follow Trump’s example, but it is doubtful whether all companies will opt for this line of action.

An indication of the path ahead emerged when the chief executive of Exxon Mobil, Darren Woods, urged Donald Trump not to pull out of the Paris Agreement this time. Trump, in response to political donations from some US-based oil companies, had adopted the battle-cry “drill, baby, drill" on the campaign trail as part of his promise to re-prioritize fossil fuel extraction and abandon the Paris pact once again.

Woods is attending CoP-29 in Baku and said that an in-now-out-again American policy is likely to hurt many corporates, including Exxon Mobil.

The US became signatory to the Paris Agreement in 2015 under the then Barack Obama administration, got yanked out in 2017 after Donald Trump was sworn in, but was re-admitted in 2021 once Joe Biden became president.

Many large corporations, like Exxon, are averse to abandoning large investments already made in renewable energy under the Inflation Reduction Act, which Trump has vowed to repeal. And so, even if Trump withdraws the US government from climate-related activities, it is likely that large corporations will continue reducing their emissions.

Also read: Will the COP29 climate summit break the cycle of broken promises?

There is plenty to be despondent about CoP-29: it is hosted by a petro-state, many national leaders have given it a miss and it showcases endless and futile bureaucratic wrangling. It is helpless against the EU’s use of climate-related trade barriers.

Then came news that parties had agreed to work out a new climate financing goal to replace the annual $100-billion target from Paris. What the new goal will be and how it will be met is bound to provoke fractious debates, adding to the existing sense of despair.

But with early indications now suggesting that the private sector might provide some of the concessional funding, coming on top of expectations that large corporations will continue to reduce emissions, it will be interesting to observe the extent to which corporates can influence government behaviour in the climate change battle.

Empirically, and logically, it sounds counter-intuitive but hope springs eternal.