EU to Focus on Climate Funding and Carbon Markets at COP29

The European Union heads to COP29 in Baku with a focus on securing agreements around climate financing from wealthy nations for more vulnerable countries. The European Union aims to ensure that funding reaches those most in need, particularly small island states (SIDS) and least-developed nations, especially in Africa. 

Wopke Hoekstra, EU Commissioner for Climate Action, will represent the bloc at the summit, which takes place from Nov. 11 to 22. The European Union has approved a mandate for Hoekstra, but it has not disclosed the exact amount it is willing to contribute to climate financing. Countries in the Union are determined to secure greater financial commitments, following the US$100 billion per year pledged by rich countries under the Paris Agreement, which was met in 2022. 

A major point of contention is China's role in the global climate finance framework. The EU wants China, whose socio-economic landscape has dramatically changed in recent decades, to join the group of donors, even though the country still considers itself a developing nation. The EU is not opposed to China maintaining its developing status, if it contributes financially to help less-resourced nations combat climate change.

In addition to financing, the European Union will push for greater accountability from the fossil fuel sector in addressing climate change. The bloc advocates for identifying both existing and innovative financing sources, including contributions from the oil and gas industries, to support vulnerable countries in mitigating climate impacts and building resilience. 

At the summit, the EU will also seek progress on Art. 6 of the Paris Agreement, which addresses carbon markets. This mechanism allows countries with lower emissions to sell emission rights to higher-emitting nations. Ensuring transparency and establishing robust accounting practices for carbon trading will be critical. 

Moreover, the European Union is preparing to defend its Carbon Border Adjustment Mechanism (CBAM) at COP29. This system, set to be implemented in 2026, aims to prevent carbon leakage by imposing fees on imported goods from countries with less stringent environmental regulations. The CBAM will likely target countries like China, Turkey, and Brazil, and it may face criticism as a protectionist measure.