The core of the problem, phasing out fossil fuel, left unaddressed
The COP29 fell short on solidifying a roadmap for a global fossil fuel phase-out. Financial flows towards the main problem, fossil fuels, still vastly outsize those to solutions. Globally, governments are spending approximately $ 7 trillion (that’s a seven with twelve zero’s) each year on fossil fuel subsidies. And the financial sector is funnelling €650 billion each year into fossil fuels, perpetuating dependency.
A Fossil-fuel Non-Proliferation Treaty is needed
The agreements made at COP29 are insufficient to limit global warming to 1.5°C and address climate equity. Advocacy for a Fossil Fuel Non-Proliferation Treaty is critical. Such a treaty would establish binding commitments to phase out fossil fuel in a just manner.
A Call for Leadership
Financial institutions must lead in pushing for this global agreement while championing the reallocation of capital towards renewable energy and sustainable systems. The financial sector must act where governments hesitate, financial institutions have a responsibility—not just to divest from fossil fuels but to accelerate the transition. At Triodos Bank, we see a clear path forward: finance must be a driver of positive systemic change. By ending fossil fuel financing and supporting equitable climate solutions, the sector can catalyse a just and resilient economy.
New climate finance goal is insufficient
The main expectation of the COP29 was to set a new bold climate finance target that would do justice to the climate adaptation and mitigation financing needs of developing countries. The countries hit hardest by the impact of climate change and that contributed the least to causing climate change. An agreement was reached on committing $300 billion per year by 2035 and a call to raise $1.3 trillion a year from a wide range of sources, including private investment. This is a fraction of the trillions that the global south needs to protect their people from climate change and transition to cleaner economies.
Some progress on the Loss and Damage Fund
A key achievement of the previous COP was an agreement on the Loss and Damage Fund, designed to support nations disproportionately affected by climate-induced disasters. The fund got officially operationalised during the COP29 and can start distributing money from 2025, these are small steps in the right direction.
Carbon Markets: progress, but important work ahead
COP29 operationalised a new international carbon market called the Paris Agreement Crediting Mechanism (PACM), paving the way for the trade of carbon units under a global standardised system. Important decisions now lie in the hands of technical bodies, which will work on methodologies and integrity issues like permanence, additionality and baselines for different types of carbon projects next year. It remains to be seen whether the agreement and next year’s technical work allows the PACM to effectively and transparently move money to the right carbon removal and sequestration projects.
As we look ahead to the COP30 in Brazil, the stakes are high
The COP29’s failure to secure essential agreements puts even more pressure on the next COP in Brazil, where countries (rich and poor) will most likely have to negotiate an even stricter climate policy, as the goal to keep global warming preferably below 1.5 degrees is becoming increasingly difficult to achieve. This underscores the need for transformative leadership. The financial sector cannot wait, banks and investors must lead by reallocating capital from financing fossil fuel to climate solutions. The time to act boldly is now.