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Climate leaders from around the world have convened in Baku, Azerbaijan for the UN’s biggest annual climate conference, COP29. And this year, it’s all about money.
Member nations are negotiating over how much responsibility rich countries have to finance the energy transitions of smaller economies. But larger global tensions loom over the proceedings — including the reelection of Donald Trump.
In today’s episode, Bloomberg’s senior climate reporter and host of Zero Akshat Rathi calls in from COP29 to update host Sarah Holder on the unfolding negotiations and how America’s new president-elect changes the conversation.
Further listening: The World Needs Climate Leadership. Can Azerbaijan Step Up?
Here is a lightly edited transcript of the conversation:Sarah Holder: The world’s most important climate conference kicked off this week in Baku, Azerbaijan. And this year, it’s all about money.
Archival Darren Woods: To go from the system that we have today to a less carbon intensive system is going to require money and it's going to be more expensive.
Archival Jacinda Njike: You can't achieve anything if you don't have financing.
Archival Alok Sharma: There is a wall of money there. But we just need to find a way of deploying it.
Holder: That was Darren Woods, the CEO of Exxon, NGO lawyer Jacinda Njike, and former UK minister Alok Sharma.They’re just a few of over nearly 50,000 people attending this year’s UN climate conference called COP.
It’s an annual meeting where delegates from nearly 200 countries come together to address one of the most urgent issues of our time: climate change.
At last year’s COP, members laid the groundwork to transition away from fossil fuels and reach net zero by 2050.
So this year, they need to decide who’s going to pay for that transition.
Akshat Rathi: It's labeled the finance COP.
Holder: Akshat Rathi is a senior climate reporter for Bloomberg, and the host of the Zero podcast. This is the fourth COP he’s attended. But Akshat says the stakes of this year’s talks feel even higher than usual.
And that’s not just because we’re set to blow past the 1.5 degrees Celsius temperature rise target outlined in the Paris Agreement.
Or because 2024 is set to be the hottest year on record.
Or because the financial commitment needed to decarbonize could be as much as trillions of dollars.
It’s because on top of all that…
Rathi: There is a Trump cloud somewhere in the sky all the time during these negotiations.
Holder: Trump has been an antagonist to environmental efforts. During his first term, he pulled the US out of the Paris Climate accords. And he's made no secret about his feelings on fossil fuels.
Archival Donald Trump: We have more liquid gold, oil and gas. We have more liquid gold than any country in the world, more than Saudi Arabia. We have more than Russia.
Holder: It’s this kind of rhetoric that has delegates concerned — and wondering what a second Trump presidency means for the US’s commitment to climate goals, and to the earth’s future.
Holder: This is the Big Take from Bloomberg News. I’m Sarah Holder.
Today on the show: Inside COP29 after a Trump win. How the world will calculate the cost of fighting climate change – and decide who’s footing the bill.
Holder: Rathi has been on the ground in Baku since COP29 kicked off there earlier this week. He’s trying to get the pulse on how negotiations over climate financing are going — and how global tensions are influencing the talks. So he’s speaking to people there, from vegan activists…
Attendee: We are here to promote veganism because this is the solution for global warming.
Mukhtar Babayev: Your Excellencies, distinguished delegates, dear friends…
Holder: To Mukhtar Babayev, the oil executive who’s currently the president of COP.
Archival Mukhtar Babyev: Welcome to Azerbaijan. Welcome to COP29.
Holder: That’s Babayev at COP’s opening ceremony in his home country of Azerbaijan, a location that’s been raising some eyebrows.
Rathi: Azerbaijan is a petrostate 90% of its exports are oil and gas.
Holder: Isn't that a tension?
Rathi: Certainly. But it's also part of the process. You want even the countries that have fossil fuels to be a part of climate action because it's a global problem and every country has to do its bit.
Holder: The negotiations happening at this year’s COP revolve around what responsibility the country’s richest economies have to help smaller economies adapt to a warming world. And by the time COP29 is over – there are two main things that delegates need to decide.
Rathi: The first one is called Article 6, and it's about creating a carbon market where, say, a country like Indonesia, which has a lot of forests, could be producing carbon credits and be selling them to Norway, which produces a lot of oil and has emissions.
That would allow money to go to Indonesia, which it could use to try and move its energy transition faster. That got signed off, at least half of it, on the very first day of COP, and maybe countries and companies will start to buy carbon credits from these countries.
Holder: Just after COP members finalized some of the rules for international carbon trading and made plans to launch a UN-backed carbon market, Saudi Arabia launched its own carbon trading market capitalizing on the new opportunity.
Rathi: The second thing, which is a much harder thing, is called the New Collective Quantified Goal on Climate Finance. Sorry, it's a big phrase, but that's the official phrase. And all it means is, what will rich countries contribute towards helping poor countries reduce emissions, adapt to the warming that's already been caused because without that money, those countries could not develop as much renewable energy and might end up fossil fuels which will exacerbate the problem. And the number, which is going to be in the hundreds of billions of dollars or trillions of dollars is what is at the heart of the contention over the two week period.
Holder: Well, how do they decide how much responsibility each country has to shoulder?
Rathi: There is no simple math here. It's not like you put out a ton of emissions, so you are going to have to pay so much money. It is very much the hard work of diplomacy. You look at the science, you say clearly rich countries have done the most. Now, you should start to show how you can help poor countries manage that.
Rich countries will say, look, we are having problems back at home. There's a cost of living crisis. Whatever the reasons might be, those countries will have to make those excuses and then there will be a fight and that fight actually happens in like really boring text legal text but boring text for you know, poets or or literature readers, but very important text. And the final thing is, this is a very weird experiment because the COP process only works by consensus. That means all countries, not a single country can disagree.
All countries have to agree. Only then you get a deal at the end.
Holder: What about the private sector, how much of the responsibility will they take on?
Rathi: The private sector is not directly involved in these negotiations. It's very much a UN process. But, because the energy transition and all these climate goals is trillions of dollars of investments annually, there is no way that happens without the private sector participating.
That's why, at every COP, we get not just government ministers, but also company CEOs coming. I spoke to the CEO of Exxon earlier this week, and he very much made the case that the US should remain in the Paris agreement, that Donald Trump should keep the Inflation Reduction Act, because for companies, it is really important that the policies that government set are stable, acceptable and they have business certainty to go down this energy transition.
So the private sector doesn't play a direct role but it plays a central role in delivering the goals. The interaction between the two is always fascinating to watch.
Holder: Just how much money is needed to address climate change? Is that a number you can share and quantify?
Rathi: Yes, that number has been quantified, and there are estimates of various kinds. So something like three trillion to five trillion dollars is roughly the number that multiple estimates come to. And that is an investment all countries have to make towards just reducing emissions. And today we make about two trillion of that investment in clean energy.
But there's a second aspect to spending money, which is adapting to the warming that's already being caused. There's already heat waves of extreme nature happening. There is sea level rise happening.
We've seen floods in places like Spain very recently. There are droughts in other regions and those all have money figures attached from the impacts, but there could be projects you could build like managing the flow of a river or a seawall that would allow you to avoid the impacts coming your way and that number can be in the hundreds of billions of dollars every year. So all of it, it is a large sum but it is always worth remembering if we don't spend this money now, we will have to spend even greater sums dealing with climate impacts.
Holder: After the break: the Trump question. How the US’s president-elect could get in the way of global climate progress at future COPs, and beyond.
Holder: At COP29 in Azerbaijan this week, Bloomberg senior climate reporter Akshat Rathi has been reporting on how negotiations over the future of climate financing are going. But halfway through the 10-day conference, there are still a lot of unknowns. One of the biggest is how the US presidential election might influence things.
Holder: So Akshat there's still this big shadow hanging over COP, and that is Donald Trump. Can you tell us more about how his leadership of the US might impact the country's participation in future COPs and in meeting these eventual commitments?
Rathi: In the past, Donald Trump pulled the US out of the Paris agreement, but he wasn't able to do very much with it because there was a delay baked in. By the time he left, Joe Biden had been elected.
This time around, when Donald Trump decides the US is leaving, it'll take one year for the US to leave. And then the US cannot directly participate in negotiations and influence the outcomes until, perhaps, a future president wants to join.
The other thing that Donald Trump can do is start to squeeze sources of finance that go towards climate, both domestically through things like cutting down financing for clean energy through the Inflation Reduction Act, for example, or globally through multilateral development banks where the US is the largest shareholder, and it could give a mandate to these banks that they cannot anymore invest in climate He could also take money away from the UN system which is something he has attempted to do in the past, and the United Nations is a very important body but it only works because all countries put in their contribution towards it, and the US contributes almost a fifth of its budget.
There is also a risk that Trump might pull the US out of the underlying climate treaty altogether.
Holder: Part of the point of COP is that all of these countries come together and have this shared commitment. If the world's largest economy down the line is no longer interested in fighting climate change, and if the US will no longer be a leader on this, where does that leave global efforts like COP?
Rathi: Look, there is no way to say it is a good thing. The US has a responsibility as the world's largest historical emitter, and as the current second largest emitter. If the US doesn't meet its responsibility, other countries will feel like they might get a free pass. But then you look at what happened when the US pulled out of the Paris Agreement the first time. No other country left, and that's because the energy transition is one that is better when done collaboratively.
Holder: It’s also because more countries are looking at the energy transition as a good investment.
Rathi: The price of clean energy has come down. The desire for countries to create competitive industries that would build electric cars or solar panels has grown. And so, the US leaving, as Ali Zaidi, who's the National Climate Advisor to President Biden, told us, the US will actually fall behind countries like China and India in the very technologies of the 21st century. And that could actually be economic harm to the USArchival Ali Zaidi: It would be economic malpractice to put us back in the position we were four years ago, where we're in a massive deficit in the leadership of these technologies.
Rathi: And so, right now we don't hear as if any other country is following the footsteps that the US might be about to take, but there is a risk that once the largest economy leaves, somebody might join the leaving party.
Holder: Akshat says that even at this tenuous moment for COP – and for the planet – there are some things bringing climate activists hope.
Rathi: Well, the biggest hope comes from China, which is a weird thing to think about because China is currently the largest emitter of greenhouse gas emissions, has the most coal power plants in the world, and produces almost 30 percent of planet warming emissions. And yet, it is also the country that is deploying more clean energy than the rest of the world combined. But I also get hope from other countries. Countries like India and Brazil and even Kenya. Smaller economies that see the potential for building clean energy as the route to prosperity, not just because it will help reduce climate change, but also because they will find ways to turn that clean energy into economic growth that will bring prosperity to their own people.
And that perhaps is the most hopeful note you can take when we are almost certainly going to be facing many more and more intense climate impacts over the next few years.
Holder: And Akshat, we've also been circling some of the challenges facing COP, the tensions that are playing out beneath the surface, the disappointments, or the knowledge that more work has to be done after past COPs. So I guess I'm just curious, how much does this conference matter? Why is it important to keep convening every year and hashing this out?
Rathi: Well, climate change is a global problem. It affects every country, everywhere. It is caused by every country, everywhere, just not proportionally. Because greenhouse gas emissions, once emitted, go into the atmosphere and stay there. And thus, there has to be a global forum to address a global challenge.
And as frustrating as COPs are, as long as COPs are, I find the event one of hope because it forces all these people to come together. When I walk through the COP venue, I see people wearing all sorts of dresses, speaking all sorts of languages, and there is no other place on earth that I think you can experience that level of diversity and that level of realization that we are all in it together.
Holder: COP29 officially ends on November 22nd. But it could take longer to reach a deal.
For further coverage of COP29 and more reporting from Akshat, head to Bloomberg.com or the Zero podcast feed, where you can also hear Akshat's interview with Exxon CEO Darren Woods.
©2024 Bloomberg L.P.