Five key takeaways from COP30

Rumours of the demise of tackling climate action have been greatly exaggerated. No country other than the US has formally abandoned the quest that the annual Conference of the Parties (COP) is all about – tackling climate change. Collaboration and cooperation (‘Global Mutirao’ in the local Portuguese of Brazil) were hallmarks of the agreement signed by the 194 countries there – even Ukraine participated – which keeps the show on the road.

The reality, though, is that material advances from last year were conspicuous by their absence. The COP’s continuing inability to commit to reducing fossil fuels summed it all up and ensures progress on emissions reduction will proceed at a glacial pace. Here are our team’s thoughts.

Finance – the investment gap gets wider

The big news came a year ago at COP29 in Baku when the target for climate finance tripled to US$300 billion a year. This is capital that developed countries are to make available to low- and middle-income countries to support emissions reductions and climate change adaptation. Yet the actual finance committed is still little more than US$100 billion a year.

COP30 issued a call to action on the 'Baku to Belem roadmap' – to ‘enable’ the scaling up and access to climate finance of US$1.3 trillion a year through private capital, multilateral development bank reforms and innovative financing.

A report released at COP30, which Wood Mackenzie contributed to, finds that to meet the US$1.3 trillion goal will require a roughly fourfold increase in equity by 2035 from current levels.

Trade policy needs to become central to decarbonisation efforts

In the past, international trade has been largely excluded from the UN Framework Convention on Climate Change meetings. But a quarter of global emissions now come from internationally traded products and materials, so it’s not surprising that the topic was debated intensely this year. Currently, nationally determined contributions (NDCs) are calculated on a territorial basis, which does not take into account the imported emissions absorbed into production and supply chains.

Taking action here will require common methods to measure and track the emissions embodied in the production process. The Greenhouse Gas Protocol and the International Organization for Standardization are trying to derive a common framework. Some countries suggested at this year’s COP that targets should include imported emissions, too. By focusing on supply chain emissions accounting, where efforts are often stymied by international competition, the world can accelerate the transition.

The EU’s Carbon Border Adjustment Mechanism (CBAM) is an effort to regulate embodied carbon by levelling the playing field through a price on imported emissions in specific sectors. However, some countries – including China, India and Japan – have pushed back on the EU’s CBAM initiative, calling it “unilateral and arbitrary.”

The final COP30 agreement avoided concrete actions against unilateral trade barriers. This suggests that CBAM remains a point of international friction and contention, although its implementation is proceeding within the EU.

Methane mitigation momentum – missing in action 

In the absence of the US – often a driving force behind the methane narrative at previous COPs – Brazil, China and the UK attempted to fill the void. The trio hosted a methane summit and published a statement signed by 11 countries committing to drastically reduce methane emissions in the global fossil fuel sector.

Meanwhile, the UN’s Environment Programme (UNEP) launched a new report on the status of efforts under COP26’s Global Methane Pledge. Very few of the 159 signatories have made progress toward the pledge’s headline goal of cutting methane emissions by 30% by 2030. Even fewer have enacted specific methane mitigation laws or included methane-specific targets in updated NDCs.

That meant that COP30 lacked a standout achievement on methane emissions. UNEP’s report highlighted that emissions are still rising. Yet significant global reduction potential lies within major economies, with possible mitigation solutions relatively low cost.

The international carbon market – still developing

With rules for carbon trading under Article 6 finally agreed at COP29 last year, little action was expected from COP30. However, after two weeks of heated debate, the key outcome could be that the rules defined in Baku have stayed in place, with no backtracking on central themes.

One key decision was to grant a six-month extension for carbon offset projects to transition from the old clean development mechanism to the new Paris Agreement crediting mechanism, signalling confidence in the direction of travel.

NDC assessment:

A decade since the Paris Agreement, global emissions have yet to peak, and the world is currently on a 2.6 °C warming pathway on Wood Mackenzie’s Base Case projections. No major economy is on track to meet 2030 emissions reduction targets. Announced goals for 2035 lack the ambition required to keep warming below 2 °C. China is decarbonising rapidly but has yet to begin any decline in absolute emissions.

Based on the NDCs submitted, global emissions in 2035 are projected to be around 12% below 2019 levels, and insufficient to reach well below 2 °C trajectory.

In comparison, Wood Mackenzie’s base case outlook, in our Energy Transition Outlook, shows only an approximately 2% decline in emissions by 2035 relative to 2019 levels. Meanwhile, our country pledges scenario points to a nearly 15% decline over this period. The analysis suggests submitted NDCs would, in fact, result in a warming pathway of above 2 °C.

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