EU: EU secures agreement on carbon market rules and new climate finance goal at COP29

At the COP29 UN Climate Change Conference in Baku, the European Commission and EU Member States took the lead in brokering a deal to align global financial flows with the objectives of the Paris Agreement. Through the adoption of a New Collective Quantified Goal (NCQG) for Climate Finance, the EU successfully broadened the global contributor base for climate finance. The NCQG provides for more countries to contribute finance, reflecting their growing emissions and economic weight. The agreement also gives a strengthened role to multilateral development banks (MDBs), maximising the leverage and impact of public funds by drawing in and mobilising significant private finance. Parties agreed that the combined funding from all these sources should reach at least $1.3 trillion per year by 2035.

Within this broader target is a commitment by developed countries to take the lead on mobilising $300 billion per year by 2035 for developing countries’ climate action. This core goal can be achieved through a wide range of sources, including finance mobilised by multilateral banks and, for the first time, contributions from other countries. This was a critical EU demand to ensure that other countries do their fair share in providing and mobilising funding, matching their financial capacity. There is no assigned share of this contribution for the EU or Member States, and decisions about how to meet these targets will lie with Member State Governments and the EU, through national budgets and the MFF.

The EU negotiating team also successfully finalised the rules that will bring greater environmental integrity, transparency and accountability to international carbon markets under Article 6 of the Paris Agreement. The crediting mechanism under Article 6.4 will set a new UN-backed standard for high-quality carbon offsets, and the new rules for recording and tracking of international transfers will bring transparency to bilateral carbon deals between Parties. This will enable a cost-effective reduction and removal of emissions.

During COP29 the EU joined a group of other ambitious countries in announcing its intention to present a 1.5C-aligned NDC next year, setting the bar for other countries. To drive forward the clean energy transition, the Commission and the Beyond Oil and Gas Alliance announced a partnership on the transition away from fossil fuels. The Commission also launched a new Methane Abatement Partnership Roadmap to further accelerate the reduction of methane emissions associated with fossil energy production and consumption, in collaboration with a number of partner countries, international organisations, NGOs and development banks. 

During COP29, the EU published its first ever Biennial Transparency Report (BTR), ahead of the end of year deadline. The submission of BTRs is a significant milestone in the implementation of the Paris Agreement, enhancing accountability and collaboration in the global fight against climate change, as outlined under the Enhanced Transparency Framework of the Paris Agreement.