Expectations for the COP29 summit, held in late November, were muted to begin with due to the limited progress on a collective finance goal, a growing area of contention in recent years, with the prospect of a U.S. withdrawal from the Paris Agreement also casting a gloom over the conference. While a 'minimum' goal of $300 billion per year on international climate finance flows from developed markets to EMDEs by 2035 was agreed to replace a previous goal of $100 billion, it remains short of most estimates needed to support the transition in emerging markets.

However, one key breakthrough was an agreement governing international trade in emissions reduction credits. Implementing these activities will build confidence in the new marketplace and address the well-known integrity challenges plaguing the voluntary carbon markets. Several countries also announced updated reductions pledges, notably, the UK, Brazil and Indonesia, with the former announcing an 81% reduction target by 2035.

A major headwind to climate action is the prospect of the US withdrawal from the Paris Agreement for the second time following Donald Trump's election win. A potential US withdrawal is likely to lead to continued emissions reductions - albeit at a pace that means significantly missing the official target of a 50% reduction in emissions by 2030. At the same time, China stands to gain significantly from the energy transition due to its dominant role in key low-carbon value chains.

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