⏰ COP29: Trade tensions at the final countdown

This is an excerpt from the Reuters Sustainable Switch COP29 daily newsletter that goes into the heart of how companies and governments are grappling with climate change, diversity, and human rights. Click here to receive the full newsletter in your inbox.

Hello!

⏰ It’s the final countdown of the COP29 climate summit in Baku, Azerbaijan, and hopes of reaching an agreement are on the horizon. But trade tensions are proving to be hard to overcome.

💰 The COP29 presidency released a new draft climate-finance-deal proposal that would have developed nations take the lead in providing $250 billion per year by 2035.

😤 "I'm so mad. It's ridiculous. Just ridiculous," said Juan Carlos Monterrey Gomez, the Special Representative for Climate Change for Panama, who called the proposed amount too low. "It feels that the developed world wants the planet to burn."

💲 The draft also sets a broader goal to raise $1.3 trillion by 2035, which would include funding from all public and private sources, according to the draft.

But trade tensions have been rising over potential tariffs and levies.

Punitive tariffs and levies

🚧 The G77 and China group of 134 countries, which includes Brazil and South Africa, argue that trade barriers like the EU's carbon border levy hinder their green transition by adding new costly climate-related trade policies from the world’s wealthiest nations, according to U.N. documents and negotiators.

📝 The previously unreported statement, delivered by the group in closed-door talks at COP29, described trade-related climate policies, such as the European Union's carbon border tariff, as punitive and an "unsavory attempt to try to continue to subject our developing countries to underdevelopment."

From 2026, the EU's carbon border levy will charge steel, cement and other imports for their CO2 emissions, subjecting them to the same carbon price paid by European industries.

Brussels insists the levy is not a trade measure, but a tool to ensure a level playing field and keep European companies from dodging EU pollution costs by moving overseas.

The Trump card

📈 These developing countries are already facing growing climate costs, plus a possible spike in the price of doing business abroad if the U.S. Republican President-elect Donald Trump imposes tariffs on imports.

⚡ The world's wealthiest countries could also see disruptions to their energy transition if Trump pursues tariffs that would hit green energy supply chains for raw materials and components that largely come from China.

A draft early on Thursday of the COP29 summit's central deal on climate finance did mention trade issues but it was quickly rebuffed by the EU as outside of the scope of the talks.

💵 The deal also has to tackle divisions over issues such as whether funds should be offered as grants or loans, and the degree to which different types of non-public finance should count towards the final annual goal.

🕛 A new draft deal had been due to be released at midday Friday in Baku, in the hopes of a deal by the end of the day, but past COPs have traditionally run over time.

💬 In Conversation

Maria Mendiluce, CEO at the We Mean Business Coalition, a global non-profit, shares her thoughts on the COP29 agreement and transitioning from fossil fuels:

 “The transition from fossil fuels is not just one of many issues — it is the root cause of the climate crisis and must be addressed head-on at COP29. 

Businesses worldwide are calling for coherence and policy stability to facilitate planning and investment for the energy transition.  

Negotiators at COP29 must prioritize their commitment to implement the outcomes of the Global Stocktake, particularly around transitioning away from fossil fuels towards clean energy. 

This should be reflected in the final COP29 texts, reinforcing the pivotal agreements reached at COP28. 

Without clear signals that align with last year’s commitments, including the transition away from fossil fuels, governments risk stalling critical private sector investment needed to achieve climate goals.” 

🔦 ESG Spotlight

♻️ Today’s spotlight shines a light on circular economy initiatives in South Korea as the nation has won international praise for its recycling efforts, but as it prepares to host talks for a global plastic waste agreement, experts say the country's approach highlights its limits.

When the talks known as INC-5 kick off in Busan next week, debate is expected to center around whether a U.N. treaty should seek to limit the amount of plastic being made in the first place.

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