Last month, our YES-Europe delegation attended COP29 in Baku, and we are eager to share the outcomes from this year’s climate negotiations. In this post, we will dive into the negotiations surrounding mitigation, the just transition and carbon markets. If you missed our first blog post on this year’s most contentious issue- the New Collective Quantified Goal (NCQG), be sure to check it out here.

Mitigation

The Mitigation Work Programme (MWP) was established at COP26 to “urgently scale up mitigation ambition and implementation in this critical decade”. Negotiations at COP29 were tense with some Parties determined to block any progress on “transitioning away from fossil fuels”. Developing country groups, including the Like-Minded Developing Countries (LMDCs), the African group and the Arab group rejected any reflection or integration of last year’s Global Stocktake (GST) outcomes in the MWP. These included transitioning away from fossil fuels in energy systems; tripling renewable energy capacity and doubling energy efficiency improvements by 2030; phasing out inefficient fossil fuel subsidies; accelerating methane emissions reductions; reversing deforestation, etc. These countries refused to take up any new commitments or “prescriptive, top-down” targets, including any connection to ambitious 1.5°C-aligned NDCs. Thus, countries drifted away from the agreed commitment and language of last year even though Paragraph 186 of the Global Stocktake “invites…relevant work programmes” to integrate “relevant outcomes” of the stocktake into their future work, “in line with their mandates”.

The final text included no mention of the Stocktake or fossil fuels and did not send any high-level political messages on the next round of NDCs besides “reaffirming” their “nationally determined nature”. The text instead focused predominantly on the dialogues undertaken within the MWP, which this year focused on “Cities: buildings and urban systems” with the only substantive outcome being continued discussions. The outcome of this year’s negotiations was thereby highly disappointing with no substantive decisions, no increased ambition and no concrete steps towards achieving climate neutrality.

Dialogue on implementing the Global Stocktake outcomes

This dialogue was established in the GST decision adopted at COP28 in 2023. This year, in June during the Bonn conference, countries started discussing the operationalization of the dialogue and strongly diverged in their views on its expected scope. Some underscored that the dialogue is established in the finance section of the GST decision and should therefore focus only on finance, while others wanted it to follow up on the entire Stocktake decision, including elements on fossil fuels. At COP29 countries once again failed to reach an agreement on how the outcomes of last year’s GST, including the pledge to transition away from fossil fuels, should be taken forward and instead postponed the decision to COP30 next year in Brazil. Moreover, various items that could have resulted in guidance for countries developing their updated NDCs, due by February 2025, were deferred until after this deadline.

Just Transition

The Just Transition Work Programme (JTWP) was operationalized last year at COP28 to discuss just and equitable transition pathways to achieve the goals of the Paris Agreement that include energy, socio-economic, workforce and other dimensions all of which must be based on nationally defined development priorities and include social protection so as to mitigate potential impacts associated with the transition.

Similarly, to the other negotiation tracks, the JTWP negotiations at COP29 exemplified the deep divisions between countries. Most developed countries and small island developing states wanted the work programme to reflect mitigation ambition and the link between just transition and the 1.5°C goal as well as recognizing the socio-economic opportunities for transitioning away from fossil fuels, the importance of protecting labour and human rights as well as education and reskilling provisions. On the other hand, developing countries emphasized the right to sustainable development and poverty eradication as well as the urgent need to enhance the provision of means of implementation (financial support, technological access and capacity building) from developed to developing countries as a precondition to achieve climate ambition. They also underscored the significant gaps in finance for climate change adaptation and the need to address barriers that put them in disadvantaged positions such as unilateral trade measures.

Procedural shortcomings and limited discussion time exacerbated frustrations, further entrenching divisions between Parties. The result was no decision on the JTWP at COP29 this year, postponing the discussions to next year. It remains difficult to agree on a global just transition pathway because countries tend to emphasize different aspects of justice within the net-zero transition. While developed states tend to adopt a narrow focus on the just transition as a domestic issue, aimed at mitigating negative socio-economic consequences arising from the transition, developing countries underscore the international dimension of just transition, meaning that some countries have a historical responsibility to transition first and provide support to other countries who have contributed little to the climate crisis to do the same.

Article 6 of the Paris Agreement

Article 6 was one of the few agenda items, on which countries managed to reach an agreement at COP29. Article 6 of the Paris Agreement enables international cooperation on carbon markets by allowing the trade of carbon credits derived from emission reduction projects. Therefore, it has the potential to help countries meet their climate targets more affordably and efficiently but also holds risks for the quality and permanence of emission abatement.

Article 6 has three main elements:

Article 6.2: Cooperative Approaches

This mechanism allows bilateral or multilateral trading of carbon credits. The idea is that one country can fund emission reduction projects in another country and then count those reductions toward its own climate targets. The credits generated through these projects are known as Internationally Transferred Mitigation Outcomes (ITMOs). Allowing countries to purchase ITMOs from other countries where it’s cheaper to reduce emissions makes reaching climate targets more affordable but depending on the quality of credits it might not be as effective.

Article 6.4: Centralized Carbon Market Mechanism

In contrast to Article 6.2, Article 6.4 offers a standardized, UN-supervised process that allows both countries and companies to buy certified emissions reductions. This mechanism, known as the Paris Agreement Crediting Mechanism (PACM), establishes a standardized framework for generating and trading verified carbon credits. For instance, through this mechanism, a company in one country can reduce emissions in that country and have those reductions credited, so that it can sell them to another company in another country that may use them for complying with its own emission reduction obligations or to help it meet net-zero targets.

Article 6.8: Non-Market Approaches

This provision supports emission reduction efforts through non-trading mechanisms, encouraging innovation and partnerships beyond traditional carbon markets.

Article 6 was finally operationalized at COP29 bringing nearly a decade of negotiations to a close. In Baku, Parties finalized the rules for both Article 6.2 and Article 6.4, laying the groundwork for international and domestic compliance markets. The agreement sets out the elements each participating party shall include in the authorization of use of the ITMOs as well as some safeguards of additionality, permanence, and corresponding adjustments by host countries. Before credits can be bought and sold under the PACM, however, the Supervisory Body must approve methodologies for specific types of carbon-cutting activities and receive registrations from projects aiming to implement them.

Unfortunately, challenges remain, particularly in ensuring transparency, accountability and the integrity of traded credits. Countries face no real consequences for failing to comply with the rules, which leaves little deterrent against exploiting the system. Although the final text on Article 6.2 introduces some encouraging transparency measures, significant gaps persist. All in all, Article 6 has the potential to drive impactful projects that support science-based climate goals but its success depends on the integrity of those involved. Without stronger top-down rules, the honesty of participants and careful monitoring by third parties will be key to making sure these markets help, rather than harm global climate action.