Baku, the capital of Azerbaijan, seems the right place to hold an energy summit.

Ranks of nodding donkey rigs by the side of the roads, the smell of hydrocarbons in the air and the ubiquitous logo—in national colours—of state-owned oil firm SOCAR all stand testimony to the country’s long and fruitful association with the oil industry, going back to the first ever machine-drilled well in 1846.

But is it the right place to stage a climate change conference, as it did with the UN’s COP29 extravaganza?

That depends on whether you believe fossil fuels are the root of all environmental evil and must be removed from the global fuel mix immediately, or whether hydrocarbons will have an essential role to play in the energy transition which most—apart from a few deniers, including the president-elect of the USA—agree must take place to combat global warming.

Most of the COP29 negotiations centered on the challenge of striking a deal somewhere between $100b and $1.3t—a range rich in potential acrimony

The two sides of that debate were at loggerheads over 12 days in November when 60,000 people per day slogged through the tunnels the authorities had built in what amounted to a sizeable village on the playing field of the Baku Olympic Stadium.

In the end—despite a considerable amount of rancour and animosity—pragmatism, and money, won the day.

Finance COP

Each COP has its own theme. Last year, in Dubai, COP28 was billed as the “UAE consensus” COP, which, according to the UN’s climate change executive secretary Simon Stiell, spelled the “beginning of the end” for fossil fuels.

Baku was early on tagged the “finance COP” by the COP29 president, Mukhtar Babayev, to reflect the top priority of getting a deal to fund the huge amount of investment the energy transition will require.

It was seeking to replace the “loss and damage” fund—a $100b facility to compensate developing nations for the costs of mitigation and adaption caused by global warming in some of the most vulnerable parts of the planet: small island states in the Pacific, low-lying littorals and arid inland regions across the Global South.

The fund has been talked about since 2007, but it has been slow progress to persuade developed countries to stump up the cash, partly because of the insistence of China—the second-biggest economy in the world and the current biggest polluter—that it retain its UN-designated “developing’ status.

The value of the fund was being eroded all the time by inflation, and its purpose diminished by the sharply rising estimates of what global energy transition will actually cost.

This has risen exponentially over recent years. Some of the estimates are simply so high—for example, $38t/yr by 2050, according to a German government study—as to be meaningless. The consensus figure used at COP29 was $1.3t/yr by 2035.

Most of the COP29 negotiations centered on the challenge of striking a deal somewhere between $100b and $1.3t—a range rich in potential acrimony.

Meanwhile, it became apparent early on that the oil and gas producers were not going to simply roll over to the environmentalists.

God-given gift

Ilham Aliyev, president of Azerbaijan, set the tone in an opening speech that proclaimed his country’s oil and gas to be a “gift from God” and slammed environmentalists, especially European ones, as hypocrites and neo-colonialists. It was not the usual COP language of diplomacy and compromise, and it further riled the environmentalists.

Both France (a particular target for Aliyev) and Argentina (under its climate sceptic president Javier Milei) withdrew some of their delegations.

It was also increasingly obvious that the teams from OPEC and Arab oil-producing states, led by Saudi Arabia, were not going to budge an inch on fossil fuels, and in fact were looking to de-emphasise some of the ground-breaking aspects of the “UAE consensus”.

$300b/yr – Amount pledged to be raised for developing countries

The Saudi attitude was “it has already been agreed, so why do we have to say it again?” But the Europeans were not convinced and said so at a series of media briefings where they came close to breaking the confidentiality terms of the COP negotiation process. The final communique had no mention of “fossil fuels”.

Throughout the 12 days, the elephant in the plenary hall was Donald Trump. The important US delegation, led by President Biden’s climate envoy John Podesta, and which for the past four years has been a rallying flag for responsible environmentalism at COPs, was clearly diffident in the negotiations about finance, where the biggest economy in the world could have played a crucial role.

But Biden and Podesta will both be out of their jobs in January, and Trump has pledged to once again withdraw from the Paris Agreement. The US—which treasury secretary nominee Scott Bessent has promised will pump more oil than ever—will probably not be present at COPs in any meaningful sense for the foreseeable future.

Heat is on

Against this divisive and polarised background, the Baku COP29 presidency must be given credit for seeing it through to the end. On what proved to be the final day, the heat was turned up on the negotiators to get a deal done—literally, as air conditioning was switched off in the COP village, which was also running out of food.

When Babayev hammered his gavel for the last time, it was on a deal that saw the parties pledge to raise at least $300b/yr for developing countries by 2035 in a “new collective quantified goal” (NCQG) and set a target of $1.3t over the same period in the “Baku finance goal”. It was the biggest commitment to climate funding in COP history.

The deal was greeted with howls of “betrayal” and “travesty” from the Global South delegates—most notably led by the Indian delegation.

But UN Secretary General Antonio Guterres—no friend of the hydrocarbon industry—pragmatically urged the protesters to take the win, and told the West to pay up fast. It was “a base on which to build”, he said.

It was, according to your position within the global debate on climate change, either a COP half full, or a COP half empty. 

Perhaps Guterres’ concession was a reflection of the fact that there is a body of opinion building within the UN against the COP concept, at least in its current format. Some leading UN grandees, led by former Secretary General Ban Ki-Moon, had earlier delivered a critical letter saying the COP was no longer “fit for purpose” and calling for it to be reformed.

As I boarded the plane at Heydar Aliyev airport to leave my fourth consecutive COP, I reflected that that is surely right. COP needs reform, and here are some ideas as to how.

COP has grown too big. Baku’s official attendance made it the second-biggest COP in history, after Dubai’s 100,000. The trend to ever-bigger COPs must be reversed.

A large number of the attendees—mostly from NGOs and smaller countries—appear to see it as an annual protest excursion to an exotic country, rather than a negotiating chamber. Their ranted simplicities do not contribute to the serious task of containing global warming.

The UN distinction between ‘blue zone’ (national governments, international institutions, NGOs and media) and ‘green zone’ (private sector, including oil companies) has become meaningless and should be scrapped.

Finally, COP needs a new global financial institution to properly oversee and administer the huge sums that will be pouring into its coffers when the NCQG and Baku finance goals start to pay off.

Baku showed that COP can still be a vital weapon in the battle against climate change. But to remain fit for purpose, it needs some radical reform. That is up to the UN.

Frank Kane is Editor-at-Large of AGBI and an award-winning business journalist. He acts as a consultant to the Ministry of Energy of Saudi Arabia

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Author: Frank Kane