Net Zero

1. COP’s existential crisis
2. Kerry’s dismay
3. Trade joins the debate
4. ‘Solidarity’ taxes gain traction
5. What COP29 didn’t do

COP’s crackdown on activists, and Trump’s plan to revive a moribund pipeline.

COP’s existential crisis

As COP29 hurtles to a close, the latest draft agreement on climate finance has some delegates ready to potentially abandon the talks rather than accept a proposed fundraising target they view as catastrophically low.

After two weeks in which the summit’s leaders failed to offer any specific fundraising target as a starting point, the draft agreement released Friday would commit developed countries only to raise $250 billion by 2035, a figure about $1 trillion lower than what the most vulnerable countries had sought. And with it, the COP process itself is being pulled into existential doubt.

“It’s ridiculous, just ridiculous,” Juan Carlos Monterrey Gómez, Panama’s special representative for climate change, told Semafor. “Yesterday, with no figure, they were slapping us on the face. Now with the crumbs they are offering, they are spitting in our faces. At this point all options are on the table, including the nuclear option” of walking out of Baku without a deal, he said.

This year’s focus on finance was always going to make this an exceptionally hard COP, and the last few hours of every COP are always agonizing. But at the Baku talks, the COP process itself is facing its deepest crisis in recent memory. Under President-elect Donald Trump, the US is about to pull out of the process. Argentina ditched the summit when it had barely started, and France’s negotiator refused to attend. Papua New Guinea never showed up.

COP is an imperfect process, and is always in some stage of breakdown. It was never very likely that any kind of voluntary, UN-administered process in which every country from the Seychelles to Saudi Arabia needs to agree on every detail would ultimately solve the climate crisis.

Perhaps COP’s most important function through it all is to continue to exist: To give countries a reason to keep showing up, to keep chipping away at the problem, to keep up the peer pressure, while individual countries and private companies figure out more durable and comprehensive solutions. But at this precarious stage of the global energy transition, the Baku talks have shown that even that may be too much to ask.

Kerry’s dismay

The reelection of Donald Trump threatens to undermine progress on climate diplomacy that countries carefully hashed out over three decades of talks, the former US climate envoy told Semafor.

“Elections have consequences,” John Kerry, the former US Special Envoy for Climate, said in an interview with Semafor columnist Hadley Gamble. Whatever else is decided as the COP29 climate summit closes in Azerbaijan, “none… ultimately will rise to the level of what COP28 was able to accomplish. That was the most powerful thing since the Paris agreement was created, and now those plans have to be more specific, more comprehensive, and bigger.”

Trade joins the debate

Simmering tensions between wealthy and developing countries on the issue of clean energy trade restrictions boiled up into the COP talks for the first time — but quickly got extinguished. Before COP29 started, China had pushed to add a new negotiating track focused on setting guidelines for tariffs and clean energy subsidies. It was a way to push back on what Beijing and its allies in many low and middle-income countries see as unfair subsidies and trade barriers, including the US Inflation Reduction Act and Europe’s carbon border tariffs.

That didn’t happen, and trade faded from the conversation. But a draft of the summit’s climate finance agreement published on Wednesday contained a clause saying that developed countries “shall phase out substantial climate subsidy packages… by 2028,” language that would effectively outlaw the IRA. The language, observers said, was added by the “like-minded developing countries” negotiating bloc, which includes China and India. A representative for the group didn’t respond to a request for comment. And while the clause was struck in the latest draft, it shows that trade is destined to be an increasingly central feature of future climate talks.

‘Solidarity’ taxes gain traction

Amount that could be raised for climate finance by new taxes on passenger flights, fossil fuel production, and other high-carbon corners of the economy. A growing chorus of economists say “solidarity levies” that could also apply to cryptocurrency mining, stock market trading, and maritime shipping could go a long way toward plugging the climate finance deficit from rich countries’ treasuries. At COP29, France, Spain, and Kenya were among the countries to say they would back such levies; according to the Financial Times, “the days when new carbon levies were deemed too politically impossible to be on the table are well and truly over.”

What COP29 didn’t do

As the fraught Baku summit draws to a close, the focus will turn to next year’s COP30 in Brazil. Unlike the hosts of the last several COPs, Brazil’s President Luiz Inacio Lula da Silva is an outspoken advocate for climate action, in a country with a vibrant community of civil society groups and Indigenous rights activists. The main focus in Belem will be on the latest round of Paris Agreement deadlines for countries to submit new national climate plans. Brazil set a high bar already this year, detailing new steps to curb deforestation, expand carbon markets, and speed up the deployment of renewable energy. During this week’s G20 meeting, Brazil also encouraged rich countries to speed up their net zero deadlines and, depending on what happens in the final hours of Baku, climate finance targets may be back on the table for renegotiation. But one big challenge for Belem, situated in the rainforest, will be providing sufficient accommodation and transport infrastructure.

“It’ll be the most important COP ever,” said André Guimarães, executive director of the Amazon Environmental Research Institute. “We need to increase ambition substantially, plan the exit of fossil fuel dependency, and accelerate carbon markets — all that COP29 didn’t do.”

New Energy

• Indian billionaire Guatam Adani was charged by US prosecutors with offering $250 million in bribes to Indian officials in order to secure contracts for massive solar power projects.
• Norway’s Equinor cut 20% of the staff from its renewables unit, as rising costs have squeezed its clean power goals.

Fossil Fuels

• Trump’s transition team is working on a plan to revive the Keystone XL pipeline, even though the companies that first proposed it are no longer interested in building it.
• The Biden administration is racing to finish a new policy to cut off federal financing for overseas fossil fuel projects before Trump takes office.
• A deal under consideration to replace Russian gas exports to Europe with gas from Azerbaijan mostly benefits the Kremlin, analysts say.
• US and European officials will likely scrap a high-profile plan that had been in the works to help India shut down its coal-fired power plants.

Finance

• HSBC is scrapping a plan to build a new carbon trading desk as top corporate buyers of carbon offsets turn away from them.

Politics & Policy

• Afghanistan has been locked out of climate finance since the Taliban took over the country’s government in 2021. Now some UN agencies are trying to change that policy.

EVs

• If Trump proceeds on a plan to rescind California’s ability to regulate in-state vehicle emissions, it could hurt one of Tesla’s most profitable, if least prominent, lines of business.
• Ford will cut 800 jobs in the UK in response to weak demand for EVs.

Personnel

• Howard Lutnick, Trump’s nominee to lead the Commerce Department, will oversee two vital climate science agencies that have been targeted for the chopping block by some Trump advisers.

Harjeet Singh, global engagement director for The Fossil Fuel Non-Proliferation Treaty Initiative.

An incoming president’s first 100 days are typically a time for fast movement on big bills, but Donald Trump might be in for a rougher experience next year, Semafor’s Kadia Goba reported.

That’s in part because of Republicans’ slim hold on the House, but the GOP may also face the troublesome task of funding the government for the rest of the fiscal year and raising the debt limit.