COP29: What It Means for Oil Traders

In November 2024, global climate negotiators gathered in Baku, Azerbaijan, for COP29, the latest in the series of annual UN climate summits. While headlines largely focused on climate finance, the implications for fossil fuels were more nuanced.

One of the most significant outcomes of the summit was the agreement to establish a new global climate finance target. Known as the New Collective Quantified Goal (NCQG), this commitment sets a minimum benchmark of USD 300 billion per year by 2035, more than tripling the previous $100 billion pledge made in 2009. The funds are intended to support climate mitigation and adaptation efforts in developing countries. Although the delivery mechanisms are still being shaped, the volume of capital now being mobilised could eventually accelerate the build-out of renewable infrastructure in regions that are currently net importers of fossil fuels.

The question of how to approach fossil fuel use remained a complex and closely watched topic at COP29.  While delegates were unable to agree on a formal commitment to phase out fossil fuels, the final text retained language on reducing fossil fuel use, reflecting ongoing efforts to find common ground.  The continued presence of this issue on the agenda underscores its relevance and signals that discussions around the future role of oil and gas will remain active across policy, finance, and energy planning circles.  

Another notable development was the operationalisation of the Loss and Damage Fund, originally announced at COP27 and reaffirmed at COP28.  This mechanism is designed to channel support to countries suffering the most severe impacts of climate change.  In the months following COP29, the United States announced its withdrawal from the Fund’s board, a decision that has prompted discussions about the Fund’s governance and the implications for its long-term stability and funding commitments.

For oil traders, COP29 did not deliver immediate regulatory disruption.  There was no direct policy action that alters the short-term outlook for crude markets.  However, the broader themes—growing climate finance, persistent pressure on fossil fuels, and increased institutional focus on transition pathways—are shaping the environment in which long-term trading strategies are made.

Even in the absence of a global fossil fuel exit timeline, investors and counterparties are increasingly assessing exposure through the lens of climate risk.  Understanding how public sentiment, capital flows, and policy frameworks evolve in the post-COP29 world will be key to maintaining resilience in the years ahead.

Sources:

Carbon Brief. “COP29: Key Outcomes Agreed at the UN Climate Talks in Baku – Carbon Brief.” Carbon Brief, 24 Nov. 2024, www.carbonbrief.org/cop29-key-outcomes-agreed-at-the-un-climate-talks-in-baku/.

Lo, Joe. “Fossil Fuel Transition Talks Rescued from Brink of Collapse at COP29.” Climate Home News, 18 Nov. 2024, www.climatechangenews.com/2024/11/18/fossil-fuel-transition-talks-rescued-from-brink-of-collapse-at-cop29/.

Abnett, Kate, and Virginia Furness. “United States Quits Board of UN Climate Damage Fund, Letter Shows.” Reuters, 7 Mar. 2025, www.reuters.com/world/us/united-states-quits-board-un-climate-damage-fund-letter-shows-2025-03-07/.

Calma, Dean. Outside Passage Leading to the Delegate Offices at the United Nations Climate Change Conference UNCCC COP29 Held in Baku, Azerbaijan., www.flickr.com/photos/iaea_imagebank/54157180158.