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.
The global population is facing a critical time in climate policy. Climate change has evolved from being a distant and abstract concept to a tangible reality. In 2023, we experienced the highest temperatures in 120,000 years. The world also saw the worst wildfires in recorded history, the most notable being in Canada, Greece, Spain, and Hawaii.
The existing energy framework we have was built for a different climate. Today, this system is no longer sufficient because of rising temperatures and more extreme weather – very hot summers and blistering winters. Hence, the world needs to find a balance between managing the existing levels of climate change and trying to hold off the rate of global warming.
The last few decades have seen the world rapidly develop clean energy technologies like wind- and solar-generated power. Electric cars are also accessible. We also have international frameworks in place like the Paris Agreement and the annual United Nations Climate Change Conferences which we colloquially refer to as COP. Energy transition has become a major talking point but, aside from being a popular topic, it is something the energy industry has come to take seriously.
In fact, oil and gas companies have been investing in renewables since the 1980s. Today, oil companies are committed to investing billions of dollars in energy efficiency. These companies are actually very well placed to lead the energy transition: they already have experience with large-scale projects, storage and transportation, and a deep understanding of the energy needs of consumers.
What we as the global population also need to consider is the affordability of clean energy for poorer countries. Roughly US$1 trillion is needed in investments in the power sector for developing countries to meet their climate goals. Demetrios Papathanasiou, Global Director of Energy and Extractives at the World Bank, says that “poorer countries are stuck in a vicious cycle where they pay more for electricity, cannot afford the high upfront cost of clean energy, and are locked into fossil fuel projects. In essence, they are paying a triple penalty for the energy transition.”
Furthermore, many of these countries do not have the strong governance that is so fundamental to signal to investors that the country is suitable for private investment into its clean energy transition.
Even in developed countries at the household level, high upfront costs of clean energy solutions make them inaccessible for those with lower incomes. Despite the long-term promise of electricity bill savings, making that switch can cost two-thirds of someone’s yearly salary.
The global move towards clean energy therefore requires solutions from governments and large corporations to uplift those who cannot afford it. At Cathay Petroleum, our teams are consistently researching our options to invest in clean energy with a view to support the global energy transition.
Sources:
Jacob, Julia, and Dan Peck. “Record-Breaking Wildfires Have Occurred All over the Northern Hemisphere during 2023, New Report Finds.” ABC News, ABC News Network, abcnews.go.com/US/record-breaking-wildfires-occurred-northern-hemisphere-2023-new/story?id=103169036. Accessed 19 Dec. 2023.
“‘I Wasn’t the Obvious Choice’: Meet the Oil Man Tasked with Saving the Planet.” The Guardian, Guardian News and Media, 7 Oct. 2023, www.theguardian.com/environment/2023/oct/07/meet-the-oil-man-tasked-with-saving-the-planet-cop28.
International Energy Agency (2023), World Energy Outlook 2023, IEA, Paris https://www.iea.org/reports/world-energy-outlook-2023, License: CC BY 4.0 (report)
Kienzler, Clemens, et al. “How Oil and Gas Companies Can Be Successful in Renewable Power.” McKinsey & Company, McKinsey & Company, 27 Feb. 2023, www.mckinsey.com/industries/electric-power-and-natural-gas/our-insights/how-oil-and-gas-companies-can-be-successful-in-renewable-power.
“Breaking down Barriers to Clean Energy Transition.” World Bank, World Bank Group, 18 May 2023, www.worldbank.org/en/news/feature/2023/05/16/breaking-down-barriers-to-clean-energy-transition.
In the last four decades, the number of people in China with incomes below the international poverty line has fallen by almost 800 million. That is almost 75% of the total decrease in the number of people worldwide who live in extreme poverty. Over the same period, China’s GDP per capita increased more than sevenfold as it moved from an agrarian economy to a more industrialised one.
By any measure, China’s growth has been rapid and unprecedented. Not only has it eradicated extreme poverty, it has also made large improvements in access to healthcare and education. Its post-COVID fiscal policy is expected to remain expansionary. On the energy side, more than half of global demand growth in the last ten years can be attributed to China.
There are several factors that account for this growth in China’s energy demand: High-tech manufacturing in clean energy areas like photovoltaic systems and electric vehicles continues to grow. In 2022, revenue for listed manufacturers in these two sectors alone amounted to US$300 billion. China is also on track to add on the same amount of capacity as the combined capacity of all OECD countries in Europe and Asia so there continues to be a strong demand for petrochemical feedstock. Finally, hydroelectricity production has been inhibited by droughts which further contributes to its energy demand.
China continues to be one of the largest oil consumers globally. Its oil imports in this decade are correspondingly set to increase. It is also the world’s largest coal consumer, producer and importer and the world’s largest natural gas importer. Around 70% of China’s electricity is still generated from fossil fuels fuels and China accounts for 27% of annual global carbon dioxide and a third of greenhouse gas emissions.
Despite China being the largest consumer of fossil fuels, it is also the leader, spending US$650 billion annually on several clean energy technologies. It dominates the solar panel supply chain and has brought down the price of solar components to the lowest it has ever been.
By the end of 2026, China is expected to have 1,000GW of solar power alone. Globally, 11,000GQ is needed to meet the 2030 targets of the Paris Agreement. Given China’s size, the world’s environmental problems cannot be resolved without its engagement. The future of energy is undoubtedly very much influenced by China’s growth and energy transition.
Sources:
World Bank and the Development Research Center of the State Council, the People’s Republic of China. 2022. Four Decades of Poverty Reduction in China: Drivers, Insights for the World, and the Way Ahead. Washington, DC: World Bank. doi:10.1596/978-1- 4648-1877-6. License: Creative Commons Attribution CC BY 3.0 IGO
International Energy Agency (2023), World Energy Outlook 2023, IEA, Paris https://www.iea.org/reports/world-energy-outlook-2023, License: CC BY 4.0 (report)
Howe, Colleen. “Explainer: The Numbers behind China’s Renewable Energy Boom.” Reuters, 16 Nov. 2023, www.reuters.com/sustainability/climate-energy/numbers-behind-chinas-renewable-energy-boom-2023-11-15/.