The 29th Conference of the Parties (COP29) in Baku, Azerbaijan concluded last week, with lengthy and challenging negotiations yielding an eleventh-hour deal on tackling climate change. At its core was a groundbreaking pledge by wealthy nations to provide $300 billion annually in climate finance by 2035—a tripling of the current target, but significantly lower than what is needed to support emerging and developing economies. 

Last year, energy end-users spent a staggering $10.5 trillion, with $6.3 trillion borne by non-OECD countries. The $300 billion pledge, while significant, represents just 5% of the annual energy bill for developing nations—a seemingly modest sum. Yet, if allocated strategically, its transformative potential is enormous. For example, investments targeting energy infrastructure in Africa, South Asia, and Latin America could lead to the installation of 1,500 gigawatts (GW) of solar, 500 GW of wind, and 300 gigawatt-hours (GWh) of battery storage by 2035, aligning with the climate goals of countries in those regions and advancing global decarbonization efforts. 

Despite decades of climate talks, global carbon dioxide (CO2) emissions have continued to rise. Achieving the 1.5-degree Celsius target—which refers to a target for an average global temperature rise above pre-industrial levels— under the Paris Agreement demands unprecedented reductions in emissions, a goal requiring swift, transformative action. The commitments made at COP29 could help steer the global energy system toward the necessary trajectory—but only if implemented with precision. The divergence between the 1.5-degree and 2-degree pathways underscores the urgency of narrowing the policy gap to avoid catastrophic climate outcomes. 

Emerging economies require $1.3 trillion annually by 2030 for energy transition efforts, adaptation, and resilience. While the $300 billion pledge at COP29 is a critical step, it covers only a fraction of these needs. Private investment and development banks must play a central role in bridging this gap. Additionally, geopolitical factors, such as the withdrawal of the US from the Paris Agreement under Donald Trump, have complicated global cooperation, as has the shifting economic landscape, with emerging economies such as China taking center stage in global emissions and growth. 

Beyond finance, COP29 emphasized the importance of methane reduction. Methane, with its warming potential estimated at between 30 and 80 times greater than CO2, presents a fast-acting solution to curb global warming. Cutting methane emissions by 50% over the next three decades could reduce global temperatures by 0.2 degrees—a critical buffer in the fight against climate change. 

Simultaneously, countries are preparing to submit revised nationally determined contributions (NDC), which are pivotal to setting the trajectory of global emissions. Aligning ambitious goals with actionable policy frameworks will be critical to turning NDCs into meaningful progress. 

Another milestone from COP29 was the operationalization of Article 6 under the Paris Agreement, which establishes a global framework for carbon credit trading. While promising, challenges remain, such as transitioning legacy projects and ensuring the integrity of credits. The next few years will determine whether Article 6 can deliver scalable and transparent carbon markets. 

The outcomes of COP29 could significantly reshape energy markets, particularly in developing regions. Strategic deployment of climate finance, scaled renewable manufacturing, and methane-reduction initiatives are vital to managing a just energy transition. 

COP29 has set the stage for transformative change, but the focus must now shift to execution. Whether through targeted financing, aggressive methane reductions, or enhanced NDCs, the race to net-zero emissions requires actionable policies grounded in robust frameworks. The time for ambition has passed—action is now the ultimate test. 

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