Missing in climate action? COP29 summit underway in Azerbaijan

The latest round of U.N. climate talks, known as COP29, is making headlines this week in Azerbaijan. Ironically, the country is one of the top ten most fossil fuel-dependent economies in the world, with oil and gas making up 90% of its export revenue and 60% of its finances. Even more ironically, the largest share of Azerbaijani fossil fuel exports goes to the European Union via pipelines that run to Greece, Albania and Italy (Southern Gas Corridor), while those levels have been increasing in recent years due to Russia’s war in Ukraine.

Quote: “We are on a road to ruin,” COP29 President Mukhtar Babayev said in his opening remarks. “These are not future problems – climate change is already here. The top priority is to agree to fair and ambitious ‘New Collective Quantified Goals’ on climate finance.” In line with those objectives, progress was made on Article 6 of the 2015 Paris Agreement. Delegates approved new standards for a global carbon market that would allow richer countries to buy the emissions of poorer countries by investing in their clean energy projects or carbon-capturing forests.

However, despite commitments made in the past, greenhouse gas emissions have continued to reach record highs, while increasing temperatures, a loss of biodiversity and extreme weather events are said to be growing in intensity. Not helping the situation are questions of fairness and trust, as well as accountability and enforcement mechanisms. Notable world leaders were also absent from the summit, including President Biden and China’s Xi Jinping, along with the heads of India, Brazil, France, Germany and the European Union.

Investing angle: During his last term in office, Donald Trump withdrew the U.S. from the Paris Agreement, and the President-elect is likely to do so again. Interestingly, oil and gas stocks have performed much better under Biden than Trump, while clean energy shares boomed under the latter. The movement can highlight the actual dynamics of the economy, along with supply/demand levels, profits and prices. In fact, U.S. oil production hit new records for much of the past four years despite a policy platform by the Biden administration to transition away from fossil fuels and towards green energy.

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