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The two-week-long UN Climate Change Conference (Cop29) ended last week with a contentious pledge by wealthy countries to increase climate finance. While the commitment was criticised by developing nations as insufficient, objections from some of the world’s richest nations meant there was nearly no agreement at all.

This fragile compromise may have dominated headlines, but it was far from the only development from the conference. Here is an overview of the main trade-related discussions and outcomes from Baku.

US$300bn for climate finance – but still not enough

The landmark pledge of Cop29, nicknamed “the finance Cop” due to its supposed focus on funding the green transition, was an increase of climate finance from the wealthiest countries to the poorest from US$100bn to US$300bn a year by 2035.

While this is a clear upgrade – and higher than the originally proposed US$250bn – it is far less than the US$1.3tn that developing countries had sought.

It is also unlikely to be enough to mitigate the effects of climate change, with NGO WaterAid’s lead policy analyst for water, sanitation and hygiene finance, Lesley Pories, calling it a “death sentence for the millions on the climate frontlines”.

Though the official text of the resolution calls for financing from “all public and private sources” to reach US$1.3tn a year by 2035, it is unclear in practice how this will materialise.

OECD analysis from May shows that public funds currently make up over 80% of global climate finance.

If this ratio remains the same, hitting US$300bn in public climate finance would only lead to US$75bn in additional private finance, far below the Cop resolution’s target.

Carbon credits are here to stay

The first major success of the conference was the finalisation of Article 6 of the Paris Agreement, which codifies a set of rules and protocols for the production and trading of carbon credits.

One carbon credit is theoretically equivalent to one tonne of carbon mitigated or removed from the atmosphere and can be bought by polluters to offset their environmental impact.

However, the market has been wracked by scandal in recent years, with many projects found to be worth far less in carbon credits than they had claimed.

Establishing a market with unified rules and nation states as potential buyers – Norway alone signed deals worth up to US$740mn in Baku – could restore much-needed credibility to the asset class.

Bloomberg New Energy Finance estimated in February that a carbon market made of high-quality credits could be worth US$1.1tn by 2050.

The achievement is also likely good news for commodity traders, which are increasing their investments in the space.

Carbon tax discussion looms over Cop30

A discussion on the EU’s Carbon Border Adjustment Mechanism (CBAM) was avoided at Cop29, despite requests from the Basic (Brazil, South Africa, India and China) countries that it be included on the agenda. However, this omission is unlikely to quell the contention around the proposed policy.

A Chinese official told S&P Global that the country would lobby for a discussion on “climate change-related, trade-restrictive unilateral measures” at next year’s Cop30. China claims that policies like the CBAM, which applies a tariff to certain carbon-intensive goods imported into the EU, will slow the global decarbonisation process and increase transition costs.

The EU, meanwhile, describes CBAM as a “tool to put a fair price on the carbon emitted during the production of carbon-intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries”.

Goods proven to have already paid a carbon price equivalent to the EU’s are exempt from additional fees.

While there are debates on the economic impacts CBAM will have, a study by ING suggests it could increase the cost of Chinese aluminium imports to the EU by 17%, while Indian aluminium could rise by up to 40%. London School of Economics research suggests that it could also decrease African exports to the bloc by up to 5.7%.

Given that next year’s Cop will be hosted in Brazil, one of the countries proposing a discussion on carbon tariffs, it seems likely the topic will feature on the 2025 agenda.

Momentum for change could be slowing

Cop has faced mounting criticism in recent years, in no small part due to the nations selected as its hosts. Last year’s event was held in Dubai, a city heavily reliant on oil and gas exports, and Baku is much the same.

A BBC investigation prior to this year’s event found a senior Cop official using his role to discuss fossil fuel deals – a parallel to Cop28, where up to US$100bn-worth of fossil fuel deals were signed, according to NGO Global Witness.

These deals, alongside the difficulties in agreeing climate finance targets, led a group including former UN secretary general Ban Ki-Moon to describe the event’s current processes as “no longer fit for purpose”.

Next year’s Cop may face an even greater hurdle in the form of US President-elect Donald Trump.

In his previous term, Trump withdrew the US from the Paris Agreement on climate change, which was signed in 2015 at Cop21. He has pledged to once again exit multilateral decarbonisation programmes, casting serious doubts over the US’ participation in the US$300bn climate finance target.

Without the involvement of the world’s largest polluter and wealthiest nation, the legitimacy of Cop may be further eroded, especially if developing nations feel they are left to foot the bill that many believe should be borne by the largest economies.

Prior to the event, the BBC quoted Richard Klein, senior research fellow at the Stockholm Environment Institute, as saying: “The US at this COP is not just a lame duck, it’s a dead duck. They can’t commit to anything and that means that countries like China will not want to commit to anything.”

The stakes are enormous. Any slowdown in climate action could have catastrophic effects in both economic and human terms.

A Moody’s report from March identified US$11tn of rated debt as being “highly exposed” to climate change-related risks. Defaults of this scale could do massive and lasting damage to the global economic and trade system and require major action to mitigate the fallout.