The annual U.N. climate conference, long the center of global decarbonisation diplomacy, is facing an identity crisis. Once the forum for aggregated Nationally Determined Contributions under the 2015 Paris Agreement, COPs are increasingly being eclipsed by high-value country-to-country deals and corporate-led deployment of technology. That shift was succinctly summed up by Christiana Figueres, the former head of the U.N. climate process, who said the COP process was "not fit for purpose."

The change reflects shifting economic and geopolitical realities. Washington’s posture under President Trump pushed U.S. climate diplomacy into transactional, competitive terrain, setting it on a collision course with China — a country that has spent decades building industrial capacity in solar panels, batteries and associated supply chains. Rather than merely participating in COP, China has exported an integrated energy model: equipment manufacturing, project financing and state-backed investment in overseas grids and renewables. That approach converts climate action into trade and strategic influence as much as environmental policy.

For markets, the implications are profound. Capital is following commercial opportunity and geopolitics, not multilateral pledges. Sovereign offtake agreements for green hydrogen, long-term purchase contracts for batteries and grid-scale solar investments are negotiated bilaterally and often financed through state-backed or commercial institutions. These deals can mobilize tens of billions of dollars rapidly and create durable industrial champions. By contrast, aggregate COP commitments have struggled to translate into binding finance flows at scale, especially for hard-to-abate sectors and for lower-income countries facing urgent adaptation needs.

Policy risks follow. When decarbonisation becomes parceled into competitive national strategies, there is greater potential for fragmented standards, carbon leakage and trade disputes. Industrial policies that favor domestic champions can accelerate clean-technology deployment but also provoke retaliatory measures or protectionist responses. That dynamic raises the stakes for global coordination on rules such as carbon accounting, border carbon adjustments and technology transfer mechanisms.

Yet COPs retain value as a convening space. The conferences aggregate nearly 200 nations, provide a platform for climate finance negotiations and set normative expectations. The question is whether that platform can adapt to a world where capital flows and industrial strategy often determine outcomes. Strengthening the finance architecture of the U.N. process, tightening transparency around nationally reported emissions and linking multilateral frameworks to trade and investment rules are potential reforms to rebuild relevance.

What to watch at the next summit is whether leaders can bridge this cleavage: will COP produce instruments that unlock private capital at scale and mesh with the bilateral infrastructure deals already reshaping the energy transition? Or will it be relegated to a backdrop as states and corporations write the rules through direct partnerships and commercial contracts? The shape of global decarbonisation — and its winners and losers — may be decided outside the plenary halls where it was once negotiated.