Countries assembled in Baku for the annual climate conference, COP29, voted to clear a much-delayed agreement to finalise a global carbon market.
Such a market would allow countries to trade carbon credits – certified reductions in carbon emissions – among themselves, with prices determined by the emission caps that countries impose.
The market itself follows from a section in the Paris Agreement, called Article 6.
Though most of the necessary nuts and bolts to make a carbon market supervised by a United Nations body operational were in place since 2022, several niggles remained. In particular, concerns arose about ensuring that the carbon credits generated are genuine, and that their antecedents remain transparent. These issues have led to ongoing discussions about refining the framework to prevent potential misuse or lack of accountability.
There have been several rounds of talks involving the Parties (country signatories to the Paris Agreement) on these outstanding concerns that have been raised. In addition, last month, a supervisory body of the United Nations, which would serve as the ultimate arbitrator of the carbon market, set out a draft text. This text outlined the standards for carbon removal and provided a framework for assessing related projects.
A senior official from the Indian delegation told The Hindu days before COP 29 began that even this version was not “entirely acceptable.” However, he added that negotiators could work through the issues and iron out the details during the discussions.
Key issue
A key issue surrounding carbon markets is accounting.
Countries can count foreign-financed carbon savings towards NDCs if the credits meet international standards, but rules vary.
“Following years of stalemate, the breakthroughs in Baku have now begun. But there is much more to deliver,” he added.
“The decision on Article 6.4 is a major step forward.
Key Climate Finance Goal at COP29: U.N. Calls for Ambitious Global Commitment
NCQG refers to an update to the $100 billion a year that developed countries pledged to make available to developing countries for adapting to climate change and mitigating emissions. In addition, the Paris Agreement mandates that this new target must take effect by 2025, which makes it one of the most eagerly anticipated outcomes of the Baku COP.
U.N. Climate Change Executive Secretary Simon Stiell also emphasised the importance of reaching a new global climate finance goal in Baku.
“So, let’s dispense with any idea that climate finance is charity. An ambitious new climate finance goal is entirely in the self-interest of every nation, including the largest and wealthiest.”
