UNCTAD‘S Least developed countries report 2024 emphasized on Monday that the group 45 least developed countries (LDCs)) Carbon market projects can be used to increase climate action by offsetting buyers’ emissions at improved levels, which would enable greater investment.
Least developed countries were among the first to join carbon markets – where carbon credits are bought and sold – but they face particular challenges in accessing the market due to its scale and difficulty. in attracting foreign investment.
Geographic and financial constraints
According to UNCTAD, six LDCs account for more than 75% of the total carbon credits issued in the voluntary market and 80% of them under UNCTAD regulations. Clean Development Mechanism (CDM) allows countries to fund emissions reduction projects in other countries and claim emissions savings as part of their own efforts to meet international targets. Although LDCs participate, they account for only 1.5% of global CDM projects, highlighting the potential for more comprehensive participation.
By 2023, the value of carbon credits from the poorest countries will reach about $403 million, just a fraction of the $1 trillion in annual investment needed for these countries to meet the target. Sustainable development goals by 2030.
This reflects the need for a stronger framework to make carbon markets a viable source of financing.
Opportunities abound
UNCTAD notes that land-based sectors such as forestry and agriculture, where LDCs have significant untapped potential, could provide significant amounts of carbon credits. The report estimates that Emission reductions from these sectors could be 70% of global aviation emissions reductions in 2019, or about 2% of global emissions.
However, this opportunity requires a viable carbon price and accessible projects. A price of $100/ton is needed for such projects to be profitable. Currently, LDCs use only 2% of their land-based mitigation potential and do not have a higher carbon price, up to 97% may remain untapped by 2050.
Chart the path forward
UNCTAD’s report calls for targeted actions to help LDCs benefit more fully from carbon markets. It recommends strengthening domestic frameworks with regulatory capacity and stronger monitoring and reporting systems to ensure that communities directly benefit from projects.
The report also calls for expanding international partnerships. Regional cooperation and South-South partnerships can help LDCs reduce costs and improve their position in carbon markets.
Finally, capacity building is key, with the report calling on development partners to provide resources to help least-developed countries align carbon market projects with broad economic goals. bigger.
UNCTAD said these efforts could help least-developed countries tap into their significant climate potential, creating economic opportunities while advancing their climate goals.
