Launching the carbon credit market after agreeing on loose regulations at COP29
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Countries at the UN climate summit in Baku have reached final agreement on common rules to launch a carbon trading market, nearly a decade after they were first proposed .
The deal approved at the United Nations COP29 climate summit late Saturday night will allow countries and companies to exchange credits for carbon emissions cuts to offset carbon emissions. their.
The carbon trading mechanism was first formally outlined in the 2015 Paris Agreement to limit climate change, as a way for polluters to pay other countries to cut emissions on their behalf. .
But it has been controversial amid fears it will not deliver the promised results in removing carbon from the atmosphere.
The head of the delegation of a group of forest-rich countries, including Bolivia and the Democratic Republic of Congo, Kevin Conrad, said “if managed properly, the market can become a force for good and begin to reverse the market failures that cause environmental and atmospheric devastation.” .
The birth of the market prompted cheers and a standing ovation from UN negotiators in the first session of the final plenary session, in a rare breakthrough at the summit which is on the brink of collapse.
Countries and companies will be able to exchange credits equivalent to one ton of carbon dioxide saved or removed from the atmosphere, under mechanisms subject to loose UN oversight and designed to avoid double counting of reduced emissions.
The final deal sidesteps a row over a proposed United Nations registry to track the flow of emissions claims, with the United States forced to compromise on the extent of the registry’s power .
Host country Azerbaijan raised the issue Prioritize business carbon emissions, driving success on day one about the two-week summit for countries to adopt the initial element of the global market.
In subsequent negotiations to resolve the rules, it pushed participants to overcome their disagreements. This involves a series of trade-offs between requiring stricter accounting and facilitating a path to market growth, with a rule book of principles on how to trade, calculate Billing and checking credits.
Countries and companies have taken advantage of the promising market launch by signing preliminary agreements in recent weeks. Commodities trader Trafigura has announced a “pilot” carbon project to help Mozambique develop carbon recovery projects.
However, some experts warn that the new market could face many of the same accusations of greenwashing that have plagued existing unregulated credit trading between companies.
These have caused the voluntary credit market to shrink from $1.4 billion in 2022 to $1.1 billion last year, based on estimates by MSCI Carbon Markets.
“This deal leaves a lot of confidence in the hands [countries] which is a problem because the normals themselves are not yet zero [emissions] appropriate,” said Injy Johnstone, a researcher at Oxford University.
These concerns were echoed by Isa Mulder of Carbon Market Watch, who said the “dangerously loose and unclear” agreement entailed a “free-for-all” approach.
UN carbon market experts will continue to discuss what types of credits countries can buy. For example, some countries want to sell credits related to hypothetical CO₂ not being emitted, such as protecting forests, closing coal mines, or cooking on stoves that use gas instead of wood as fuel , to eliminate net greenhouse gas emissions.
These types of credits could eventually lead to more CO₂ entering the atmosphere, some experts say, in part because it could reduce incentives for polluters to plan for emissions cuts. their basic waste.
One negotiator described the discussions as “very, very difficult” before finally deciding on a “buyer beware” approach, which relies heavily on transparency to embarrass countries. have bad behavior.
Proceeds from carbon deals could help contribute to the climate finance needs of poorer countries, which economists estimate at about $1.3 trillion a year.
But others expressed caution about the solutions offered by carbon emissions trading. Brazilian environment minister Marina Silva said this was not a “panacea” to boost financing for developing countries.
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