UN panel reach compromise on global carbon trading system ahead of COP29
UN negotiators have reached an agreement on key issues around a global emissions trading system ahead of the COP climate summit to be held in Baku next month. It is hoped that the agreement will allow nations with high carbon emissions to fund carbon reduction projects in countries with lower emissions and high carbon removal potential. This will be achieved by trading carbon permits, which represent the removal of one tonne of carbon dioxide emissions, similar to the current arrangement in voluntary carbon markets across the globe.
Many of the finer details of the system are yet to be confirmed, including the mechanism for pricing of permits, however in concept the trading system would fund much needed carbon reduction/ removal projects in poorer countries.
Mike Ridler, CEO of C-Zero Markets
“If the UN adopts sustainable development standards for regulated carbon markets this looks like a genuine step in the right direction in terms of achieving climate goals.”
The concept was first devised in Article 6.4 of the Paris Agreement, nearly 10 years ago, which described a legislated centralised international trading system, but there has been some debate around the wider issues which could result from it. Concerns have been raised around wealthier countries operating business as usual while procuring credits to offset their emissions. However, with wider scientific agreement that carbon removal initiatives will be essential for hard to abate sectors to reach net zero, there has been more priority given to funding these projects which will become crucial in keeping the world on track for 1.5°C above the pre-industrial average global temperature.
Mike Ridler of C-Zero Markets has called this promising development “a major step forward in enabling a robust, agile carbon market.” C-Zero will be closely watching the negotiations held on this topic in next month’s COP. This has been labelled by many as the “Finance COP” due to its primary goal of solving the issue of getting more money to poorer countries who are disproportionately suffering the effects of climate change.