Building a Global Carbon Market
Article 6 Progress at COP29
𝙒𝙝𝙖𝙩 𝙘𝙖𝙪𝙜𝙝𝙩 𝙢𝙮 𝙖𝙩𝙩𝙚𝙣𝙩𝙞𝙤𝙣?
Progress towards a global carbon market at COP29: delegates agreed on a global carbon market framework under Article 6 of the Paris Agreement, allowing countries and companies to trade carbon credits to achieve climate targets.
𝙒𝙝𝙮 𝙞𝙩 𝙢𝙖𝙩𝙩𝙚𝙧𝙨?
A global carbon market would allow for a more cost effective, scalable and coordinated pursuit of climate goals. A few examples:
• Shared Climate Goals: Article 6 allows countries and entities to work together to achieve their nationally determined contributions (NDCs), aligning efforts with the global temperature targets of the Paris Agreement.
• Cost-Effectiveness: A global carbon market allows emissions reductions to occur where they are cheapest, optimizing resources and reducing the overall cost of achieving net-zero targets.
• Scalability and Liquidity: By connecting markets worldwide, it creates a larger pool of participants, increasing market liquidity and scaling investments in emissions-reduction projects across diverse sectors and geographies.
• Harmonized Standards and Accountability: It establishes consistent rules for measuring, verifying, and trading emissions reductions, ensuring transparency, avoiding double counting, and aligning efforts globally to meet net-zero goals.
• Interaction with Compulsory and Voluntary Markets: A global market can link compliance systems for greater efficiency, validate and harmonize voluntary credits, and integrate both into unified frameworks that prevent double counting and enhance transparency.
𝘿𝙚𝙩𝙖𝙞𝙡𝙨:
• At COP29 delegates reached a significant agreement to establish a global carbon market framework under Article 6 of the Paris Agreement. This framework enables countries and companies to trade carbon credits, each representing one ton of carbon dioxide either removed from the atmosphere or not emitted, to meet their climate targets.
• Key elements involve setting up a registry to track credits and determining the level of information sharing and project accountability. Countries without the resources to create their own registries to use U.N. services without U.N. endorsement of the credits.
• NDCs: Nationally Determined Contributions
• ITMOs: Internationally Transferred Mitigation Outcomes