Saturday, 18 January 2025
Home Topics Politics Climate Finance COP29 agrees on deal to kick-start global carbon credit trading
Climate FinanceEmissionsEmissions MarketsNewsPoliticsUnited NationsVoluntary Carbon Markets (VCMs)

COP29 agrees on deal to kick-start global carbon credit trading

56
Activists shout slogans during a protest action at the COP29 United Nations climate change conference, in Baku, Azerbaijan November 23, 2024. REUTERS/Maxim Shemetov
Activists shout slogans during a protest action at the COP29 United Nations climate change conference, in Baku, Azerbaijan November 23, 2024. REUTERS/Maxim Shemetov

BAKU (Reuters) – Countries agreed a deal at the COP29 climate conference on Saturday on rules for a global market to buy and sell carbon credits that proponents say will mobilise billions of dollars into new projects to help fight global warming.

The agreement, clinched roughly a decade after international talks on forming the market began, hinged on how to ensure credibility in the system so it can reliably lead to reductions in greenhouse gas emissions driving climate change.

Carbon credits are created through projects such as planting trees or putting up wind farms in a poorer country that receive one credit for every metric ton in emissions that they reduce or suck out of the atmosphere. Countries and companies can buy those credits to help reach their climate goals.

After striking an agreement early in the two-week conference that will allow a centralised U.N. trading system to launch as soon as next year, negotiators spent much of the rest of their time in Azerbaijan trying to hammer out details of a separate bilateral system for countries to trade directly.

Details to be worked out included how a registry to track credits would be structured, as well as how much information countries should share about their deals and what should happen when projects go wrong.

Among the strongest voices was the European Union calling for stricter U.N. oversight and greater transparency over trades between nations, while the United States sought more autonomy over the deals struck.

The COP29 presidency had published a draft deal ahead of the agreement that proposed allowing for some countries to issue carbon credits through a separate registry system, without that amounting to a U.N. seal of approval.

The final text was a compromise after the EU secured registry services for countries that can’t afford to set up their own ledgers for issuing and tracking credits, while the U.S. ensured that a transaction merely being recorded on such a registry does not qualify as a U.N. endorsement of the credits.

By agreeing that the registry would not determine a credit’s quality or endorse issuers, the EU had “gone way out of its way to accommodate the U.S.”, said Pedro Barata, who tracked the talks for the non-profit Environmental Defense Fund.

“It’s still a viable international trading system… even if some people will say it has no teeth.”

While shoring up a global market for carbon credits was a key focus of talks in Baku, bilateral trading began in January when Switzerland bought credits from Thailand and dozens of other countries have already made agreements to transfer credits.

But those deals remain limited and striking the right balance on a clear set of rules to ensure integrity and transparency without limiting countries’ ability to participate should prompt a pick-up in deal flow.

IETA, a business group that supports an expansion of carbon credit trading, has said a U.N.-backed market could be worth $250 billion a year by 2030, and count towards offsetting an extra 5 billion metric tons of carbon emissions annually.

(Additional reporting by Jake Spring; Editing by Frances Kerry)

Related Articles

The sun sets behind an oil drilling rig in Prudhoe Bay, Alaska on March 17, 2011.  REUTERS/Lucas Jackson/File Photo
CourtsEnvironmentMiningNatural GasOilPolitics

Republican-led states sue Biden administration over offshore drilling ban

Republican-led states sue over Biden's ban on new offshore oil and gas...

A Canadian flag gracefully blowing in the wind against a clear blue sky, showcasing its red maple leaf and white background.
BusinessClimate FinanceElectionsEmissionsEnvironmentUnited Nations

Four of Canada’s biggest banks leave climate alliance

The Net-Zero Banking Alliance aims to accelerate climate action among financial institutions.

A view shows the Canoo logo on a Canoo LV (Lifestyle Vehicle) electric vehicle outside a manufacturing site in Livonia, Michigan, U.S. November 29, 2022. REUTERS/Rebecca Cook/File Photo
AutomotiveBusinessElectric Vehicles (EVs)Manufacturing

EV startup Canoo files for bankruptcy, to cease operations

The EV startup has been facing rapid cash burn and a struggle...

Chevron and Hess logos are seen in this illustration taken, October 23, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
FuelLegislationNatural GasOilTrade

US FTC finalizes consent order for $53 billion Chevron-Hess merger

The U.S. Federal Trade Commission approves a consent order to resolve antitrust...

Login into your Account

Please login to like, dislike or bookmark this article.