(Bloomberg) — Speakers at the COP29 climate conference in Azerbaijan reached a carbon accord after nearly a decade of negotiations. This decision will pave the way for increased trade activity under a new market overseen by the United Nations.
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“We have finished waiting for 10 years,” said COP29 President Mukhtar Babayev. “Climate change is a global problem and Article 6 will enable global solutions.”
Achieving an agreement on the current set of rules for Article 6 of the Paris Agreement was a priority for the Azeri President at COP29. On the first day of the meeting, the negotiators rushed to develop an agreement under Article 6.4 that the new international credit system is supported by the UN and adopted some rules on Article 6.2 on Saturday.
The law allows countries to trade carbon credits with each other, as well as with companies. Unfortunately, it details the accounting system for how a country that sells credits can remove them from its national carbon inventory to prevent the same credit from being used twice.
These new laws have resolved a number of unresolved issues including provisions for the strict calculation of credits that countries can use against climate change, which are called internationally transferred mitigation results or ITMOs, as well as detailed information from countries on how credits are made. suppliers meet market standards around environmental integrity.
A number of countries, including Singapore, Switzerland, Thailand and Japan, have already struck deals to sell ITMOs before the rulebook was finalized. In practice, the rules will be very flexible in the coming years.
Meanwhile, industrial developers are worried about laws that have weakened the country and can facilitate the sale of loans that have no environmental value. “The mistakes of Article 6, unfortunately, have not been addressed.” said Isa Mulder, policy expert at Carbon Market Watch. “It seems that countries wanted to adopt inadequate policies and fix the consequences later, rather than prevent them in the first place.”
The voluntary carbon market, the unique system in place for trading credits, has been the target of accusations of greenwashing because many of the units have not delivered the promised reductions in global warming. This has caused consumers, including some of the world’s largest companies, to exit the market or look for high-quality and affordable loans that remove carbon dioxide from the atmosphere.