By AFP - Agence France Presse
World approves UN rules for carbon trading between nations at COP29
Nathalie ALONSO, with Kelly MACNAMARA in Paris
New rules allowing rich polluting countries to buy carbon reduction “offsets” from developing nations were agreed at the UN climate talks on Saturday, a move that is already raising fears that they will be used to greenwash climate targets.
The decision, taken during extra time at the COP29 conference, is a major step forward in a debate that has been dragging on for years, and diplomats began applauding when the decision was announced.
Proponents say that a UN-backed structure for carbon trading could direct investments to developing nations, where many credits are generated.
Critics fear that, if poorly set up, such schemes could undermine the world's efforts to curb global warming.
Lambrechts, from Greenpeace, said the agreement delivered “carbon markets with loopholes and a lack of integrity” that would allow fossil fuel companies to continue polluting.
WWF's Reuben Manokara said the final text was “a compromise” and, while not perfect, provided “a degree of clarity that has long been absent” from global efforts to regulate carbon trading.
Carbon credits are generated by activities that reduce or avoid greenhouse gas emissions that heat up the planet, such as planting trees, protecting existing carbon sinks, or replacing polluting coal with clean energy alternatives.
Up until now, these credits have been traded mainly by companies in an unregulated and scandal-ridden market.
However the 2015 Paris climate agreement provided that countries could also participate in a cross-border trade in carbon reductions.
The general idea is that countries - especially rich polluters - can buy carbon credits from other nations that are doing better on their own emissions reduction targets.
- Article 6 -
The initiative, known as Article 6, includes both direct trade between countries and a separate market supported by the UN.
It has proved popular with both developing countries seeking international funding and wealthier nations eager to find new ways to meet strict emission reduction targets.
The European Union and the United States pushed for an agreement at COP29 in Baku, the capital of Azerbaijan. Many developing nations, mainly in Asia and Africa, have already signed up for projects.
However experts fear that the systems could allow countries to trade dubious emission reductions that cover up their failure to reduce greenhouse gas emissions.
By the beginning of this month, more than 90 agreements had already been signed between nations for more than 140 pilot projects, according to the UN.
But so far, only one deal has been struck between the countries, involving Switzerland buying credits linked to a new fleet of electric buses in Thailand's capital, Bangkok.
Switzerland has other deals scheduled with Vanuatu and Ghana, while other purchasing countries include Singapore, Japan, and Norway.
- 'The biggest threat to the Paris Agreement' -
The Climate Action Tracker project has warned that Switzerland's lack of transparency about its emissions cuts risks “setting a bad precedent.”
Niklas Hohne of the NewClimate Institute, one of the groups behind the project, warned that there is a concern that the market will create an incentive for developing countries not to promise emissions cuts in their national plans, so that they can sell credits for any reductions that go beyond that level.
“There's a lot of motivation on both sides to get this wrong,” he said.
Injy Johnstone, a researcher specializing in carbon neutrality at Oxford University, told AFP that the fact that nations can set their standards in these agreements between countries is a major concern.
She said that, overall, the risk of greenwashing makes Article 6 “the biggest threat to the Paris Agreement.”
Alongside this decentralized, state-to-state system, there will be another UN-run system for trading carbon credits, open to both states and companies.
On the opening day of COP29, nations agreed on a series of crucial ground rules to set this UN-run market in motion after almost a decade of complex discussions.
“Many projects are waiting” for the market, Andrea Bonzanni, from the International Emissions Trading Association IETA, told AFP. IETA has more than 300 members, including energy giants such as BP.
Despite these positive signs, some experts have expressed doubts that the quality of the carbon credits traded on the regulated market will be much better than the previous ones.
Erika Lennon, from the Center for International Environmental Law, said that it would be necessary to ensure that these markets did not create “even more problems and more scandals than the voluntary carbon markets.”
These “voluntary” markets have been rocked by scandals in recent years amid accusations that some credits sold did not reduce emissions as promised or that projects exploited local communities.
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