In Baku breakthrough, COP clears carbon credit trade

  • November 13, 2024
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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In Baku breakthrough, COP clears carbon credit trade

Sub : Env

Sec: Int convention

Context:

  • At the ongoing COP29 climate conference in Baku, countries have reached a landmark agreement to establish a global carbon market, addressing long-standing disputes and delays.
  • This mechanism, rooted in Article 6 of the Paris Agreement, aims to facilitate international cooperation on carbon trading and help countries meet their climate goals more effectively.

Understanding the Global Carbon Market:

  1. Framework under Article 6:
    • Article 6.2: Allows for bilateral trading of carbon credits between countries, enabling them to collaborate on emissions reduction projects directly.
    • Article 6.4: Establishes a global carbon market supervised by a United Nations body, where countries can buy and sell carbon credits through a central system.
  2. Mechanism of Carbon Trading:
    • Countries can trade carbon credits, which are certified reductions of carbon emissions achieved through projects like afforestation or renewable energy.
    • The prices of these credits are determined based on emission caps set by countries, incentivizing reductions in greenhouse gas emissions.
  3. Challenges in Implementation:
    • Genuine Carbon Credits: A major concern has been the authenticity of carbon credits, ensuring they reflect real, verifiable emission reductions.
    • Accounting Issues: There are unresolved questions about the ownership and usage of credits:
      • If a developed country funds a carbon reduction project in a developing country, can the saved carbon be counted in the developed country’s ledger?
      • At what stage of a renewable energy project’s life-cycle is a carbon credit eligible for trade?
      • Should credits generated by foreign-funded projects in a country be counted towards that country’s Nationally Determined Contributions (NDCs)?
  1. Recent Developments and Negotiations:
    • The UN supervisory body overseeing the market issued a draft text setting out standards for carbon removal and project evaluation, addressing transparency and consistency.

Potential Impact of the Agreement:

  • According to estimates, finalizing the Article 6 framework could reduce the cost of implementing national climate plans by $250 billion per year.
  • It is expected to channel significant financial resources to developing countries, helping them achieve climate targets.

Source: TH

COP clears carbon credit trade Environment