The COP29 climate summit has begun in Baku, Azerbaijan, and on the first day, negotiators have achieved a significant breakthrough by reaching an agreement on the rules governing a global carbon market.
This agreement, known as "Article 6.4," is based on proposals from the 2015 Paris Agreement and outlines how countries can trade carbon credits through a UN-operated marketplace. It is expected to unlock financing for emissions mitigation projects, particularly in developing nations, and allow wealthier countries to meet their climate goals by purchasing carbon credits.
The establishment of a global carbon market is anticipated to reduce the costs associated with implementing Nationally Determined Contributions (NDCs) by an estimated $250 billion annually.
However, there are still challenges ahead as negotiators need to finalize the rules for bilateral carbon credit trades. Climate advocacy groups have expressed concerns about the management of reversal risks associated with carbon storage and the transparency and governance of the agreement.
The establishment of a UN-administered carbon market is a significant step in combating climate change and could catalyze advancements in clean technology and sustainable practices. It has the potential to influence the future of international climate policy and the role of carbon markets in achieving global emissions targets.