COP29 ended with an agreement on the regulatory framework of a global carbon market after ten long years of preparations. 2025 is expected to see the first components of the markets being rolled out under the UN’s guidance with a general expectation to see it becoming operational in 2026.
“This cross-border cooperation is expected to reduce the cost of implementing countries’ national climate plans (NDCs) by up to $250 billion per year. The guidelines and rules adopted are designed to ensure that carbon projects maintain practicality and inclusivity, respect human rights, and provide support to sustainable development, enabling countries and project developers to cooperate under the Paris Agreement with confidence,” said the COP29 presidency in a statement.
Under what is now called the Paris Agreement Crediting Mechanism, companies and states will be able to buy and sell credits for projects that represent the removal of carbon dioxide from the atmosphere via natural and engineered approaches.
The next steps involve the development of the mechanism’s registry and the details of the guardrails that will protect it from false claims and inefficiency.
The breakthrough will also allow countries to trade emissions directly under Article 6.2, as they aim to achieve targets set by their nationally determined contributions (NDCs).
Sebastien Cross, Chief Innovation Officer and co-Founder at BeZero Carbon said: “Breaking the deadlock on two years of negotiations on Articles 6.2 and 6.4 is a watershed moment. Operationalising the effective trading of decarbonisation outcomes is essential if we stand a chance of meeting net zero goals. Unlike the carbon markets of the past, this Article 6 agreement is built on stronger foundations, leveraging advanced data and cutting-edge technology to ensure global carbon trading functions with more efficiency and transparency.
Of course, further steps will need to be taken to implement Article 6 effectively – including the use of independent, risk-based ratings to bolster nation’s confidence in leveraging market mechanisms to achieve their climate goals. But with proper implementation, Article 6 will unlock billions in capital flows, a large part of which will go toward developing nations, bringing benefits above and beyond decarbonisation.”
Opposition to carbon markets at COP29
Climate groups and environmentalists voiced concerns about the way the agreement was reached and were not convinced that greenwashing would be limited by the way the carbon markets were negotiated at COP29.
“Offering marginal improvements to transparency provisions, the package does not shine enough light on an already opaque system where countries won’t be required to provide information about their deals well ahead of actual trades. Even worse, the last opportunity to strengthen the critically weak review process was largely missed. Countries remain free to trade carbon credits that are of low quality, or even fail to comply with Article 6.2 rules, without any real oversight,” said Jonathan Crook, Policy Lead on Global Carbon Markets at NGO Carbon Market Watch in a statement.
Media investigations have caused shockwaves in the voluntary carbon markets with the price of carbon credits losing over 50% in the last year. Efforts to improve the space have led to a number of prominent organizations like South Pole and Verra changing their leadership, while the ICVCM initiative developed more stringent standards that are in line with the freshly agreed UN carbon market.
Read more: COP29: A Global Pledge To Phase Out Coal Power Plants Without Carbon Capture
