Cop29′s chief negotiator hails early win on carbon trading as last part of Paris pact is ratified

The Cop29 presidency has welcomed an early breakthrough at the UN climate talks in Baku which will end years-long deadlock over rules to govern global carbon markets – and free up large sums of money for spending on climate action.
This follows the reaching of consensus late on Monday on standards for the creation of “carbon credits” under Article 6.4 of the Paris Agreement among 194 countries including Ireland at the climate negotiations.
This will enable climate action by increasing demand for carbon credits and ensure the international carbon market operates with integrity under the supervision of the United Nations, said Cop29 president Mukhtar Babayev, Azerbaijan’s environment Minister.
The manner in which it was secured without debate was, however, strongly criticised by civil society groups.
“This will be a game-changing tool to direct resources to the developing world. Following years of stalemate, the breakthroughs in Baku have now begun. But there is much more to deliver,” add Mr Babayev who is lead negotiator.
[ Cop29 opens with fossil fuel companies and host country Azerbaijan targeted by protestsOpens in new window ]
The Cop29 presidency had identified full operationalisation of Article 6 as a key negotiating priority this year; the last part of the Paris pact to be ratified.
This is predicted to reduce the cost of implementing national climate plans by $250 billion per year by enabling co-operation across borders. “Today’s decision is an essential step in achieving that goal and establishes strong momentum for continued progress over the coming two weeks of negotiations,” Mr Babayev added.
Diplomats have agreed rules governing the trade of “carbon credits”, paving the way for rich countries to pay for cheap climate action abroad while delaying expensive emission cuts at home.
The rules deal with some of the final hurdles to creating a system in which countries can buy credits for removing or avoiding planet-heating pollution in other parts of the world – for instance, by planting trees or saving rainforests – and count progress toward their own emissions targets.
This is expected to provide the clarity needed to trade emissions within a global carbon market that would be open to companies as well as countries. A separate article on the trade of carbon credits between individual countries will be addressed later in Cop29 negotiations.
[ Cop summits must address biodiversity and climate crises in an integrated wayOpens in new window ]
Carbon markets are a polarising force in climate policy. Supporters say they help direct crucial funds to saving the planet while critics point to the history of fraudulent and harmful projects – particularly in the voluntary carbon market that some companies have enthusiastically embraced – that have eroded trust in the concept and driven calls for stricter rules.
Isa Mulder, a policy expert at the non-profit group Carbon Market Watch, said adopting the rules on the first day of the summit without discussion “undermined trust” in the UN climate process.
“Kicking off Cop29 with a backdoor deal … sets a poor precedent for transparency and proper governance,” she said.
The rules are expected to reduce risk of double-counting emissions – a big concern of critics – and include stronger safeguards to protect human rights.
But the text also leaves many unanswered questions, said Ms Mulder – such as how to deal with projects whose carbon-saving successes face a risk of reversal.
Olga Gassan-zade, former chair of the Article 6 supervisory body and one of its current members, said: “The criticisms of the process are fair – but it was also critically important to operationalise article 6.4 as soon as possible to scale up the delivery of carbon finance to the developing world.”
Critics of carbon markets have pointed to a history of offset projects overpromising and underdelivering, with wildfires burning through forests that were supposed to be protected and emissions from renewable energy projects being counted on balance books though they would probably have been built anyway.
Erika Lennon, an attorney at the Centre for International Environmental Law, said: “We’ve seen over and over again how carbon markets are not doing what they claim to be doing, as well as market projects that violate people’s rights. If they don’t have strong rules in place to prevent all of the abuses, it can totally undermine the integrity of the Paris agreement.”
How carbon credits work
In theory carbon markets let rich countries or more often corporations buy “carbon credits” from poor countries; the company or country buys them via an organisation which promises to pay communities to do things like planting trees and building wind turbines, and that buys the country/corporation more time to cut their own pollution.
It’s an idea that could speed up the energy transition by bringing cash to where it’s needed – but has been held back by the dodgy and harmful projects that have plagued the system since the start.
However the issue has been dogged by controversy over reporting standards and transparency, amid accusations of greenwashing especially with schemes that have brought little environmental benefit.
Civil society groups and representatives of development countries have underlined that money from carbon markets should not replace the vast sums of climate finance that poor countries say they are owed by richer ones, who did most to cause the climate crisis. – Additional reporting Guardian