Diplomats have reached a significant breakthrough at the UN climate talks in Baku, Azerbaijan, by agreeing on key rules for the trading of carbon credits. This agreement, hailed as an early success of the Cop29 negotiations, could potentially facilitate rich nations addressing their climate responsibilities through investments in green projects abroad, even as they delay making costly emissions cuts at home. However, the rapid passage of these rules has raised concerns about transparency and the efficacy of carbon markets.
The historic agreement was reached on the first day of the climate conference and was celebrated by Mukhtar Babayev, the president of Cop29, who emphasized the spirit of compromise that guided the discussions. This landmark decision addresses crucial aspects of a system enabling countries to purchase carbon credits for activities that mitigate greenhouse gas emissions in other regions. Such activities may include reforestation initiatives or the preservation of existing forests. By establishing clearer mechanisms for trading emissions, this framework is set to open up a global carbon market, overseen by the UN, accessible not just to countries but also to private companies.
The topic of carbon markets is one of ongoing contention in climate policy. Proponents argue they allocate essential funding towards environmental preservation, while critics highlight a history riddled with fraudulent practices and ineffective projects, particularly within the voluntary carbon market ecosystem. The debate over carbon credit regulations—nicknamed “article 6″—has been a longstanding hurdle in UN climate talks aimed at curbing global warming. Previous climate conferences failed to reach consensus due to stalled discussions and rejected proposals from a UN oversight body meant to guide negotiations.
This year, however, heightened pressure for advancements led parties to adopt new standards pertaining to carbon credit methodologies, allowing for an expedited agreement. While the new rules aim to mitigate the risk of double-counting emissions and reinforce human rights protections, critics remain skeptical about the clarity on ongoing concerns, such as how to manage projects that might face setbacks in their claimed carbon reductions.
Isa Mulder, a policy expert with Carbon Market Watch, expressed concern that progressing with this agreement without comprehensive discourse “undermined trust” in the UN climate process. Echoing her sentiments, Erika Lennon of the Centre for International Environmental Law pointed to established patterns where carbon markets have fallen short of their promises, highlighting a potential threat to the integrity of the Paris Agreement: “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.”
As the climate conference unfolds amidst a backdrop of record-breaking temperatures and extreme weather events exacerbated by climate change, the effectiveness of these newly minted carbon trading rules—and the overall success of Cop29—remains to be seen.