The 29th Conference of Parties (COP29) to the United Nations Framework Convention on Climate Change (UNFCCC), being held in Baku, have officially adopted the new operational standards for a mechanism of the Paris Agreement under Article 6.
- The adoption of article 6.4 has set the stage for operationalising the global carbon market.
About Article 6.4
- Article 6 of the Paris Agreement facilitates international collaboration to lower carbon emissions.
- It offers two pathways for countries and companies to trade carbon offsets, supporting the achievement of emission reduction targets set in their climate action plans, or nationally determined contributions (NDCs).
- Article 6.2 allows two countries to establish a bilateral carbon trading agreement under their own terms.
- Article 6.4, seeks to develop a centralised, UN-managed system to enable both countries and companies to offset and trade carbon emissions.
- The Article 6.4 Supervisory Body, tasked with creating a United Nations-governed carbon market, finalised essential standards covering carbon removal projects and methodology guidance.
- A carbon market would allow countries to trade carbon credits – certified reductions of carbon emissions – among themselves and whose prices are determined as a consequence of emission caps imposed by countries.
Several issues related to carbon market:
- A country in a developed country finances an afforestation project in a developing country, and it prevents 1,000 tonnes of carbon from being released into the atmosphere. Would this saved carbon be part of the developed country’s carbon credits when the actual prevention is happening elsewhere?
- At what stage of a renewable energy project’s life-cycle will a generated credit be considered eligible for trade?
- Can countries claim credits generated in their borders, financed by foreign companies, and count them towards their Nationally Determined Contributions (NDC)?
- India, as part of its NDC, has committed to reduce emissions intensity by 45% by 2030 from 2005 levels and create a carbon sink of 2.5 to 3 billion tonnes of additional forest and tree cover by 2030.
