The speeches on the rules of the carbon market pass to Slow Start

By Jake Spring, Kate Abnett and Shadia Nasralla

SHARM EL-SHEIKH, Egypt (Reuters) – According to negotiators and observers, countries are far from agreeing on the technical details to manage the global trade in carbon offset credits after a week of talks at the UN’s COP27 climate summit in Egypt, with delays threatening to skip a 2023 deadline.

Carbon offsets allow countries or companies to pay others to reduce greenhouse gas emissions to offset their own. While companies are already trading carbon offsetting credits on private markets, the so-called Article 6 of the Paris Agreement would set rules that allow countries to partially achieve their national climate goals by purchasing such credits.

The hope is that international rules backed by the world could attract billions of dollars into carbon reduction projects, but countries have struggled for years to agree on what the rules should be, which projects should be eligible, and how to ensure that are having an impact in the real world.

Countries cheered each other at last year’s climate summit in Glasgow for agreeing on general principles governing carbon markets, breaking a six-year deadlock. But that deal pushed more complicated technical work to subsequent summits, including the current COP27 meeting in Sharm El-Sheikh.

Political cartoons about world leaders

As early as COP27, countries kicked off in 2023 a decision on the rules for which types of projects can produce credit: from solar parks, to projects to avoid deforestation.

Countries will have to decide on such methodologies next year or face a 2023 deadline when carbon reduction projects registered under the old UN rules have to apply to be part of the new system.

Applying to join the new system without knowing what rules will govern it would be difficult, said Pedro Martins Barata, an expert on carbon markets, observing talks for the non-profit Environmental Defense Fund.

The draft rules under discussion are still riddled with brackets indicating which sections still need to be agreed upon.

“Glasgow was a real breakthrough … it doesn’t send a big signal if they suddenly get involved in technical matters,” said David Burns, policy expert and negotiating observer for the nonprofit World Resources Institute.

Voluntary carbon offsetting markets have struggled for years to gain trust. Activists, including Greenpeace, have criticized the offsets as a fig leaf for polluters who want to avoid cutting emissions.

“The door is still open for countries to achieve their climate goals with accounting tricks rather than real actions,” said Gilles Dufrasne, expert and observer at the nonprofit Carbon Market Watch talks.

But the nearly 200 countries at the UN summit could still make a decision on the rules for country-to-country clearing exchanges.

The sticking points also include whether there should be a centralized body where exchanges are reported, a system supported by the European Union. The United States prefers a more widespread and decentralized system.

As countries struggle to agree, private markets with no global standards are moving forward.

According to Ecosystem Marketplace, credits worth $ 2 billion traded in 2021 – almost four times the previous year – with around 500 million credits representing 500 million tons of CO2 equivalent.

How much carbon budget do we have left? https://graphics.migration.com/CLIMATE-CHANGE/zjvqkjxjdvx/chart.png

Private initiatives such as the Integrity Council for the Voluntary Carbon Market (ICVCM) and the Carbon Credit Quality Initiative (CCQI) have produced guidance on what they see as high-quality carbon offsetting.

But debates continue on issues such as whether a credit should also take biodiversity and human rights into account.

A consensus at the United Nations would send a strong signal to private markets as to what their standards should be, said Barata, who also co-chairs an expert group for ICVCM.

“At COP27, we must provide companies and countries with a clear process on how to implement carbon markets in a way that prioritizes transparency and social and environmental integrity,” he said.

While hundreds of companies and countries rely on offsetting purchases to meet the commitment to achieve “net zero” emissions, a UN panel of experts last week warned that many of these goals rely too heavily on offsets to avoid the more difficult task of reducing emissions outright.

“Net zero pledges are too heavily dependent on carbon offsetting in forests or agriculture,” said Charles Canham, a senior scientist emeritus at the nonprofit Cary Institute of Ecosystem Studies, pointing out that these categories are particularly difficult. to verify.

(Reporting by Jake Spring, Kate Abnett and Shadia Nasralla)

Copyright 2022 Thomson Reuters.

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