Landmark deal reached at COP29 on global carbon market

Countries participating in the United Nations Climate Change Conference COP29 reached a consensus on standards for the creation of carbon credits in line with the 2015 Paris Agreement. But much remains to be negotiated.

After years of talks, a global carbon market is beginning to take shape. Parties assembled for the first day of the UN Climate Change Conference COP29 in Azerbaijan approved carbon credit standards as an important step in the creation of an international emissions trading system. The consensus was reached in line with the 2015 Paris Agreement.

The UN would supervise the envisaged greenhouse gas emissions market. “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,” COP29 President Mukhtar Babayev said.

Finalizing the negotiations on climate finance under article 6 of the Paris Agreement could reduce the cost of implementing national climate plans by USD 250 billion per year by enabling cooperation across borders, according to the announcement.

The summit is formally called the Conference of the Parties of the UN Framework Convention on Climate Change (UNFCCC). It runs until November 22 in Baku, with 70,000 registered delegates.

COP29 President Babayev: Current policies won’t limit global warming to under three degrees

In his opening address, Babayev highlighted how current policies put the world on track for catastrophic warming of three degrees Celsius, citing the latest Emissions Gap Report by the United Nations Environment Programme (UNEP).

“We are on a road to ruin… Whether you see them or not, people are suffering in the shadows. They are dying in the dark. And they need more than compassion, more than prayers and paperwork. They are crying out for leadership and action. COP29 is the unmissable moment that can chart a new path forward for everyone,” the conference chief told delegates. Babayev is also Azerbaijan’s minister of ecology and natural resources.

The presidency said the full operationalization of article 6 as a key negotiating priority this year. The new tentative agreement concerns article 6.4, for a framework for carbon markets. The idea for the entire global climate finance system is to channel investment to developing countries and allow targeting mitigation efforts to where the costs are lowest.

The carbon credit standards need to ensure that emissions reduction and removal real, additional, verified and measurable

“We know the needs are in the trillions,” Babayev said, while acknowledging differences on how to get there. He added that a realistic goal for what the public sector can directly provide and mobilize seems to be in the hundreds of billions. “These numbers may sound big, but they are nothing compared to the cost of inaction. These investments pay off,” the top climate negotiator stated.

Global emission allowances would give countries, firms wide access to decarbonization tools

Carbon credit standards are supposed to ensure the high integrity of the market and make emissions reduction and removal real, additional, verified and measurable. Greenhouse gas emissions can be priced through mechanisms such as auctions, quotas, tax benefits, afforestation, soil carbon sequestration and carbon capture, utilization and storage (CCS or CCUS).

In an international market, governments, companies or other entities would be able to buy certificates and services that lower or offset their emissions.

Climate action is the “race of our lives”, Babayev underscored.

Climate finance is no charity

An ambitious new climate finance goal is entirely in the self-interest of every nation, including the largest and wealthiest, according to UNFCCC’s (UN Climate Change) Executive Secretary Simon Stiell. “If at least two thirds of the world’s nations cannot afford to cut emissions quickly, then every nation pays a brutal price. So, let’s dispense with any idea that climate finance is charity,” he stressed.

However, progress in climate action could be substantially limited if United States President-elect Donald Trump pulls his country out of the Paris Agreement – again.