Key Questions for Cop28: Resolving the Global Carbon Market Dilemma

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Get Ready for a Showdown Over the Future of Carbon Credits

Governments are on the verge of making a major decision at Cop28 to bring a much-anticipated global carbon market under the control of the UN into existence.

The Paris Agreement provides a framework for countries to work together voluntarily to achieve their climate goals by trading emission reductions and removals.

In Dubai, negotiators will finalize the framework for a new mechanism that allows countries to sell offsets to other governments, companies, and individuals under Article 6.4.

This comes at a crucial time as the integrity of the voluntary carbon market has been questioned greatly this year. Despite the scrutiny, many still see carbon credits as an essential tool to provide vital finance to developing nations.

The new system must be implemented properly to address the flaws in existing systems. Here are four crucial questions to consider from the outcome of Dubai.

Which activities are eligible?

Determining which activities can generate credits is a significant and complex issue.

If the criteria are too narrow, countries may struggle to receive meaningful financial support from the mechanism. If it’s too broad, projects with questionable climate and environmental credentials will undermine the market’s credibility.

Over the past year, the UN’s Article 6.4 supervisory body has been evaluating the eligibility of carbon removals, activities that remove carbon dioxide from the atmosphere and store it. These can be nature-based, like tree planting, or engineering-based, such as CO2 capture machines.

A Direct Air Capture (DAC) plant operated by Climeworks in Iceland. Photo: Climeworks

Six months ago, an internal UNFCCC briefing note advised against including technological solutions, labeling them as “unproven” and risky. This drew a pushback from the industry, resulting in a large number of submissions to support their case during the consultation process.

The final recommendations, reached after several extended meetings, neither endorse nor discriminate against any specific activity.

Ministers will still need to approve the package in Dubai. While a broad agreement is expected, some groups may still have concerns.

Papua New Guinea, on behalf of the Coalition for Rainforest Nations, has long insisted that credits awarded for forest conservation under the Redd+ framework should automatically qualify for the new mechanism.

However, the majority of countries and experts disagree. Pedro Martins Barata, an EDF carbon markets expert and former negotiator, says, “The purpose of the Redd+ framework was never to generate credits. That mechanism is much less strict. They should go through the same process of methodology submission and independent evaluation as all other activities.”

Are the reductions additional and permanent?  » …
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