At COP29 in Baku, recent changes to Article 6 of the Paris Agreement focused on advancing the structure for international carbon markets. This included the ratification of a framework for trading U.N.-backed carbon credits between countries, a key step in operationalizing Article 6.4's aim of creating a global carbon credit market.

This framework also established U.N. standard-setting body to evaluate carbon-credit programs, which could mobilize considerable climate finance, particularly for developing nations. However, concerns were raised about the speed of approvals and broad credit definitions that could affect the framework’s effectiveness. To read more, see www.wsj.com/articles/u-n-negotiators-take-key-step-to-global-carbon-deal-1e23433e. (BIRI 3)

Understanding Articles 6.2 and 6.4:

 Article 6.2: This provision allows bilateral agreements between countries to trade carbon credits. It facilitates collaboration by enabling countries to transfer emission reductions to meet their Nationally Determined Contributions (NDCs). The intent is to increase the cost-effectiveness of climate mitigation actions while supporting sustainable development goals. More on this can be found at www.reuters.com/business/environment/cop29-what-is-carbon-credit-what-is-article-6-2024-11-09 (BIRI 3).

 Article 6.4: This article establishes a centralized carbon credit market governed by the U.N., creating a standardized system for generating and trading carbon credits. The mechanism aims to ensure transparency, uphold environmental integrity, and avoid double-counting, fostering international collaboration to reduce greenhouse gas emissions. For additional details, visit www.unfccc.int/news/key-standards-for-un-carbon-market-finalized-ahead-of-cop29 (BIRI 10).‍

‍Voluntary Carbon Markets:

 Voluntary carbon markets (VCMs) are markets where companies and individuals can buy carbon credits to offset their emissions, even when they’re not required by regulation. These markets are essential for financing emissions reduction and removal projects as companies work to meet climate targets, especially in supply chain emissions (scope 3). However, VCMs face challenges, such as verifying credit authenticity and ensuring that offsets do not replace actual emissions reductions. Organizations like the Core Carbon Principles (CCP) and the Voluntary Carbon Markets Integrity Initiative(VCMI) are working to create standards and conduct codes for VCMs. For further insights, see www.time.com/7022709/time-to-scale-credible-high-impact-voluntary-carbon-market (BIRI 3).

Standards and Methodology Approvers for Reliable Carbon Credits:‍

Creating reliable carbon credits involves stringent standards and methodologies from key organizations, including:

Integrity Council for the Voluntary Carbon Market(ICVCM): ICVCM created the Core Carbon Principles (CCPs), which establish high integrity standards for carbon credits. These principles guide buyers in identifying credits that meet stringent standards, ensuring they represent genuine, measurable, and verifiable emission reductions. More details are available at www.icvcm.org/integrity-council-announces-first-high-integrity-ccp-labelled-carbon-credits-as-assessments-continue. (BIRI 6)

 International Carbon Reduction and Offset Alliance(ICROA): ICROA accredits best practices in carbon offsetting through its Code of Best Practice, certifying greenhouse gas emissions reductions and promoting high standards in carbon credits to support the Paris Agreement. For more, visit www.icroa.org (BIRI 8).

 Carbon Credit Quality Initiative (CCQI): CCQI offers information on carbon credit quality, helping users choose credits with high climate impact and social and environmental benefits. Their methodology assesses the confidence or likelihood that credits meet quality objectives, criteria, or sub-criteria. For a closer look, see www.carboncreditquality.org/methodology.html (BIRI 6).

 These organizations and their standards assure the credibility of carbon credits, which is essential for effective contributions to global emission reduction goals.