COP29 agrees deal to boost global carbon credit trading By Reuters

By Virginia Furness, Kate Abnett and Simon Jessop

BAKU (Reuters) – Countries reached agreement on Saturday at the COP29 climate conference on rules for a global market to buy and sell carbon credits that proponents say will mobilize billions of dollars in new projects to help combat global warming.

The agreement, reached about a decade after international talks on market formation began, hinged on how to ensure the credibility of the system so that it can reliably lead to reductions in greenhouse gas emissions that drive climate change. .

Carbon credits are created through projects such as planting trees or installing wind farms in a poorer country that receive a credit for every metric ton of emissions they reduce or absorb from the atmosphere. Countries and companies can purchase these credits to help achieve their climate goals.

After reaching an agreement early in the two-week conference that will allow the launch of a centralized U.N. trading system next year, negotiators spent much of the rest of their time in Azerbaijan trying to negotiate the details of a system. separate bilateral for countries. to trade directly.

Details to be worked out included how a registry would be structured to track credits, as well as how much information countries should share about their agreements and what should happen when projects go wrong.

Among the loudest voices was the European Union, which called for stricter U.N. oversight and greater transparency over trade between nations, while the United States sought more autonomy over agreements reached.

The COP29 presidency had published a draft agreement ahead of the deal that proposed allowing some countries to issue carbon credits through a separate registration system, without this amounting to a UN seal of approval.

The final text was a compromise after the EU secured registry services for countries that cannot afford to set up their own accounting books to issue and track credits, while the US ensured a transaction that simply registered in said registry does not qualify as a UN Guarantee for the credits.

By accepting that the registry would not determine the quality of a credit or support issuers, the EU had “done everything possible to please the United States,” said Pedro Barata, who followed the talks for the Environmental Defense Fund, an organization non-profit.

“It's still a viable international trading system… even if some people say it has no teeth.”

While shoring up a global market for carbon credits was a key focus of talks in Baku, bilateral trade began in January when Switzerland bought credits from Thailand and dozens of other countries have already reached agreements to transfer credits.

But those deals remain limited, and striking the right balance in a clear set of rules to ensure integrity and transparency without limiting countries' ability to participate should drive a rebound in the flow of deals.

IETA, a business group that supports an expansion of carbon credit trading, has said a U.N.-backed market could be worth $250 billion a year by 2030 and count toward offsetting an additional 5 billion metric tons of carbon emissions. carbon per year.