COP28: Agreement reached on carbon market framework
- Media Manager
- Nov 19, 2023
- 1 min read
S&P Global Commodity Insights
Published: November 19th, 2023
HIGHLIGHTS
Recommendations will be sent to Dubai for adoption
UN targeting operationalization in 2024 after years of talks
Emergence of Article 6.4 could have big impact on voluntary carbon market
In a significant move ahead of the UN climate change conference in Dubai, the body trusted with determining the guidelines for a global carbon market under Article 6.4 of the Paris Agreement has agreed to a framework on project methodologies and carbon removals after two years of talks.
The Article 6.4 supervisory body said Nov. 18 that its recommendations will now be presented at COP28 for adoption by CMA of the Paris Agreement. If a text is endorsed by countries in Dubai, then the UN can proceed to register projects under Article 6.4 next year. CMA is the short form for the group of the countries who have signed and ratified the Paris Agreement.
Article 6 of the Paris Agreement sets out the rules for global trade in greenhouse gas emissions reductions. It is seen as an essential enabler of international emissions trading, providing countries and businesses with a key pathway to meet and accelerate their climate goals.
Article 6.4 specifically allows a company in one country to reduce emissions domestically and have those reductions credited so that it can sell them to a different company in another country.
The operationalization of Article 6.4 will provide a new structure for a global carbon market, opening up fresh demand for credits, with the UN deciding the rules on eligibility.
