COP27: Talks on carbon market rules off to slow start

SHARM EL-SHEIKH, Egypt, Nov 14 (Reuters) – Countries are far from agreeing on the technical details of running a global trade in carbon offset credits after a week of talks at the COP27 U.N. climate summit in Egypt, a delay that threatens to blow up the 2023 deadline, according to negotiators and observers. Giving.

Carbon offsets allow countries or companies to pay others to reduce greenhouse gas emissions so they can offset their own. While companies are already trading carbon offset credits in private markets, the so-called Article 6 of the Paris Agreement would set rules that would enable countries to partially achieve their national climate targets by buying such credits.

The hope is that international rules backed by the rest of the world could attract billions of dollars in carbon-cutting projects, but countries have struggled for years to agree what the rules should be, which projects should be eligible and how to ensure them. Has real-world impact.

Countries applauded each other for breaking a six-year deadlock at last year’s climate summit in Glasgow to agree on broad principles governing carbon markets. But that deal pushed forward complex technical work at subsequent summits, including the current COP27 meeting in Sharm el-Sheikh.

Already at COP27, countries have decided on rules until 2023 for which types of projects can generate credits – from solar farms to projects to avoid deforestation.

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Countries will need to decide on those methods next year or risk running into a 2023 deadline when carbon-cutting projects registered under the old UN rules must apply to be part of the new system.

It would be difficult to apply to join the new system without knowing what rules would govern it, said Pedro Martins Barata, a carbon market expert who has observed negotiations for a non-profit environmental protection fund.

The drafts of the rules being discussed are still filled with brackets indicating which sections have yet to be agreed upon.

“Glasgow was a real success … it doesn’t send a great signal if suddenly they get bogged down in technical issues,” said David Burns, a policy expert at the non-profit World Resources Institute and an observer of the talks.

Voluntary carbon offset markets have struggled to gain credibility over the years. Campaigners, including Greenpeace, have criticized the offsets as a fig leaf for polluters who want to avoid emissions cuts.

“The door is still wide open for countries to meet their climate targets with accounting gimmicks rather than real action,” said Gilles Dufrasin, a negotiations expert and observer at the non-profit Carbon Market Watch.

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But the nearly 200 countries at the UN summit have yet to reach a decision on rules for country-to-country offset trade.

Key sticking points also include whether there should be a central body where trades are reported, a system the European Union supports. The United States prefers a more diffuse, decentralized system.

Private markets

As countries struggle to agree, private markets without global standards are on the rise.

According to Ecosystem Marketplace, $2 billion worth of credits were traded in 2021 – nearly four times the previous year – with nearly 500 million credits representing 500 million tonnes of CO2 equivalent changing hands.

Reuters Graphics

Private initiatives such as the Integrity Council for Voluntary Carbon Markets (ICVCM) and the Carbon Credit Quality Initiative (CCQI) have produced guidance on what they see as high-quality carbon offsets.

But debates continue over issues such as whether biodiversity and human rights should also be considered in financing.

The consensus at the United Nations would send a strong signal to private markets on what their standards should be, said Barta, who also co-chairs an expert panel for the ICVCM.

“At COP27, we need to give companies and countries a clear process for how to implement carbon markets that prioritize transparency and social and environmental integrity,” he said.

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While hundreds of companies and countries rely on buying offsets to reach pledges to hit “net zero” emissions, a UN expert group warned last week that many of those targets rely too much on offsets to avoid the difficult task of reducing emissions entirely. is

“Net-zero pledges rely heavily on carbon offsetting in either forests or agriculture,” said Charles Canham, senior scientist emeritus at the nonprofit Cary Institute of Ecosystem Studies, adding that those categories are particularly difficult to verify.

Reporting by Jack Spring, Kate Abnett and Shadia Nasrallah

Our Standards: The Thomson Reuters Trust Principles.

Jack spring

Thomson Reuters

Global climate and environment correspondent based in Brazil. Interests include science, forests, geoengineering, cryosphere, climate policy/diplomacy, accountability and investigative reporting. Her work on environmental destruction under Brazilian President Jair Bolsonaro won awards from Covering Climate Now and the Society of Environmental Journalists. Formerly living in China, he is fluent in Portuguese and Mandarin Chinese.

Shadia Nasrallah

Thomson Reuters

Writes about the intersection of corporate oil and climate policy. Reported on politics, economics, migration, nuclear diplomacy and business from Cairo, Vienna and elsewhere.


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