Carbon markets deal ray of hope amidst complexities

A landmark deal was reached by leaders at COP29 on carbon credit trading, establishing new rules for how countries can trade emissions reductions and create funding opportunities to combat climate change.

The deal finalised the much-debated rules for Article 6 of the Paris Agreement. However, the agreement has left many experts questioning whether the rules are robust enough to ensure the carbon market operates with the necessary transparency and accountability.

The Article 6 rules adopted at COP29 are intended to lay the groundwork for a global carbon market, helping to accelerate emissions reductions, especially in developing countries.

The framework is designed to facilitate trade between countries and companies, where emissions cuts made in one country can be purchased and used by another to meet their climate targets. This approach is expected to unlock billions of dollars in capital for climate action.

But the complex nature of the negotiations raised significant concerns. One of the key challenges lies in the lack of accountability for countries that fail to comply with carbon credit agreements.

The rules stipulate that inconsistencies in carbon credit transactions must be addressed, but there are no clear penalties or deadlines for action, leaving room for non-compliance.

Moreover, the lack of oversight could lead to the trading of substandard carbon credits, undermining the credibility of the market.