Diplomats have greenlit key rules that govern the trade of “carbon credits”, breaking a years-long deadlock and paving the way for rich countries to pay for cheap climate action abroad while delaying expensive emission cuts at home.
The agreement, reached late on the first day of Cop29 in Azerbaijan, was hailed by the hosts as an early win at climate talks that have been snubbed by prominent world leaders and clouded by the threat of a US retreat from climate diplomacy after Donald Trump’s victory in the presidential election.
But critics have warned the rules were rushed through without following proper process.
“We welcome this positive momentum,” said Mukhtar Babayev, the president of Cop29, praising a “spirit of compromise that I hope will inspire all our work here in Baku”.
The rules deal with some of the final hurdles to creating a system in which countries can buy credits for removing or avoiding planet-heating pollution in other parts of the world – for instance, by planting trees or saving rainforests – and count the progress toward their own emissions targets.
The agreement is expected to provide the clarity needed to trade emissions within a global carbon market, supervised by the UN, that would be open to companies as well as countries. A separate article on the trade of carbon credits between individual nations will be addressed later in the Cop29 negotiations.
Carbon markets are a polarising force in climate policy. Supporters say they help direct crucial funds to saving the planet while critics point to the tattered history of fraudulent and harmful projects – particularly in the voluntary carbon market that some companies have enthusiastically embraced – that have eroded trust in the concept and driven calls for stricter rules.
Efforts to agree on carbon market rules – known in Cop jargon as article 6 – have been a persistent stumbling block in UN talks to stop the planet from heating. Diplomats at the last climate talks rejected proposals from a UN supervisory body that was tasked with recommending solutions for countries to debate.
This year, with pressure to make progress on carbon markets riding high, the group took a different approach, and adopted new standards on methods and removals while recommending the Cop29 negotiators give it the green light.
Isa Mulder, a policy expert at the nonprofit group Carbon Market Watch, said that adopting the rules on the first day of the summit without discussion “undermined trust” in the UN climate conference process. “Kicking off Cop29 with a backdoor deal … sets a poor precedent for transparency and proper governance,” she said.
The rules are expected to reduce the risk of double-counting emissions – a big concern of critics – and include stronger safeguards to protect human rights.
But the text also leaves many unanswered questions, said Mulder, such as how to deal with projects whose carbon-saving successes face a risk of reversal.
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Olga Gassan-zade, a former chair of the article 6 supervisory body and one of its current members, said: “The criticisms of the process are fair – but it was also critically important to operationalise article 6.4 as soon as possible to scale up the delivery of carbon finance to the developing world.”
Critics of carbon markets have pointed to a history of offset projects overpromising and underdelivering, with wildfires burning through forests that were supposed to be protected and emissions from renewable energy projects being counted on balance books even though they would probably have been built anyway.
Erika Lennon, an attorney at the Centre for International Environmental Law, said: “We’ve seen over and over again how carbon markets are not doing what they claim to be doing, as well as market projects that violate people’s rights.
“If they don’t have strong rules in place to prevent all of the abuses, it can totally undermine the integrity of the Paris agreement.”