The Climate Conference of the Parties (COP29), bringing together international leaders in Baku, Azerbaijan, continues a broad agenda aimed at mitigating the effects of climate change. Negotiators from several countries have already managed to reach agreement on global rules for the carbon credit market. This mechanism is key to unlocking billions of dollars in funding to take concrete action to prevent the problems caused by global warming from getting worse. As agreed, the set of rules will be administered by the United Nations.
Carbon market, what is it?
In this market, there are buyers who acquire assets to offset their polluting emissions, and pay those who pollute the least to maintain their businesses to maintain the means to avoid these emissions. It works as follows:
*Companies and governments that reduce their emissions below the specified limit receive carbon credits.
*Companies operating in this market generate credits and can sell them to other enterprises that emit more CO2 than permitted. The negotiation unit of measurement is ton carbon dioxide equivalent (tCO2), where each carbon credit corresponds to 1 ton of carbon dioxide that is no longer emitted or disposed of.
* Initiatives that generate credits are evaluated to ensure the legitimacy and accuracy of emissions reductions. In this scenario, all revenues generated from the sale of credits will be used to maintain and expand environmentally sustainable projects.