Delegates to the global climate gabfest COP29 in Baku, Azerbaijan on the first day (Nov. 11) agreed to establish a world-wide carbon emissions reductions trading market. It’s called “Article 6.”
As reported by the Voice of America, the delegates adopted two related approaches for carbon trading. The first (Article 6.4) sets up a plan for trading carbon credits “between individual countries and companies, under the supervision of a centralized U.N. body. These include how to validate, verify and issue credits.” An alternative approach (Article 6.2) “allows countries to set their own terms to trade carbon credits bilaterally. Countries weren’t able to agree on the standards for either option before COP29.”
Simon Stiell, UN climate change executive secretary, said at a Baku press conference, “There’s more work to do, but this is a good start – the product of over 10 years of work within the process.
Colleagues – you are masters of making complex things understandable, so let me say on Article 6 – this is not some bit of arcane UN bureaucracy.
“When operational, these carbon markets will help countries implement their climate plans faster and cheaper, driving down emissions. We are a long way from halving emissions this decade, but wins on carbon markets here at COP29 will help us get back in that race. We must ensure that developing countries benefit from new flows of finance. There is more work to do on Article 6, and the process allows for all perspectives to continue to be heard.”
Stiell’s optimism may be cockeyed. Je-liang Liou, a researcher at the Chung-Hua Institute for Economic Research in Taiwan, told VOA that a lot of work on many details remains before financial carbon trading becomes a reality. “In the previous COP,” he said, “the supervisory body usually drafted a bill for countries to discuss and decide if they approve it or not. But this year, the body of Article 6.4 approved their own draft before COP29 started so it became more of a situation for countries to give their votes.”
“We should be very concerned in the Global South, especially if we don’t have sufficient safeguards in place to protect against the possibility of land grabs, human rights abuses, threats to subsistence and forest-based livelihoods, gender and indigenous interests.”
Tara Nair van Ryneveld, from the Southern African Faith Communities’ Environment Institute warned, “We should be very concerned in the Global South, especially if we don’t have sufficient safeguards in place to protect against the possibility of land grabs, human rights abuses, threats to subsistence and forest-based livelihoods, gender and indigenous interests.”
Transparency may be a problem for a UN carbon market, particularly under the Article 6.2 plan. According to InsideBitcoins, Ghana and Singapore have teamed up to created a project that incorporates Ghana’s existing carbon registry into a blockchain driven market for carbon offsets, known in UN-speak as “Internationally Transferred Mitigation Outcomes (ITMOs).”
Computer-based blockchain ledger technology, a fundamental aspect of cryptocurrency exchanges, guarantees transparency for the parties involved in the financial transactions. But it makes it impossible for third parties, such as auditors, to review transactions. The InsideBitcoins acticle begins with a warning: “Don’t invest unless prepared to lose all the money you invest. This is a high-risk investment, you shouldn’t expect to be protected if something goes wrong.”
The COP29 action comes as the U.S. government is moving to oversee and potentially increase regulation of domestic carbon emissions markets. Earlier this month, the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Department of Justice filed coordinated criminal fraud charges against a large U.S. emission trading firm, C-Quest Capital and two former top executives. The agencies, particularly the CFTC, have been concerned about trading fraud some time.
An analysis by the Holland&Knight law firm warned, “This is the first enforcement action arising from carbon market fraud and represents a degree of coordination between the CFTC, SEC and DOJ. This is also the first case directly tied to the CFTC’s new Environmental Fraud Task Force.”
As COP29 opened, Reuters reported, “A U.N.-backed global market for creating and trading carbon credits has been discussed for at least 10 years. In its absence, a patchwork of voluntary standards has led to a number of situations where credits were found to not be delivering the climate benefits they claimed…. The European Union – which has ruled out using credits to meet its domestic climate goals – wants a registry that can issue and manage credit trades, to help poorer countries access the market, people familiar with the negotiations told Reuters.
“The United States, however, is advocating for a registry that only tracks credit trading, arguing that empowering it to execute trades could risk giving a U.N. seal of approval to credits with weak environmental credentials, the sources said.”
–Kennedy Maize
The Quad Report
To comment:
kenmaize@gmail.com
