Striking deal on emissions-trading scheme proves elusive again at COP26

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Our planet is changing. So is our journalism. This story is part of a businesshala News initiative called Our Changing Planet to show and explain the effects of climate change and what is being done about it.

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After six years of unsuccessful efforts, the hope is that COP26 can produce a long-awaited deal on rules for the global carbon market, designed to help countries and companies cut emissions while investing in low-carbon projects. seen as a key.

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In general, most countries favor a carbon-trading system as a way to cut emissions on the back of climate change.

But a major obstacle to negotiations has been agreement on how the carbon-trading system will work and how much credit each country can earn for its emissions targets.

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A common framework was included in the 2015 Paris Agreement, which has been ratified by more than 190 countries. But the specifics are still unclear – and that’s why it remains a proposal rather than a concrete agreement.

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During the two-week climate conference in Glasgow, COP26 President Alok Sharma remarked that while progress has been made on the issue, much remains to be done.

“Obviously there is a political consensus that has to be built on this,” he said, adding that people would be “surprised” if the talks failed once again, because “we’ve been discussing this for six years.” are doing.”

setting up a system

The system would allow countries that have exceeded their emissions cuts to sell that credit to other countries; Credits that would then be used in the name of meeting their own climate goals – known as an offset. It can also create a trading market for such credit, which can be used by both the public and private sectors.

However, there is a sense of urgency to these negotiations, as some private carbon markets already exist in various regions of the world – but without any established accounting rules or oversight.

Many companies are willing to spend on environmental projects to earn carbon offsets in the name of helping Canada reach net-zero climate goals, including technology and energy companies.

Watch , How the global carbon-trading market might work:

The aim is that all these dollars can eventually help fund clean energy projects around the world.

The carbon-trading system is officially referred to as Article 6 of the Paris Agreement and there are two main elements outgoing shy.

The first is about allowing the exchange of carbon credits from one country to another, essentially allowing a nation make another payment To cut emissions on our part.

The second is focused on creating a global market for trade offsets.

Overall, the value of such transfers could reach US$300 billion annually in 2030 and US$1 trillion in 2050, according to the International Emissions Trading Association (IETA), a proponent of an emissions-trading system. Is.

“the vast majority of [countries] Agreed that there should be an international carbon market and it should be made operational,” said Andrea Bonzani, a policy director at IETA.

“How to do this and agreeing on specific rules is proving very challenging.”

‘far from now’

Right now, the Canadian government has no plans to use the provision in Article 6 to meet its climate goals, although it may be in the future, Environment Minister Steven Guillebault said during a media availability in Glasgow on Friday. .

“The idea was at a point in not-so-distant history where Canada’s plan was to do most of its emissions-reduction [target] Foreign. We are now far from where our plan currently provides for 100 percent of our emissions reductions at home,” he said.

US Special Envoy for Climate Change John Kerry said on Friday that good progress has been made on Article 6.

He said, “I think a lot of parties are now converging on ideas. For the US, we think it’s important that any package be one that has environmental integrity and clear accounting and a strong baseline, which is essential.” are,” he said.

But some environmental groups are concerned that an offset system will do little to reduce emissions or discourage the phase-out of fossil fuel production.

At COP26, countries debated a proposal for a type of transaction tax on carbon trading that would set aside funds to help protect the least developed countries from the harmful effects of climate change.

Another point of contention is the accounting rule, to ensure that if one country buys credits from the other, emissions reductions are not claimed by both countries.

Similarly, when it comes to transactions involving companies, there is a need for regulations to prevent double counting; For example, if a Canadian company builds a carbon capture project in a foreign country or funds a reforestation project overseas, it is not counted by both parties.

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