The other key issue was how to integrate the Clean Development Mechanism (CDM) established by the Kyoto Protocol, which is contained in Article 6(4) of the new agreement. The CDM, which was launched with the ratification of the Kyoto Protocol by 192 countries in 1997, enabled the creation of an emissions trading scheme that allowed countries to invest abroad to obtain credits for their Emissions Targets under the Paris Agreement. For example, a reduction in emissions from a forestry project in Brazil could generate credits that could be purchased by the French government or a U.S. automaker to offset emissions. It should be noted that neither Article 6(2) nor Article 6(4) mentions the term `contracts`. The absence of this term might reflect the caution of some developing countries with regard to the use of capital markets to address negative environmental effects, as it is feared that this will relieve rich countries of the need to take action against the adverse effects of their own economic growth. Instead, the legal text sets out the standards and tools to ensure that «common approaches» contribute to a country`s NDC. Such approaches can range from one country that funds the efficiency of another country`s energy or transport sector or buys carbon offsets from its forests, peatlands or wetlands. Carbon Market Watch, which analyzes market-based climate policy instruments such as carbon credit programs, said in a statement dated Sept. 15. November he estimates that up to 300 million tonnes of «zombie credits» – existing carbon credits – will remain in circulation as part of the compromise agreement.
«These zombie loans are of poor quality, they lack environmental integrity and most of the projects they finance would have come about anyway without the financial support,» he said. «The new text of Article 6 gives polluters the right to fraud by allowing unlimited double counting of an emission reduction that has only occurred once – or may not have occurred at all. 50. stresses the importance of the discussions referred to in paragraph 49 on the need to strengthen the global response to the threat of climate change in the context of sustainable development and efforts to eradicate poverty, and to reconcile financial flows with a trajectory towards low greenhouse gas emissions and climate-resilient development, take into account the needs and priorities of developing countries and build on the work of the Standing Committee on Finance; The final COP26 agreement made progress on voluntary emissions trading markets, but critics said the wording did not fully implement the rules and procedures needed to put as much of a burden on reducing emissions as much as possible. Under the agreement, new UN-backed committees will work on unresolved issues. 66. welcomes the continued operationalisation of the Santiago network18 in order to prevent, minimise and manage loss and damage related to the adverse effects of climate change, including the agreement on its functions and the process of developing its institutional arrangements; Paragraph 6.2 provides an accounting framework for bilateral and multilateral transfers, including programmes linking emissions trading schemes of two or more countries. Here`s the full text of the paragraph: Carbon markets have been exuberant lately. In anticipation of the final agreement reached at the UN Climate Change Conference in Glasgow, carbon offset markets for airlines have increased by 900% this year and CO2 offsets for companies by 170%. Now that negotiations on Article 6 rules in Glasgow have finally been concluded, the International Emissions Trading Association (IETA) with the University of Maryland predicts that additional funding for carbon markets could exceed $1 trillion by 2050. 54.
stresses the urgent need to improve understanding and measures to reconcile financial flows linked to the path of reducing greenhouse gas emissions and climate-resilient development in a transparent and inclusive manner in the context of sustainable development and poverty eradication; Recognizing the role of multilateralism in combating climate change and promoting regional and international cooperation to strengthen climate action in the context of sustainable development and efforts to eradicate poverty, he acknowledged that double counting by business had been reduced in the new Article 6. .