Climate Accord Opens Path To Global Carbon Trading

"Part of the narrower carbon-trading agreement is aimed at creating a U.N.-certified credit that can be accounted for around the world. A standardized credit should allow governments to access regulated and more informal carbon markets that already exist and are used widely by companies.

 

A government that can't meet emissions plans it submitted to the U.N. could buy credits to make up the difference.

 

"The rules help to define the framework for how governments can use the private sector to support them in meeting their climate targets," said Enric Arderiu Serra, head of environmental products at trading giant Mercuria Energy Trading SA.

Uncertainties around carbon accounting have slowed the expansion of these markets, said Dirk Forrister, president of the International Emissions Trading Association, a trade group. "The Glasgow market framework can unleash a whole new wave of investment as companies leverage the trading tools," he said.

The rules are part of what has been called Article 6 of the Paris accord, signed in 2015. Ever since, governments have squabbled over them.

A deal has faltered in past summits, amid fighting about what could be considered double-counting of the same credit by countries. Another stumbling block has been whether to allow countries to use older credits, from a now-defunct earlier trading system.

A global carbon market won't happen overnight. The agreement first invites nominations for a supervisory body to oversee the marketplace. Once that body is selected, it is slated to meet at least twice next year to develop technical methodologies, registration and monitoring processes.

The current patchwork of carbon markets includes ones set up and regulated by governments, such as the European Union's Emissions Trading System and similar markets in China and California.

In these markets, heavy-emitting industries such as utilities are given limits for how much carbon they can emit. If they stay under that, they can sell the extra to others who are emitting more than their ceiling. The new rules could lead to the linking up of regional trading schemes.

Parallel to these regulated markets are more informal carbon-offset markets, where companies participate voluntarily in activities such as planting trees and restoring peatlands, or funding others to do so.

These projects generate credits that can be traded among companies to drive down their own net emissions -- something regulators, investors and consumers are increasingly calling for.

Many companies already buy carbon-offset credits, including Microsoft Corp., Royal Dutch Shell PLC and Nestle SA. These offset credits can be certified by third parties who record the projects and credits and confirm they meet certain standards.

The U.N. plan would provide a framework to harmonize all of these markets under generally accepted standards, for instance, about what sort of projects qualify for credits and how much carbon they offset. Critics of informal markets complain they aren't consistent in terms of standards.

Microsoft, noting the inconsistency of how offsets are verified, developed last year its own due-diligence process to ascertain that credits it was trading were of a certain standard.

"At its best, Article 6 has the potential to be an important driver of carbon finance, clean energy, and carbon removal," said Elizabeth Willmott, carbon program director at Microsoft." [1]

 

 Well you see how good this is. Lithuanian farmers who use chemical aid to turn Lithuanian fields into deserts by growing grain to feed Arab people living in the desert will oust a couple of ministers, and the Lithuanian government will buy credits abroad so that Lithuanian farmers can continue to damage the planet's air by using the same chemicals. And who will pay for it? Oh, we're with you. Farmers can't. They barely have enough Arab oil dollars to buy new Porsche every year. The old Porsche is not the class.  The old Porsche induces only laugh of neighboring farmers.

 

1. Climate Accord Opens Path To Global Carbon Trading
McFarlane, Sarah; Dalton, Matthew.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 15 Nov 2021: A.1.