The 29th UN Climate Conference (COP29) ended with an atrociously inadequate new climate finance goal of $300 billion, after wealthy nations refused to pay up in accordance with their legal obligations to provide adequate climate finance to the Global South, according to experts at the Centre for International Environmental Law (CIEL). COP29 produced a watered-down resolution on financial pledges while ignoring the need for climate accountability, signalling yet another wasted chance for meaningful action on the climate problem.
Developing nations have requested at least $1.3 trillion per year in climate financing for reduction, adaptation, and loss and damage—a little fraction of what affluent countries spend each year on fossil fuel subsidies and war. Wealthy nations have failed to achieve their legal commitments to contribute to debt-free public financing, phase out fossil fuels without harmful loopholes or diversions such as carbon markets, and protect human rights and civic space.
It was formerly one of the most promising strategies to direct climate funds to disadvantaged people and wildlife conservation. The trade of carbon credits, each equal to one tonne of CO2 reduced or removed from the atmosphere, was intended to provide immediate, cost-effective climate and biodiversity gains. Demand skyrocketed in 2022 as firms used offsets to meet environmental responsibilities, with the market exceeding $2 billion (£1.6 billion) and growing at an exponential rate. However, the enthusiasm did not endure.
Two years later, several carbon markets organisations are struggling to stay afloat, with many losing millions of dollars each year and laying off employees. Scandals over ecologically useless credits, an FBI prosecution against a key project developer for a $100 million scam, and a lack of transparency about where offset money went have reduced their market value by more than half. Standing rainforests and other carbon-rich ecosystems have failed to become multibillion-dollar assets, despite predictions that they would.
However, at Cop29, nations gave the industry new hope by approving regulations that would establish an international carbon trading mechanism to help countries achieve their Paris goals. Following years of gridlock on Article 6 of the Paris Agreement, nations in Azerbaijan agreed on criteria for how countries might manufacture, exchange, and register emission reductions and removals as carbon credits. It paves the path for big emitters like Germany and Japan to purchase low-cost removals and reductions from developing-country decarbonisation projects like renewable energy, rainforest preservation, and tree planting, and count them towards their own commitments. Trading might commence as early as 2025, if technical bodies agree on the finer details.
If successful, the market would ensure that emissions are kept under the Paris Agreement’s cap while financing the low-hanging fruit of climate mitigation. Carbon removal is of special interest, as evidenced by the huge IT companies purchasing credits and attempting to expand their market share. Negotiators and onlookers say this is the final opportunity to do it right after multiple failed attempts.
In the past 20 years, there have been two global carbon market crashes. This resulted from a decline in credibility. According to Axel Michaelowa, a carbon markets specialist at the University of Zurich, “the operationalisation of international carbon trading under Paris can prevent a third meltdown that could be fatal at Baku.” They are an effective instrument for quickening the global adoption of low-carbon technology. The 2025 launch of the Paris carbon market is now prepared. He stated, “It can speed up mitigation and help close the widening emissions gap that keeps us from reaching the 1.5C target.”
Carbon markets continue to raise serious issues. Fears of a “new scramble for Africa” over the continent’s carbon resources were sparked by the revelation in the lead-up to Cop28 in Dubai last year that large areas of African forest had been sold off in a series of massive carbon offsetting deals to a little-known UAE firm run by a member of Dubai’s royal family.
It’s also uncertain how big and what kind of an impact any country-level market may have. Although Norway signed agreements with Benin, Jordan, Senegal, and Zambia in Baku and has set aside up to $740 million (£590) for purchases under the Paris carbon market, it is unclear how many other developed nations will follow suit, despite forecasts that the market could grow to be worth billions of dollars.
Environmental integrity is another problem that has consistently eroded trust in carbon credits, including the former UN carbon trading scheme. Less than 16% of carbon credits granted represent actual emissions reductions, implying that the great majority are hot air, according to a recent study published in Nature Communications during the first week of Cop29. The Paris carbon trading scheme was accepted by governments, but observers cautioned that the regulations were not stringent enough to prevent similar problems. One of the co-authors and senior researcher at the Oeko-Institut, Dr. Lambert Schneider, stated that if these issues spread to the official UN system, they would jeopardise the Paris agreement. According to the information at hand, a large number of carbon credits are not supported by any real decreases in emissions. The persistence of these quality problems under article 6 may jeopardise our attempts to meet our climate goals. We must address the market’s integrity issue immediately,” he stated.
Proposals that would give woods credit for naturally absorbing carbon dioxide are currently on the table. However, these removals take place naturally and are not the result of human involvement. More carbon would enter the environment if customers used these credits to increase their emissions. Additionally, there is a great deal of opportunity for providing such credits,” he stated.
Efforts have been made to improve industry standards, which may be included in the UN market. The major carbon credit standard, Verra, is launching a new method for producing the carbon credits. A joint Guardian investigation of Verra’s rainforest offsets revealed that they were essentially useless. The CEO of the non-profit, Mandy Rambharos, stated that they were committed to making things right and putting the recent problems behind them.
Buyers may be sure that the credits reflect actual emission reductions because this month, the ICVCM, a carbon credit integrity program, approved three rainforest techniques as high quality, including Verra’s new regulations. However, individuals working on the process have expressed doubts about their approval. The Guardian is aware that several specialists did not believe the methods were up to par. The ICVCM vehemently disputes this. Such credits may eventually be included in international carbon agreements, and experts say the success of these agreements would depend on whether they actually improve the environment.
Injy Johnstone, a research fellow at the University of Oxford, stated that while the new regulations are a good beginning, the possibility of abuse still exists. “We risk the Paris agreement turning into a market failure if we don’t learn from past mistakes and keep an eye out for new ones that this system may create,” she stated.
As COP29 comes to an end, we are faced with a sobering fact: the promises of international cooperation are nevertheless eclipsed by a lack of ambition, a lack of responsibility, and a concerning dependence on flawed market systems. Although the Paris carbon market’s operationalisation provides some promise for furthering climate action, the systemic problems with carbon trading pose a threat to its effectiveness.
Real progress necessitates a steadfast dedication to fairness, environmental integrity, and real carbon reductions; it cannot be achieved with recycled frameworks and token accords. This crucial juncture in climate policy has the potential to either increase disenchantment or restore faith in international institutions. The determination of stakeholders to learn from past mistakes and give transformative, rights-based climate solutions priority will determine whether the conflicting results of COP29 mark the beginning of significant change or the continuation of a fragmented approach. For legislators as well as for the future of all people on this planet, time is of the essence.
Author: Amar Chowdhury
