Carbon offset registries prepare for elusive global market
As international cooperation on climate targets progresses at a snail’s pace, a few countries and carbon offset registries are taking matters into their own hands to facilitate the trade of credits to meet national emissions goals.
A key part of Article 6 of the Paris climate agreement lays the groundwork for a global market to exchange emission reductions between both countries and the private sector. But getting this market up and running has proven challenging.
Verra, one of the most prominent carbon credit registries could roll out ‘Article 6-aligned’ labels to offset projects as early as the second half of this year, and peer Gold Standard has been piloting initiatives in preparation for global offset trading. Meanwhile, Japan is ploughing ahead with deals under its Joint Crediting Mechanism as other bilateral agreements between countries under Article 6.2 appear to have slowed.
Their efforts risk jumping the gun, however, as some crucial details of how Article 6 will be implemented in practice remain unresolved, in particular the thorny issue of double counting of emissions.
The United Nations Framework Convention on Climate Change is still aiming for the global offsets market known as Article 6.4 to become operational by the end of this year, despite the outcome seeming unlikely based on current progress.
The agreement of seemingly less complicated bilateral deals to trade emission reductions between countries has already begun. South Korea, Singapore, Sweden and Switzerland have all secured bilateral agreements or memorandums of understanding.
But the initial momentum of dealmaking appears to have subsided. What has been somewhat surprising is the countries that undertook pilot Article 6.2 projects before Article 6 was formally agreed at COP26, namely Germany, Canada and Norway, have not signed any additional deals.
Still, Japan is wasting no time taking advantage of its Joint Crediting Mechanism to sign bilateral agreements. The United Arab Emirates recently became the 26th country to agree to Japan’s bilateral framework and discussions are underway with India. Nine of the deals have occurred in the past year.
