TAG: GS-3: ECOLOGY AND ENVIRONMENT
THE CONTEXT: At the COP29 climate conference in Baku, countries reached a landmark decision to advance a long-delayed agreement to establish a global carbon market under the Paris Agreement.
Explanation:
About the Global Carbon Markets at COP29:
- The global carbon market, outlined under Article 6 of the Paris Agreement, allows countries to trade carbon credits – certified reductions in carbon emissions.
- This market aims to provide financial incentives for emission reductions, with prices set by emission caps established by participating nations.
- Article 6 of the Paris Agreement:
- It facilitates international collaboration to lower carbon emissions.
- It offers two pathways for countries and companies to trade carbon offsets, supporting the achievement of emission reduction targets set in their climate action plans, or nationally determined contributions (NDCs).
- The first option, known as Article 6.2, allows two countries to establish a bilateral carbon trading agreement under their own terms.
- The second, Article 6.4, seeks to develop a centralised, UN-managed system to enable both countries and companies to offset and trade carbon emissions.
- Progress at COP29:
- In a landmark decision at the first day of the global climate talks here, COP29 have officially adopted the new operational standards for a mechanism of the Paris Agreement under Article 6, setting the stage for a global carbon market.
- This adoption of Article 6.4, achieved during the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA), sets the stage for operationalising Article 6, which has faced years of deadlock.
- Significance :
- Carbon markets remain the last segment of the 2015 Paris Agreement awaiting full implementation.
- Though many more procedural steps are needed to bring this system into action, the agreement will help countries achieve climate targets more efficiently and affordably once fully operational.
Challenges Ahead at the COP29:
- A primary agenda for COP29 is finalising the New Collective Quantified Goal (NCQG), a commitment by developed countries to provide funds for climate action in developing nations, replacing the unmet $100 billion target from 2020.
- However, no progress has been made on this front, with the G77-plus China group, representing over 130 developing countries, rejecting the initial draft of the finance agreement and demanding revisions.
- There are disagreements over the funding size, contributors, types, and coverage period.
Demands of developing nations:
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- Developing nations demand a minimum of $1 trillion annually from 2026, with G77 calling for $1.3 trillion.
- They insist that this finance should be new, predictable, and non-debt-inducing, specifically dedicated to climate action rather than investments in clean technology counted towards existing commitments.
- Developing countries also urged that any shortfall from the $100 billion annual goal in past years be covered as arrears in addition to the NCQG.
India’s Role in Shaping COP29’s Legacy:
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- India highlighted NCQG as a top priority, advocating for significant financial commitments to the Global South.
- Indian negotiators emphasise that finance should be grant-based, low-interest, and long-term, with a balanced focus on adaptation, mitigation, and addressing loss and damage.
- That climate finance often favours mitigation projects, India and its G77 allies call for stronger support in adaptation initiatives, particularly for communities at high risk from climate change impacts.
Conclusion:
- India’s NDC commits to reducing emissions intensity by 45% from 2005 levels and establishing an additional carbon sink of 2.5-3 billion tonnes by 2030. Effective carbon markets could support India in reaching these goals.
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