The U.N.’s COP26 climate conference in Glasgow ended on Saturday, without a deadline to phase out coal but with an important agreement on the regulation of carbon markets.
Setting rules for a global carbon market will allow countries that can reduce their emissions beyond their national determined contributions in 2015’s Paris Agreement to help out countries that can’t afford to reach their own NDCs.
A big issue with Article 6 is that countries can authorize the sale of credits only if they have reduced their emissions beyond the goals set in their NDCs.
If South and Southeast Asian countries instead achieve substantial “excess reductions” in their emissions relative to their promises by phasing out coal, an Article 6 fossil fuel–based market could result in these countries becoming very large sellers of carbon credits.
Reversing deforestation, slashing emissions from agriculture and restoring ecosystems across the world, on the other hand, can trap carbon immediately and at low cost, while bringing additional benefits for rural communities and promoting biodiversity.
Many environmental scientists believe that it is more valuable to trap a unit of carbon today than tomorrow, even if there is a chance the unit will be eventually released — but this fact is not fully recognized in the U.N.
LEAF aims to put $1 billion in play, while a regulated global market — especially if it grants access to regional markets such as the European Trade System — could mobilize dozens of billions of dollars and finance tremendous changes in forest protection and regeneration.
Beyond helping Brazil protect the Amazon, a healthy global carbon market would create great opportunities for commercial and investment partners that could join the country in helping accelerate its journey to become a net zero economy before 2050, reducing the global stock of carbon in the air.
World recognition of CO2 avoidance yielded by biofuels could foster their use in electric cars, since ethanol can be a cheap and easy-to-handle source of hydrogen to power fuel cells.
Brazil can reduce emissions from the electricity sector beyond the indications in our 2015 NDC faster if the CO2 emissions avoided by expanding wind and solar generation are recognized in international markets.
There are rich opportunities in both regulated and unregulated carbon markets, as the benefits of halting deforestation and fossil fuel emissions become ever more evident.