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Can carbon market save Paris agreement?

Published : Tuesday, 25 March, 2025 at 12:00 AM  Count : 351
Farhana Afser Moury
As the world gathers for COP 29, the global carbon market stands at a crucial inflection point that could determine the fate of the Paris Agreement's ambitious climate goals. With emission reduction targets slipping further out of reach, many policymakers are pinning their hopes on robust carbon trading mechanisms to accelerate climate action.

The Paris Agreement's Article 6 which outlines frameworks for international carbon markets, has faced implementation challenges since its inception. After years of negotiations, COP 29 represents perhaps the last viable opportunity to finalize the rulebook that could unleash billions in climate finance and dramatically scale emission reduction projects across developing nations.

Carbon markets function on a simple premise is that putting a price on pollution creates economic incentives to reduce emissions. Countries and companies that cut emissions more than required can sell their excess reductions to others struggling to meet targets. In theory, this market-based approach directs investment to where emission cuts are most cost-effective.

Recent analyses suggest a fully operational global carbon market could reduce the cost of implementing nationally determined contributions by more than 50 percent, potentially unlocking $250 billion in climate finance annually by 2030. These savings could be reinvested to raise ambition further, creating a virtuous cycle of climate action.

“Carbon markets function on a simple premise is that putting a price on pollution creates economic incentives to reduce emissions. Countries and companies that cut emissions more than required can sell their excess reductions to others struggling to meet targets”

However, significant obstacles remain. Critics point to historical failures in carbon markets, including oversupply of credits, questionable environmental integrity and limited benefits to host communities. Indigenous groups and environmental justice advocates have raised concerns about potential land grabs and violations of community rights under poorly designed carbon offset schemes.

For carbon markets to fulfill their promise at COP 29, negotiators must address several critical issues. Establishing robust accounting rules to prevent double-counting of emission reductions tops the agenda. Equally important are strong environmental and social safeguards that ensure projects deliver genuine climate benefits while respecting human rights.

Developing nations are advocating for predictable revenue streams from carbon market transactions to fund adaptation efforts. Meanwhile, industrialized countries seek assurance that purchased credits represent real, additional, and permanent emission reductions.

The stakes couldn't be higher. With global temperatures already 1.2°C above pre-industrial levels and emissions continuing to rise, the window for limiting warming to 1.5°C is rapidly closing. Carbon markets alone cannot solve the climate crisis, but a well-designed system could significantly accelerate the transition away from fossil fuels.

As negotiators gather, they face a fundamental question: Can market mechanisms deliver climate action at the speed and scale required? The answer may determine whether the Paris Agreement's goals remain within reach or slip away entirely.

The writer is an undergraduate student at University of Barishal, Department of Geology and Mining


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