A breakthrough agreement could open doors for companies and policymakers looking to jump-start the international carbon credit system, which has come under increasing scrutiny by environmental advocates who say the credits allow firms to sidestep real climate action.
The agreement, which was made public by the United Nations Framework Convention on Climate Change on Saturday, features guidelines for businesses and nations to receive verified carbon credits issued by the world body for trade on the global carbon market.
The new U.N. recommendations provide guidance on what offsetting projects can earn carbon credits. To qualify, the project needs to significantly reduce emissions, and the reductions must be in addition to carbon cuts that would have occurred otherwise. Any offsetting can only be counted once for the nation or business purchasing the credit.
For many groups that support a market-based approach to reducing global emissions groups, the guidelines are a win — if they’re ratified by voting parties at the upcoming COP28 U.N. climate conference in Dubai.
In a regulated global carbon market, nations and businesses can profit by selling verified carbon credits generated through green projects such as reforestation, clean energy development and carbon removal. Countries or companies buying the credits can count them toward their emissions reduction targets.