The Institute for Global Environmental Strategies (IGES) and the International Emissions Trading Association (IETA) are partnering to enhance carbon market mechanisms outlined in Article 6 of the Paris Agreement.
The agreement aims to forward international carbon markets’ ability to mitigate climate change. Article 6 of the Paris Agreement includes rules surrounding the global carbon market, where companies may purchase carbon credits to offset their own emissions and meet net-zero targets. Carbon credits represent emissions-reducing efforts such as clean energy development, ecosystem restoration, and more.
The IGES, responsible for carrying out the Article 6 Implementation Partnership, and IETA will jointly promote carbon market solutions as key policy tools for addressing climate change. They aim to both engage the business sector in financing Paris Agreement goals and design national and international rules to ensure transparent, high-quality carbon credits.
Increasing Role of Carbon Markets in Global Decarbonization
Carbon markets have arisen as a key factor in fostering corporate emissions reductions, and they are also expected to continue to grow. During COP28, the United Nations is expected to establish a carbon market that would attach a price to carbon emissions and would aim to create clean energy demand.
With the purchase of carbon credits being a common practice for companies working to meet decarbonization goals, the transparency and credibility of carbon credits have become especially important. Some parties are skeptical of depending heavily on carbon credits for decarbonization as scientists have found certain emissions-reducing projects do not avoid as many emissions as claimed, with some not contributing at all to emissions reductions.
The World Economic Forum reportedly claims that the voluntary carbon market currently lacks transparency, and some corporations question their credibility, especially as illegitimate use of carbon credits may involve legal implications, such as greenwashing allegations.
For example, blockchain technology may be used to track carbon offsets’ origins, vetting the credits before they are made available for purchase. Earlier this year, Rubicon Carbon introduced a risk adjustment framework for new and legacy carbon credits, working to explore how project impact is measured and drives confidence in voluntary carbon markets.