The deal reached at the UN Climate Change Conference in Glasgow Nov. 13 confirms the role of the voluntary carbon market, environmental markets standards-setter Verra said late Nov. 22.
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Almost 200 countries reached agreement on Article 6 of the Paris Agreement, which sets out the rules for global trade in greenhouse gas emissions reductions – a move that strengthens the market for voluntary carbon credits, Verra said.
"COP26 confirms the role of the VCM to channel finance, technology, and capacity to climate mitigation activities, particularly in developing countries, and to transfer mitigation outcomes [emissions reductions] that help countries meet their Nationally Determined Contributions and achieve a 1.5 degrees C future," Verra said in a statement.
The deal in Glasgow successfully avoids double-counting of emissions reductions by requiring any countries transferring carbon credits abroad to make a corresponding adjustment – an increase in its national emissions tally.
This plays into the voluntary carbon market by creating an option for companies to buy credits linked to corresponding adjustments.
"Corresponding adjustments – while mandatory to meet NDCs or international mitigation purposes such as ICAO CORSIA – are optional for VCM transactions such as corporate offsetting. Verra will operationalize CAs through labels," the company said.
CORSIA credits gain almost 1,000%
Voluntary carbon credit prices have surged in 2021 as demand grows among companies to offset their emissions as part of strategies to reach net-zero by 2050 or sooner, or to meet targets in other voluntary programs.
S&P Global Platts assessed CORSIA-eligible carbon (CEC) credits at $8.71/mt CO2e at the close Nov. 22 – a gain of 989% since the first assessment of 80 cents/mt on Jan. 4, 2021. Meanwhile, Platts assessed nature-based carbon (CNC) credit prices at $13.90/mt Nov. 22 – a gain of 199% since the first assessment of $4.65/mt on June 14, 2021.
Agreement among nations on Article 6.4 of the Paris Agreement creates a new carbon crediting mechanism under the United Nations Framework Convention on Climate Change, Verra said in a webinar Nov. 22.
The new mechanism creates a successor to the UN's Clean Development Mechanism, which regulated emissions reduction projects in developing countries under the Kyoto Protocol.
Under the new 6.4 mechanism, emissions baseline-setting options will include the best available technology and ambitious benchmarks set by the best-performing comparisons, Verra said.
A key requirement for emissions offsetting projects is additionality – an assurance that emissions reductions from a project are additional to what would otherwise have taken place under relevant national policies.
The new system will ensure that additionality will take account of all relevant national policies, Verra said in the webinar.