Context:– The upcoming UN Climate Conference, COP 28 in Dubai, aims to address the regulation of carbon markets. Carbon trade involves buying and selling credits to control carbon emissions. A new commodity is origins in the form of emission reductions or removals. Since carbon dioxide is the principal greenhouse gas, people speak simply of trading in carbon. Carbon is now tracked and traded globally like any other commodity.
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Key Points:
Purpose:
Emission Control: Carbon trade facilitates trading credits that permit specific carbon emissions. Governments authorize these trades to gradually reduce overall carbon emissions and combat climate change.
Market-Based System: The objective is to establish a market-based system that reduces CO2 emissions contributing to global warming. Carbon value is determined based on a country’s ability to store or prevent emissions.
Working Mechanism:
Cap-and-Trade: Similar to cap-and-trade policies that curbed sulphur pollution in the 1990s, carbon trading rewards emission reduction and penalizes high emitters. Originated from the Kyoto Protocol, it aimed at reducing CO2 emissions for industrialized nations.
Issues:
Ineffectiveness: Some offset schemes like EU Emissions Trading System (EU-ETS) and Clean Development Mechanism (CDM) are considered ineffective and even counterproductive.
Low Impact: Carbon credits’ low prices offer no substantial incentive for industries to invest in low-carbon technology.
Challenges and Concerns: Corruption, lack of standards, double counting, and authenticity issues hinder effectiveness and market transparency.
COP 28 Objectives:
Energy Transition: Accelerate emission reduction and energy transition before 2023.
Climate Finance: Transform climate finance, deliver on old promises, and create a new finance framework.
Inclusive Action: Prioritize nature, people, livelihoods, and inclusivity in climate action.
Mobilization: Aim for an inclusive and participative COP.
Recent Developments:
Glasgow COP26: Established global carbon market rules, building upon the Paris Climate Agreement of 2015.
Adoption: Multiple countries and regions have initiated carbon trading programs.
Conclusion:
Objective Debate: Carbon trade agreements aim to reduce emissions and curb global warming effects. However, their actual effectiveness remains a subject of ongoing debate due to several challenges and shortcomings in their implementation.
Efforts such as carbon trading aim to combat climate change, but their success hinges on surmounting various hurdles in regulations, transparency, and effectiveness. The COP 28 aims to address these challenges and accelerate climate action globally.
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