United Nations climate talk resolved to allow wealthy polluting countries to purchase carbon offsets from developing countries. This move has been heavily criticized for greenwashing the polluter.
Agreed during an extended session at the COP29 conference, the ruling is a huge progress for a long arduous debate that has been permeating climate talks for a long time.
Proponents of carbon trading said that the framework backed by UN approval would lead to an investment into developing nations that generate credit.
Reuben Manokara of WWF remarked that the UN ruling was a compromise between supporters of the credit and its critics, though it does provide some clarity for carbon trading regulation efforts.
Carbon credits are a representation of and generated by actions that work to reduce or prevent greenhouse gas emissions, such actions include protecting and planting trees and other carbon sinks, and replacing fossil energy with cleaner alternatives.
Before the UN resolution, carbon trading was mainly traded by companies on a market with no regulation and plagued by scandal.
The 2025 Paris Climate Talk has envisioned that countries could take part in international carbon trading, which would mainly be wealthy polluters buying credits from developing countries that are more successful at reducing their own carbon emissions.
The carbon trading initiative, also known as Article 6, includes both direct trading between countries and a dedicated UN-sanctioned marketplace.
The move has been popular for both developing countries that are looking for foreign funding, and wealthier nations finding ways to meet a steep carbon reduction goal.
The United State and The European Union is the main proponent of the carbon trade agreement at COP29 hosted at Baku, Azerbaijan. The majority of signatories for the project are developing nations in Asia and Africa.
However, experts warned that the system could be used to trade questionable credit and cover up their inability to meet carbon reduction targets.
Earlier this month, more than 90 deals have been signed between countries for over 140 climate projects, data from the UN shows. But only one deal actually went through, which is Switzerland buying credit from Thailand involving its capital Bangkok’s new fleet of electric buses.
However, the Climate Action Tracker project criticized Switzerland’s deal for lack of transparency over its emission cut, warning that it could set a bad precedent.
Niklas Hohne of NewClimate Institute, one of the groups that criticized the deal, urged that there was a concern over the possibility of developing countries underpromising their emission cut in the national project to sell credit from any excess reduction.
There is also a major concern over the risk of countries setting their own standard in a deal between countries, said Injy Johnstone, a researcher specializing in carbon neutrality at Oxford University.
Injy also added that the risk of greenwashing could undermine the effort of Article 6, and possibly the biggest threat to the Paris agreement.
Aside from the decentralized system between states, the UN would also be establishing a system for carbon trading that is open for both nations and companies.
The ground rule for the UN-managed market was agreed on the opening day of COP29 after nearly a decade of discussion.
It is necessary that this market does not create further problems and scandals than the voluntary market, said Erika Lennon from the Center for International Environmental Law.
