BAKU, Azerbaijan, January 7. An agreement on international carbon markets reached at the Conference of the Parties to the UN Framework Convention on Climate Change (COP29), held in Azerbaijan in November 2024, can expand the participation of low-income countries in the market and stimulate the growth of investment flows, Trend reports via the World Bank (WB).
WB noted that carbon credit markets play an important role in attracting private capital.
“They have the potential to serve as a mechanism for channeling private investment into development projects that reduce or remove emissions from the atmosphere. These include, for example, planting new forests and deploying technologies in low-income countries, such as the use of environmentally friendly cooking stoves.
Thus, it's estimated that from the first to the third quarter of 2024, about $14 billion was mobilized for the development of new carbon credit projects worldwide, with the largest share directed toward carbon removal projects using nature-based solutions,” the bank said.
According to the bank, the recent agreement on international carbon markets at the COP29 can help expand market participation and stimulate the growth of investment flows to low-income countries.
WB emphasized that this agreement provides clarity on the rules for cross-border trading of carbon credits under Article 6 of the Paris Agreement.
"Once the amendments to the agreement come into effect, focus will shift to their practical implementation. This will necessitate capacity-building efforts across countries, ranging from the establishment of institutional and regulatory frameworks to the development of market infrastructure, such as registries. The validation of UN-governed carbon markets has created an alternative pathway for market participation, a development that is particularly significant in light of the growing scrutiny of transparency in voluntary carbon markets in recent years," the bank remarked.
The COP29 conference, held in Azerbaijan last November, was marked by several pivotal decisions:
- A new annual funding mobilization target of $300 billion was established, tripling the previous goal of $100 billion;
- The Loss and Damage Fund was successfully operationalized.
- Negotiations concerning the creation of robust carbon markets under Article 6 of the Paris Agreement were concluded.
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