COP26 agreement on carbon markets is a welcome boost for market integrity
CARBON markets recently received a long-awaited boost at Glasgow. Towards the close of the 2021 United Nations Climate Change Conference (COP26), more than 100 negotiators hammered out an agreement on a broad framework to enable governments and companies to enter bilateral deals to swap and trade carbon credits, which are seen as essential in the race towards net-zero emissions.
The development - after some 6 years of negotiations - is significant for a number of reasons. One, it introduces a set of standards in the current sprawl of carbon trading markets. Two, it paves the way for United Nations (UN) certification of credits, which would inject much needed credibility into markets. Three, it reflects a strong consensus on the need for carbon offsets, and a transparent pricing mechanism that should elicit confidence.
There are currently 2 types of carbon markets: a compliance-driven cap-and-trade market, and a voluntary market which allows businesses, governments and even individuals to offset emissions through the purchase of carbon credits. The voluntary markets in particular have been described as a "wild west" where methodologies and the provenance of carbon credits were seen as questionable, creating a landscape ripe for greenwashing.
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Columns
‘Competition for talent’ a poor excuse to keep key executives’ pay under wraps
OCBC should put its properties into a Reit and distribute the trust’s units to shareholders
Why a stronger US dollar is dangerous
An overstimulated US economy is asking for trouble
Too many property agents? Cap commissions on home sales
Time to study broadening of private market access