BAKU — New rules allowing rich polluting countries to buy carbon reduction “offsets” from developing countries were agreed at UN climate talks on Saturday, a move that is already raising fears they could be used to green climate goals.

The decision, taken during the extensions of COP29, represents a major breakthrough in a debate that has dragged on for years in climate negotiations, and diplomats applauded when the decision was made.

Supporters say a U.N.-backed carbon trading framework could direct investments to developing countries where many credits are generated.

Critics fear that if implemented poorly, these programs could undermine global efforts to curb global warming.

Greenpeace’s An Lambrechts said the deal created “carbon markets with flaws and a lack of integrity” that would allow fossil fuel companies to continue to pollute.

WWF’s Reuben Manokara said the final text was “a compromise” and while not perfect, it provided “a level of clarity that has long been missing” from global efforts to regulate carbon trading.

Carbon credits are generated by activities that reduce or avoid greenhouse gas emissions linked to global warming, such as planting trees, protecting existing carbon sinks or replacing polluting coal with alternatives clean energy. Until now, these loans were mainly negotiated by companies in an unregulated and scandal-ridden market.

But the 2015 Paris climate agreement said countries could also participate in a cross-border exchange of carbon reductions. The general idea is that countries – mainly rich polluters – can buy carbon credits from other countries that are performing better on their own emissions reduction targets.

Article 6

The initiative, known as Article 6, includes both direct country-to-country trade and a separate UN-backed market. It has proven popular with developing countries seeking international funding and richer countries keen to find new ways to meet their ambitious emissions reduction targets.

The European Union and the United States pushed for a deal at COP29 in Baku, the capital of Azerbaijan. Many developing countries, particularly in Asia and Africa, have already signed up for projects. But experts fear these schemes allow countries to trade questionable emissions cuts that disguise their inability to actually reduce greenhouse gas emissions.

At the start of the month, more than 90 agreements had already been concluded between countries for more than 140 pilot projects, according to the UN. But so far only one exchange has taken place between countries, involving Switzerland purchasing credits linked to a new fleet of electric buses in Bangkok, the Thai capital.

Switzerland has other agreements with Vanuatu and Ghana, while other buying countries include Singapore, Japan and Norway.

‘The biggest threat

to the Paris Agreement’

The Climate Action Tracker project warned that Switzerland’s lack of transparency over its own emissions reductions risked “setting a bad precedent”. Niklas Hohne of the NewClimate Institute, one of the groups behind the project, warned that there was a fear that the market would induce developing countries to under-promise emissions reductions in their own plans nationals in order to be able to sell credits for any reduction above this threshold. level.

“There is great motivation on both sides to make mistakes,” he said.

Injy Johnstone, a researcher specializing in carbon neutrality at the University of Oxford, told AFP that the fact that nations could set their own standards in these agreements between countries was a major concern.

She said that overall, the risk of greenwashing makes Article 6 “the greatest threat to the Paris Agreement.”

Alongside this decentralized state-to-state system, there will be another UN-managed carbon credit trading system, open to both states and businesses.

On the opening day of COP29, nations agreed on a number of crucial ground rules to set this UN-administered market in motion, after nearly a decade of complex discussions.

“Many projects are waiting” to be put on the market, Andrea Bonzanni of the IETA International Emissions Trading Association told AFP. IETA has more than 300 members, including energy giants like BP.

Despite these positive signs, some experts have expressed doubts that the quality of carbon credits traded on the regulated market is much better than that of previous carbon credits.

Erika Lennon of the Center for International Environmental Law said it would be necessary to ensure such markets do not create “even more problems and more scandals than voluntary carbon markets.”

These “voluntary” markets have been rocked by scandals in recent years, amid accusations that some credits sold did not reduce emissions as promised or that the projects exploited local communities.