COP29: Agreement on standardizing the carbon offset market

Global standards for the carbon offset market were approved at COP29 in Baku. The standards could attract investment to developing countries and facilitate decarbonization. Developed countries could thereby reduce the cost of meeting emissions targets and gain time to develop new technologies.

On the second day of COP29 in Baku, it was announced at a press conference that the implementation of global standards for the market in so-called carbon offsets had been approved. Carbon offsets are generated through projects such as planting trees or reducing emissions from existing facilities in developing economies, and are used to offset emissions in developed countries.

Introducing standards for the carbon offset market should make it easier to offset emissions in a more transparent and credible way. This marks significant progress in implementing Article 6 of the Paris Agreement, which establishes a mechanism for trading carbon offsets.

The introduction of standards could then result in an influx of billions of dollars into the offset market, with the money going to developing countries for projects that reduce or absorb emissions. This could help achieve the broader goal of increasing the availability of funding in developing economies.

Standards for the offset market could also lead to lower costs for developed countries to meet their short-term decarbonization targets (NDCs). In general, it is significantly easier to eliminate the first 10% of emissions (for example, by building the first solar power plants) than it will almost certainly be to eliminate the last 10% (for example, by replacing or decarbonizing gas-fired power plants that complement renewable sources).

More affordable and credible carbon offsets could allow developed countries, including the Czech Republic, to postpone the need to eliminate the last few percentage points of emissions. This could provide more time to develop technologies that will make carbon neutrality possible and enable it to be achieved at a lower cost.