GLOBAL leaders at this year’s COP 29 summit in Azerbaijan have agreed to a new framework to allow for country-to-country trading of carbon credits.

The framework, known as Article 6 of the Paris Agreement, has been on the table for 10-years, with in the carbon industry hoping for an agreement since then.

A resolution on the international trading of carbon credits has been recognised as one of the big achievements of the summit which wrapped up at the weekend.

“On country-to-country trading (Article 6.2), the decision out of COP29 provides clarity on how countries will authorize the trade of carbon credits and how registries tracking this will operate,” said a statement from COP 29.

“And there is now reassurance that environmental integrity will be ensured up front through technical reviews in a transparent process.

“This mechanism, known as the Paris Agreement Crediting Mechanism, is underpinned by mandatory checks for projects against strong environmental and human rights protections, including safeguards that ensure a project can’t go ahead without explicit, informed agreement from Indigenous Peoples.”

Making sure finance flows to less developed countries has been a goal most of the COP summits in recent times, with this the leadership of this year’s summit saying country-to-country trading of credits was a way to unlock that capital.

“It is particularly good news for least developed countries, who will get the capacity-building support they need to get a foothold in the market,” the statement said.

“This mechanism, known as the Paris Agreement Crediting Mechanism, is underpinned by mandatory checks for projects against strong environmental and human rights protections, including safeguards that ensure a project can’t go ahead without explicit, informed agreement from Indigenous Peoples. It also allows anyone affected by a project to appeal a decision or file a complaint.”

Call for clarity from Carbon Market Institute

Australia’s carbon industry representative body the Carbon Market Institute, has called for the Australian Government to make some firm commitments following the summit – including an emissions reduction target for 2035.

“Australia will also need to decide whether it will engage in or cede influence in international cooperation through carbon markets just as interest and investment steps up in Asia and the Pacific,” ,” chief executive officer John Connor said.

“CMI supports a 2035 target of at least 70pc reduction for Australia which will require the broadening and deepening of policy including the Safeguard Mechanism.

“However, business face some investment uncertainty with the Coalition yet to clarify their approach to this policy, the second biggest driver of reductions after renewable energy targets.

“COP29 was carried out in the shadow of the election of President Trump and, while imperfect, was productive in key areas. It now puts the spotlight on some key decisions to be made in Australia and elsewhere which will need great clarity and conviction.”