COP29 paves the way for trillion-dollar climate financing agreement
During the COP29 climate conference held in Baku, an agreement was reached on Saturday regarding the possibility for wealthier countries to utilize an emission balancing mechanism by making payments to nations that exceed planned reduction goals. This decision legalizes "carbon credits," which have been debated for years.
The proceedings of the Conference of the Parties to the United Nations Framework Convention in Baku, concerning climate change, were planned to conclude on Friday. However, the participants continued negotiations in the capital of Azerbaijan until Saturday.
The main discussion focused on the amount of funds that developed countries will allocate annually to support developing countries until 2035. Island nations, which are most in need of this aid, proposed an amount of $1.3 trillion (CAD 1.8 trillion) annually. In response, developing countries initially stated an amount of €250 billion (CAD 365 billion), and after negotiations - €300 billion (CAD 437 billion).
The current aid of $100 billion (CAD 1400 billion) per year expires in 2025, forcing negotiators to work on a new agreement in Baku.
"The beginning of a new era"
- I would like to add now is that, in my view, COP29 will be remembered as the start of a new era for climate finance. The EU and its Member States will continue to play a leading role - stated Wopke Hoekstra, the EU commissioner participating in the talks. He emphasized that an ambitious and realistic goal was achieved and that the circle of donors was expanded.
- WWith these funds and this structure, we are confident we will reach the 1,3 trillion [USD, approx. 1.8 trillion CAD] objective - added Hoekstra.
"Carbon credits" come into effect
Although it was still unclear whether an agreement on the value of support would be reached, the rules for trading "carbon credits" were agreed upon. According to the new arrangements, wealthy countries can now meet their climate commitments by financing emission reductions in African or Asian countries, rather than reducing emissions within their own territories.
The decision to legalize "carbon credits" was made after prolonged disputes about them - reminds the AP agency.
Also known as "offsetting," these credits have been used by businesses to balance their own emissions, which was supposed to testify to their carbon neutrality. Previously, this market was uncontrolled and often associated with accusations of greenwashing.
Now, according to the Paris agreement from 2015, richer countries can purchase so-called carbon credits by making agreements with countries that achieve higher results in reducing CO2 emissions.
