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Biodiversity & Environment

Carbon Market

  • 07 Dec 2019
  • 2 min read

Why in News

‘Carbon Markets’ has become a contentious issue at the Conference of Parties 25 (CoP 25), being held in Madrid (Spain) from 2nd-13th December, 2019.

  • Carbon markets allow for buying and selling of carbon emissions with the objective of reducing global emissions.
  • Carbon markets existed under the Kyoto Protocol, which is being replaced by the Paris Agreement in 2020.

Carbon Markets

  • Carbon Markets can potentially deliver emissions reductions over and above what countries are doing on their own.
  • For example, technology upgradation and emission reduction of a brick kiln in India can be achieved in two ways:
    • A developed country which is unable to meet its reduction target can provide money or technology to the brick kiln in India, and thus claim the reduction of emission as its own.
    • Alternatively, the kiln can make the investment, and then offer on sale the emission reduction, called carbon credits. Another party, struggling to meet its own targets, can buy these credits and show these as their own.

Carbon Markets under the Paris Agreement

  • The provisions relating to setting up a new carbon market are described in Article 6 of the Paris Agreement.
  • Article 6.2 enables bilateral arrangements for transfer of emissions reductions.
  • Article 6.4 talks about a wider carbon market in which reductions can be bought and sold by anyone.
  • Article 6.8 provides for making ‘non-market approaches’ available to countries to achieve targets.

Source: IE

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