While many carbon market participants were hoping for clarified UN guidance surrounding carbon trading at this year’s Conference of the Parties (COP), it was not to be. Few major developments took place regarding carbon markets at this year’s conference and there was disappointment on a lack of progress towards a 1.5 degrees target. Negotiations primarily focused on a loss and damage fund through which developed countries can compensate countries most vulnerable to the climate crisis (1).
Lack of major progress on Article 6.4, which addresses carbon trading and markets, was partly to be expected as the supervisory body responsible for Article 6.4 only met once in the summertime (2). Recommendations by the supervisory body were deemed insufficient and it was sent back to the drawing room to continue its work during 2023.
This slow progress and the consistent underperformance by individual countries in meeting climate goals (3) illustrates the critical importance of the voluntary carbon market. Despite its complexity, and streamlining efforts are underway, the voluntary carbon market offers the best functioning pathway to mobilize global finance to address the climate crisis.