Innovation Fund is one of the world's largest funding programs for the demonstration of innovative low-carbon technologies. The Innovation Fund was established by Article 10a(8) of Directive 2003/87/EC to support innovation in low-carbon technologies and processes in all Member States

The Commission has adopted a decision setting the EU-wide quantity of allowances issued under the EU Emissions Trading System for buildings, road transport and small industry (ETS2) for 2027. This cap will amount to 1,036,288,784 allowances in 2027 and will contribute to the EU reaching its 2030 climate targets.

The calculation of the cap for 2027 is based on the average CO2 emissions from fuel combustion in the ETS2 sectors during the years 2016 to 2018. This average is reduced by 2027 as follows:

Firstly, by 2024 through a linear reduction trajectory based on all emissions within the scope of the Effort Sharing Regulation.

Secondly, for the years 2025-2027, through an annual linear reduction factor of 5.1 % in accordance with Article 30c(1) of the ETS Directive.

The ETS2 cap for 2027 includes the European Economic Area and European Free Trade Association (EEA-EFTA) countries.

The ETS2 cap for 2028 will be determined later, based on the average CO2 emissions reported by entities regulated under ETS2 for the years 2024 to 2026.

The decision, which will soon be published in the Official Journal, fulfils the Commission's obligation under the ETS Directive to publish the Union-wide quantity of allowances for 2027 by 1 January 2025. Spring

At the UN climate change conference COP29 in Baku, the European Commission and EU member states took the lead in brokering an agreement to align global financial flows with the goals of the Paris Agreement. Acceptance a new collective quantified goal (NCQG) for climate finance EU successfully expanded the base of global contributors for climate finance. The NCQG allows more countries to contribute funds, reflecting their growing emissions and economic weight. The agreement also strengthens the role of multilateral development banks (MDBs), maximizing the leverage and impact of public funds by drawing and by mobilizing a significant amount of private finance . The parties agreed that the combined funding from all these sources should reach at least $1.3 trillion annually by 2035. (More on ec.europa.eu)

Based on the EU regulation on the certification of carbon removal, I bring you the outline of a sample project for carbon credits. This sample project takes into account all the requirements of the Carbon Removal Certification Framework (CRCF/2024) and contains hypothetical values that illustrate the quantifiable benefits of the project.

1. Identification and description of the project

• Type of activity:
  • Temporary carbon removal from carbon agriculture a reduction of emissions from land. A peatland restoration project includes both of these categories, as restoration leads to carbon sequestration in biomass (temporary removal) and at the same time to reduced emissions from degraded peatlands (reduction of emissions from soil).
• Description of procedures and processes:
  • The project includes the removal of invasive plant species, such as common reed and sea buckthorn willow.
  • Restoration of water courses will be implemented through damming drainage channels and building small water reservoirs, which will increase the groundwater level and restore the water regime of the peatland.
  • Protective measures will include fencing of restored areas to prevent the entry of farm animals and building information boards to increase public awareness of the importance of peatlands.
  • The activity time is scheduled for 10 years and subsequent monitoring will take place for 20 years, which ensures long-term monitoring of carbon storage and early identification of potential leakage risks.
• Identification of carbon sources and sinks:
  • Source: Atmospheric CO₂.
  • Pitfall: Organic soil and bog vegetation, while it is assumed that carbon storage will take at least 50 years.
• Geographical location:
  • Cadastral territory of Oravská Lesná village, plot no. 1501/5 and 1502/3, with the exact boundaries of the project marked on the attached on a map basis in a scale of 1:5000.
• Identification of the operator/group of operators:
  • The main operator of the project is Civic association Zelené rašeliniská, the contact person is Ing. Jana Vzorná, email: jana.vzorná@zeleneraseliniska.sk.
  • They are also involved in the project land owners, with which OZ Zelené rašeliniská concluded a cooperation agreement.
  • All the actors involved create group of operators responsible for project implementation and monitoring.

2. Quantification and verification

• Baseline calculation:
  • Current emissions from degraded peatlands are set at 20 tons of CO₂ per year per hectare based on measurements and analyses Institute of Forest Ecology SAV.
  • This value takes into account average CO₂ emissions from comparable degraded peatlands in the region and was determined in accordance with the IPCC methodology.
• Quantification of total emission reductions/carbon removals:
  • After the restoration of peatlands, emissions are expected to decrease to 5 tons of CO₂ per year per hectare.
  • This reduction will be achieved through renewed water regime, decomposition of organic matter and growth of bog vegetation, which act as a CO₂ trap.
  • Total savings in emissions for 10 years of activity it is calculated as follows: (20 t/ha – 5 t/ha) × 500 ha × 10 years = 75,000 tons of CO₂.
• Calculation of emissions associated with the project (GHGassociated):
  • CO₂ emissions associated with the implementation of the project are estimated at 2,500 tons of CO₂ for the entire implementation period.
  • This value includes emissions from of transport, uses machines and materials in the restoration of peatlands, as well as emissions associated with production and disposal of protective measures.
• Consideration of uncertainties:
  • Quantification of CO₂ emissions and sinks was performed using conservative approach and takes into account uncertainty ±10 %.
  • This uncertainty was determined based on the analysis of input data variability and methodological uncertainties in calculations.
• Verification by an independent certification body:
  • He will ensure the certification of the project certification company TÜV SÜD, which is accredited by the Slovak National Accreditation Service (SNAS) in accordance with the EU regulation.
  • SNAS is a member of the European Organization for Accreditation (EA), which guarantees that the certification will meet the requirements of the regulation.
  • Verification will include inspection all aspects of the project, including quantification of CO₂ emissions and sinks, additionality, sustainability and monitoring mechanisms.

3. Redundancy and sustainability

• Demonstration of additionality:
  • Peatland restoration project it goes beyond current agricultural practice in the region, which is characterized by intensive drainage and use of bogs for agricultural purposes.
  • Restoration of bogs it is not legally binding, though Act on the Protection of Nature and Landscape it imposes an obligation to protect bogs as valuable biotopes, it does not define concrete measures for their restoration.
• Ensuring long-term carbon storage:
  • They will be introduced as part of the project measures to protect restored peatlands from drainage and mechanical damage, such as construction of protective zones around bogs and regulation of the water regime.
  • To ensure the long-term sustainability of the project, it will be created maintenance and inspection fund in height EUR 100,000, which will be used to finance regular inspections and maintenance of protective measures.
  • The project defines monitoring period of 50 years, during which it will regularly monitored carbon storage in the peatland.
• Accountability mechanisms:
  • He assumes responsibility for any CO₂ leakage from the peatlands OZ Green bogs as the main operator of the project.
  • In the event of CO₂ leakage, OZ will be obliged to implement corrective measures, such as for example addition of peat material, restoration of the water regime or afforestation of affected areas.
  • Financing of corrective measures will be provided from the fund for maintenance and control, or from other sources, for example from insurance against CO₂ leakage.
• Meeting sustainability requirements:
  • In addition to reducing CO₂ emissions, the peatland restoration project will also positive impact on biodiversity region, because bogs are home to many rare and endangered species of plants and animals.
  • The project will also contribute to improvement of water quality in the region because peatlands act as natural filters that retain pollutants.
  • Implementation of the project will create jobs for 20 people on a part-time basis throughout the duration of the project, which will contribute to the development of the local economy.

4. Certification and registration

• Choosing a certification scheme:
  • The project will be certified according to the scheme Verra Carbon Standard.
  • Although sources cite Verra as a proven standard, it is necessary independently verify, whether this scheme meets all the requirements of the EU Carbon Removal Certification Regulation.
• Obtaining a certificate of conformity:
  • Project certification is planned until June 2025 after the completion of basic peatland restoration activities.
  • To obtain a certificate of conformity it will be necessary submit complete documentation to the certification body (TÜV SÜD). about the project, including the project plan, monitoring plan, calculations of CO₂ emissions and sinks, additionality and sustainability analysis and other relevant documents.
• Project registration and issuance of carbon credits:
  • After obtaining the certificate of conformity, the project will be registered in CRCF unified register.
  • Based on verified data on the reduction of CO₂ emissions, they will carbon credits issued in total volume 72,500 tons of CO₂ (after deducting the emissions associated with the implementation of the project).
  • Registration in the CRCF and issuance of carbon credits is expected until the end of 2025.
  • They will be in the registry published information about the project, including the name of the project, identification data of the operator, location of the project, type of activity, verified reduction of CO₂ emissions, number of issued carbon credits and other relevant data.

Expected benefits of the project

• Environmental:
  • Reduction of CO₂ emissions by 72,500 tons.
  • Support of biodiversity and protection of endangered species.
  • Improving water quality in the region.
• Social:
  • Creation of jobs for 20 people on a part-time basis.
• Economical:
  • Expected revenues from the sale of carbon credits at an estimated price of €15 per credit: 72,500 credits × €15/credit = EUR 1,087,500.
  • This value is hypothetical and depends on of the current market price of carbon credits.

Risks and their mitigation strategies

• Risk of CO₂ leakage:
  • Mitigation: Introduction of protective measures, creation of a fund for maintenance and control, insurance against CO₂ leakage, development of a corrective action plan.
• Risk of changes in legislation:
  • Mitigation: Regular monitoring of changes in legislation, consultations with legal experts, adjustment of the project in accordance with new requirements.
• Risk of insufficient demand for carbon credits:
  • Mitigation: Diversification of sales channels, building partnerships with potential buyers, monitoring market trends.

Added model project for carbon credits provides a more comprehensive overview of the peatland restoration project and takes into account relevant requirements of the EU regulation on certification of carbon removal.

It is important to emphasize that some information in the project is hypothetical and theirs the final form will depend on the details of the implementation and verification of the project.

Certification of carbon credits takes place on the basis of internationally recognized standards and methodologies that ensure the transparency, credibility and environmental benefit of projects. These certificates are awarded after thorough verification and are essential for carbon credits to be traded on voluntary or regulated markets. Key certification criteria include:

1. Carbon credits certification criteria

1.1 Additionality

The project must demonstrate that the emission reduction or carbon removal would not occur without a specific intervention. For example, a tree planting project should demonstrate that these activities are not common practice in the area.

1.2 Measurability and monitoring

Greenhouse gas emissions that have been reduced or eliminated must be accurately measured and monitored according to standard methodologies. This includes verification of input data, such as emissions before and after project implementation.

1.3 Durability (Permanence)

The project must guarantee long-term carbon preservation, especially in projects such as planting forests or geological storage of CO₂. Mechanisms must be set up to eliminate the risk of releasing carbon back into the atmosphere.

1.4 Uniqueness (Non-Double Counting)

Each carbon credit must be unique and cannot be counted more than once, which ensures the integrity of the market.

2. Certification process

Project registration

The project developer submits detailed information about his project to the certification scheme.

Third-party verification

Independent certification organizations such as Verra (VCS), Gold Standard or American Carbon Registry (ACR) carry out project verification based on established standards.

Issuance of certificates

After successful verification, carbon credits are registered in official registries and can be traded. A single European register based on the CRCF (Carbon Removal Certification Framework) will operate within the EU from 2028.

Continuous monitoring and auditing

During the entire duration of the project, regular audits are carried out to ensure compliance with criteria and methodologies.

3. Certification standards and schemes

 

– Verra (Verified Carbon Standard – VCS): One of the largest certification schemes for voluntary carbon credit markets.

– Gold Standard: It focuses on projects with a high environmental and social benefit.

– EU CRCF: An EU-approved carbon removal certification framework that provides harmonized rules for European projects.

Certification of carbon credits provides an important guarantee that projects bring real benefits to the climate and promote sustainability on a global level.

This ensures that each project is not only effective in terms of environmental protection, but also contributes to the credibility of the carbon trading system. Spring

A study from the Ecologic Institute analyzes the possibilities of introducing a price system for methane emissions from the energy sector in the EU from 2030. Two main approaches are considered: the expansion of the Emissions Trading System (ETS) and the introduction of a tradable emission standard (EPS) with a bonus-malus system. The analysis takes into account the link with the new methane regulation in the EU and assesses the political, technical and legal feasibility of both approaches, while also addressing issues of monitoring, measurement accuracy and compatibility with WTO rules. The study recommends expanding the ETS as the most promising option.

The pricing of methane emissions in the EU energy sector presents several challenges that need to be carefully considered.

• Ensuring reliable and accurate monitoring, reporting and verification (MRV): Methane leaks, as well as incomplete methane combustion and venting, cannot be quantified with the same level of reliability and precision as CO2 emissions from fossil fuel combustion. CO2 emissions are easily calculated as a function of fossil fuels consumed and their carbon content. On the contrary, methane leaks often need to be estimated based on non-continuous measurements or calculation methods with varying degrees of accuracy. While the implementation of the EU Methane Regulation and technological developments will substantially increase the accuracy and quantity of available data on methane emissions from the energy sector, the MRV of methane emissions is likely to continue to be less accurate than the GHG emission standards currently covered by the EU ETS. As an accurate MRV is crucial for the integrity of the EU ETS system as a whole, it may be challenging to maintain the credibility of the ETS price and the functioning of the emission allowance market while integrating methane emissions on par with existing emission sources. This can be seen as a threat to the integrity and functionality of the tool.
• Determination of the limit for the uncertain total volume of emissions: There is currently considerable uncertainty about the total volume of methane emissions from the energy sector. At least for some major sources of methane emissions and countries, data from Member States' greenhouse gas inventories are not reliable.
• Solving stochastic events with extremely high emissions: Individual events with exceptionally high emissions can cause significant methane emissions. These events are usually associated with accidents, sudden consequences of insufficient maintenance and abnormal process conditions. Acts of war or terrorism can also cause them. Therefore, events with extremely high emissions are impossible to predict and difficult to measure. As discussed in previous research, such stochastic fluctuations can lead to complications within a decreasing overall limit.
• International coverage and compatibility with WTO rules: As the EU imports most of the fossil fuels it consumes, mitigating methane emissions from imported fuels is more important than the domestic effects of methane pricing. There are solutions for covering imports with the price of emissions, either by expanding the CBAM mechanism or by including traded volumes in the scope of the system of bonuses and malus within the EPS. In both cases, however, it is necessary to demonstrate political feasibility and acceptability on the part of the main trading partners. Although there are reasons to be optimistic about the compatibility of CBAM with WTO rules, only a WTO decision can provide certainty.
• Political acceptability and cost sharing: The introduction of methane emissions pricing may lead to an increase in energy prices for consumers, which could provoke a public backlash. At the same time, it is necessary to consider a fair distribution of costs between producers and consumers.

In addition to these challenges, it is also necessary to consider the administrative and technical aspects of the implementation of the methane emissions pricing system, as well as its impact on the competitiveness of European businesses. Spring

The Council today gave the final green light to a regulation establishing the first EU-level certification framework for sustainable carbon removal, agriculture and carbon sequestration in products. This voluntary framework will facilitate and support high-quality decarbonisation and land abatement activities in the EU as a complement to sustainable emissions reductions.

Carbon removal and emission reduction in soil

The regulation will be the first step towards introducing a comprehensive certification framework for carbon removal and reduction of emissions in soil to EU legislation. It will help the EU reach its goal of climate neutrality by 2050.

 

The Regulation applies to the following activities within the EU:

• permanent carbon removal , which captures and stores atmospheric or biogenic carbon for several centuries (e.g. bioenergy with carbon capture and storage, direct air capture with storage)
• carbon sequestration activities that capture and store carbon in products with a long life of at least 35 years (such as wood-based construction products)
• carbon farming activities , which increase the sequestration and storage of carbon in forests and soil or which reduce greenhouse gas emissions from soil, carried out over a period of at least five years (e.g. reforestation, restoration of peatlands or wetlands, better use of fertilizers)

(More on consilium.europa.eu)

Certification standards play a key role in ensuring the credibility and quality of carbon offset projects. The most prominent of these standards include Verra's Verified Carbon Standard (VCS), Gold Standard and The Climate Action Reserve. These certification tools ensure that projects that produce carbon credits actually benefit the environment and contribute to the reduction of greenhouse gas emissions.

Verra's Verified Carbon Standard (VCS)

Verra's Verified Carbon Standard (VCS), founded by Verra, is one of the most widely used global standards for the certification of voluntary carbon projects. This standard was established in 2005 and since then has significantly contributed to the development of the voluntary market for carbon credits.

Main characteristics:

– Standardized methodologies: VCS provides a set of methodologies that allow accurate measurement and monitoring of emission reductions. Different types of projects, such as renewable energy sources, forestry and agriculture, can be certified according to these methodologies.

– Third-party verification: Projects must be verified by independent certification institutions, which ensures transparency and trustworthiness.

– Flexibility: VCS supports a wide range of projects, including in developing areas, helping to stimulate sustainable development.

– Emphasis on innovation and development: VCS constantly updates and improves its methodologies based on the latest scientific knowledge and technological innovations.

Gold Standard

The Gold Standard, introduced in 2003, was originally developed for projects under the Kyoto Protocol, but gradually expanded to include voluntary projects. This standard is known for its emphasis on the highest environmental ambitions and broad social added value.

Main characteristics:

– Focus on human and environmental benefits: The Gold Standard requires that projects not only reduce emissions but also contribute to socio-economic benefits for local communities. These projects must demonstrate positive effects on health, poverty, energy and biodiversity protection.

– Rigorous evaluation and participation: Projects must undergo a thorough evaluation and often involve the participation of local communities in planning and implementation. This ensures that projects are not only technically efficient but also socially just.

– Approach based on sustainable development: The Gold Standard is closely linked to the UN Sustainable Development Goals (SDGs), whereby projects must demonstrate a contribution to these goals.

The Climate Action Reserve

The Climate Action Reserve is a North American standard that focuses primarily on the regional specifics of carbon projects on the continent. It was originally created in California and is closely related to California's emissions trading system.

Main characteristics:

– Accurate and consistent protocols: This standard offers detailed protocols for various types of projects, including energy, industrial and agricultural initiatives, that are tailored for North American conditions.

– Transparency orientation: Climate Action Reserve emphasizes a high level of transparency in all phases of the project, from planning to monitoring and reporting.

– Emphasis on effectiveness: Projects under this standard must demonstrate not only environmental benefits, but also effectiveness in implementation and risk management.

All three standards – Verra's Verified Carbon Standard, Gold Standard and The Climate Action Reserve – play a vital role in strengthening confidence in carbon offset schemes. They are essential to guarantee that carbon credits actually contribute to reducing emissions and promote sustainable development. Spring

A carbon offset credit is a certified unit that corresponds to one metric ton of CO2 or its equivalent of another greenhouse gas. These credits are created through projects that either reduce emissions or capture them. Examples include renewable energy projects such as solar and wind power, afforestation and conservation of existing forests, energy efficiency improvements, and landfill methane capture projects.

Organizations that cannot directly reduce their emissions to the required level can purchase these credits to offset their emissions. In this way, they support projects that contribute to the overall reduction of global emissions.

"No institution, no company will be carbon neutral without the use of carbon offsets. There is literally no way to reduce emissions to zero.” 

Carbon credit market mechanism

The market for carbon offset credits is divided into two main segments: the regulated and the voluntary market.

1. Regulated market: This market is defined by international and national regulations, such as the Emissions Trading System under the Kyoto Protocol or the European Emissions Trading System (EU ETS). Organizations in these jurisdictions are required to meet emission limits and must purchase carbon credits if they exceed them.

2. Voluntary market: This market allows individuals and organizations to offset their emissions voluntarily, outside of legislative or regulatory frameworks. Many companies use this market as part of their corporate social responsibility strategy to demonstrate their commitment to sustainability.

Certification and credibility

The credibility of carbon offset credits is essential. Therefore, there are several certification programs and standards that ensure that emission reductions are real, measurable and additional (ie, emission reductions would not have occurred without the project). Some of the most well-known certification standards include Verra's Verified Carbon Standard (VCS), Gold Standard and The Climate Action Reserve.

Criticism and challenges

Although carbon offset credits are a valuable tool for mitigating climate change, they also face some criticism and challenges. Critics say they allow polluters to "buy off" their carbon footprint without actually reducing emissions. Another concern is that not all emission reduction projects have the same impact, and some might even proceed without support from offset credits.

There is also the question of how effectively and transparently these projects are evaluated and monitored. However, without offset credits, many sectors would face a huge challenge in achieving net zero emissions. This is especially true for industries where the technologies required for full decarbonization are not yet available or economically viable.

Despite these challenges, carbon offset credits remain an important tool on the path to a carbon-neutral future. To achieve optimal efficiency, they require thorough evaluation and continuous improvement of standards and certification processes, as well as innovation in emission reduction technologies. Spring

The European Commission today adopted the Carbon Market Report, which analyzes and presents the operation of the EU Emissions Trading System (EU ETS) in 2023 and in the first half of 2024. In 2023, the EU ETS was characterized by a historic 16.5 % reduction in emissions from stationary installations driven by the energy sector. The production of electricity from renewable sources (mainly wind and solar) has increased significantly, and the trend of replacing coal with gas in electricity production has resumed. With this development, ETS emissions from installations are approximately 47.6 % below 2005 levels and on track to reach the 2030 target of 62 %. (More on climate.ec.europa.eu)

On opening day, Baku scored what it saw as an early goal by forcing countries to adopt rules on some of the key building blocks of the UN's new Article 6.4 global carbon market, which last month accepted supervisory body of the mechanism.

This document presents a proposal for a sustainable development instrument to be used under the mechanism set out in Article 6, paragraph 4 of the Paris Agreement. The aim of the tool is to ensure that projects and programs within this mechanism do not harm the environment and support sustainable development and the 17 goals of sustainable development. The document describes in detail the process of assessing risks and impact on the environment and society, as well as monitoring and reporting results in accordance with the requirements for sustainable development. The proposal of the instrument was submitted to the supervisory body of the mechanism in Article 6, paragraph 4 and, after a comment procedure, it is expected to be approved and start to be applied in 2024.

Short summary of the document "Instrument for sustainable development according to Article 6.4"

This document presents a revised draft of the Instrument for Sustainable Development under Article 6.4 (hereinafter referred to as "Instrument A6.4 SD"). The main objective of this instrument is to ensure that projects and programs of activities under Article 6.4 of the Paris Agreement (hereinafter referred to as "A6.4 activities") promote the principle of "do no harm", promote sustainable development and contribute to the 17 Sustainable Development Goals (SDGs)..

Development and approval of the A6.4 SD Tool

The A6.4 SD tool was developed gradually based on instructions from the supervisory authority of the Article 6.4 mechanism. During this process, the comments of stakeholders and other relevant instruments and systems of safeguards used in existing market-based mechanisms were taken into account. Instrument A6.4 SD is expected to be approved at the fourteenth meeting of the Supervisory Authority in 2024.

Using the A6.4 SD Tool

Use of the A6.4 SD Tool is mandatory for all proposed A6.4 activities, including Clean Development (CDM) activities that seek to transition to the Article 6.4 mechanism. The tool provides a structured approach for activity participants to:

• They carried out a risk assessment in order to identify risks and potential impacts, evaluate them and, if necessary, avoid them. Where risks cannot be completely avoided, A6.4 SD instructs participants to minimize impacts and mitigate any remaining negative environmental and social impacts and risks by establishing environmental and social indicators at the activity level.
• They identified and assessed potential positive and negative impacts on the 17 Sustainable Development Goals (SDGs) and priorities of sustainable development of the host country and set indicators for monitoring sustainable development at the level of activities.
• They monitored and reported the monitoring results against the established environmental and social indicators and indicators of sustainable development at the level of activities.

Structure of the A6.4 SD Tool

The A6.4 SD tool is divided into three key parts:

• Environmental and social protection measures: This part focuses on the elements and criteria that serve as a basis for the participants of the activities to identify, evaluate, prevent, minimize and mitigate the potential negative environmental and social impacts and risks that may arise during the implementation and operation of the activity A6.4.
• Impacts on sustainable development: This part focuses on identifying the positive and negative impacts of activity A6.4 on the sustainable development of the host country.
• Validation and verification: These parts set out additional requirements for the validation and verification standards of the Article 6.4 mechanism for projects and programs of activities that Designated Operating Entities must take into account during the validation and verification phases.

Stakeholder engagement

Stakeholders may submit comments and questions regarding compliance with the A6.4 SD Tool during local stakeholder consultations and global consultations prior to registration of the A6.4 activity. After registration of an A6.4 activity under the mechanism of Article 6.4, the participants of the activities must establish and maintain a mechanism of continuous engagement of stakeholders to comment on the compliance with the A6.4 SD Tool until the end of the valid project crediting period.

Conclusion

A6.4 SD is an important tool to ensure that activities under the Paris Agreement Article 6.4 mechanism contribute to sustainable development while minimizing potential negative environmental and social impacts. (Co2AI)

 

 

Governments at COP29 on Monday approved new UN standards for international carbon markets, a key step towards allowing countries to trade credits On the opening day of UN climate talks in Azerbaijan, nearly 200 countries agreed after nearly a decade of complex discussions to several fundamental basic rules for setting the market in motion.

Other key aspects of the overall framework have yet to be negotiated, experts said, but the decision brings a long-sought UN-backed high-quality credit trading market closer.

"It's hugely important," Erika Lennon of the Center for International Environmental Law (CIEL) told AFP in Baku, saying it would "open the door" to a full-fledged market. (More on phys.org)

Once a credible path to meeting climate goals, carbon offsets are falling out of favor with many top companies. Companies such as Delta Airlines, Google and EasyJet were once the biggest buyers of these credits. However, they have now retreated or completely stopped buying offsets related mainly to renewable energy projects.

Renewable energy compensates for the loss of steam

This shift in thinking reflects that such carbon offsets are not delivering the environmental benefits they promise. Instead of buying offsets, many companies are trying to reduce their emissions directly. This process is more difficult and expensive than buying offsets.

A Bloomberg Green analysis of public offset transaction records shows a significant decline in sales for the second consecutive year. This clearly indicated a trend towards fewer offset purchases. (Saptakee S, more at carboncredits.com)

As more and more companies work to reduce their carbon footprints, there is an urgent need for upfront funding to implement nature-based carbon projects that meet global climate goals. Nature-based solutions that use natural ecosystems such as forests to sequester carbon have significant potential but remain underfunded.

Currently, only 1.2 % of the annual potential of these solutions has been used through the Voluntary Carbon Market (VCM). This lack of investment is a key obstacle to achieving climate change mitigation goals and keeping the global temperature rise below 1.5°C. (Jennifer L, more at carboncredits.com)

On 23 September, the Commission adopted an amendment to the EU Emissions Trading System (ETS), Monitoring and Reporting Regulation (implementing regulation (EU) 2018/2066). The revisions include a zero-rating of emissions from certain low-carbon fuels, such as renewable fuels of non-biological origin and synthetic low-carbon fuels in the ETS.

The changes also concern improved rules for biomass fuels and sustainable aviation fuels and aim to ensure compliance with sustainability criteria and greenhouse gas savings and prevent double counting of emissions.

Improvements to the existing rules also concern the transfer of CO emissions ₂ and CO ₂  , which are considered permanently chemically bound in the product.

In addition, the measures also include monitoring and reporting requirements for effects that are not related to CO emissions ₂ from the aviation industry. The EU is committed to addressing the full climate impact of aviation, including non-CO impacts ₂ , such as persistent contrails and NOx particles, which are major contributors to global warming. A new system for monitoring, reporting and verifying these effects will be operational from 2025. (Co2AI)

Carbon markets are essential to accelerate climate action in developing countries, where climate finance needs far exceed available resources. By providing a channel to mobilize the necessary financing and deliver real additional emissions reductions and removals, carbon markets can help close significant investment gaps. In addition, they support broader economic development through associated co-benefits and the potential reinvestment of carbon revenues. As such, carbon markets can be an important tool for achieving climate goals and supporting vulnerable communities. (HANIA DAWOOD, more at worldbank.org)

Slovakia did not include charging for emissions from heating and road transport in the amendment to the Emissions Trading Act. According to the European Commission, it should have done so by September 25. The Minister of the Environment wants Brussels to change the directive.

Slovakia has twice missed the deadline for the implementation of the new version of the emissions trading directive – the first was January 31, 2023, the European Commission moved it to June 30, 2024 due to member states' inaction. In July, it sent a formal invitation to 26 member states, stating that they have two months to implement the directive into national law. (Irena Jenčová, more at euractiv.sk)

The revisions agreed today introduce zero rating of emissions from the combustion of renewable fuels of non-biological origin (RFNBO), recycled carbon fuels (RCFs) and synthetic low carbon fuels (SLCFs) under the ETS, subject to compliance with the criteria set out in the Renewable Energy Directive (RED II), in particular the "additionality" rules (electricity used for the RFNBO product should be renewable and complementary) and greenhouse gas emissions savings (at least 70 % compared to a comparable fossil fuel on a life-cycle basis), ensure that such emissions are accounted for and to avoid double counting. (More on climate.ec.europa.eu)

We talk a lot about global carbon markets – but relatively little about the mechanism by which countries trade emissions reductions. This mechanism - Internationally Transferred Mitigation Outcomes ( ITMO ) – is a strategic tool for nations to not only meet their climate commitments, but also make effective use of their carbon sequestration resources.

Heading to COP29 and beyond, the ITMO market is poised for growth with the potential to shift significant financial flows towards sustainable projects and drive innovation in carbon trading practices. It is an area that demands the attention of politicians, businesses and environmental stakeholders as it holds the promise of accelerating our shared journey to a low-carbon future. (Su Meng, Suodi Xi, more at lexology.com)

A growing number of companies have committed to net zero by 2050 to support climate change mitigation efforts under the Paris Agreement. To achieve this goal with minimal changes to their core business, many companies use or plan to use carbon offsets (also known as carbon credits). Offsets can be procured at low cost and are abundant in the Voluntary Carbon Market (VCM). The appeal of offsets lies in their ability to allow companies to outsource decarbonization efforts to external initiatives, avoiding the more complex task of transforming their own operations and supply chains and phasing out fossil fuels. VCM subsequently grew rapidly. It is worth around $2 billion in 2022 and is predicted to continue to grow in value and scope as companies increasingly seek to offset their emissions. (Gregory Trencher, Sascha Nick, Matthew Johnson , more at natutr.com)