Outline of carbon markets deal emerges at U.N. climate summit

Nov 13 (Reuters) – Negotiators began to close in on a deal to settle rules for carbon markets on Saturday, as talks extended into overtime at the COP26 U.N. climate summit.

New draft documents released early Saturday on implementing Article 6 of the 2015 Paris Agreement suggest progress around all three of the key sticking points that have skuppered a deal on the issue at the past two U.N. climate conferences.

Article 6 would set the rules allowing countries to partially meet their climate targets by buying offset credits representing emissions cuts by others.

Companies as well as countries with vast forest cover are keen for a robust deal on government-led carbon markets in Glasgow, in hopes also of legitimising the fast-growing global voluntary offset markets.

But balancing those interests against worries that offsetting will go too far in allowing countries to continue emitting climate-warming gases has made some wary of a hasty deal.

TAXING TRADES

On the issue of whether certain carbon trades should be taxed to fund climate adaptation in poorer nations, the latest proposals offer a two-track approach.

Bilateral trades of offsets between countries would not face the tax. That suggests capitulation to rich nations including the United States, which had objected to poor countries’ demands for the levy.

In a separate centralised system for issuing offsets, 5% of proceeds from offsets will be collected to go toward an adaptation fund for developing countries.

Also in that system, 2% of the offset credits will be cancelled. That aims to increase overall emissions cuts by stopping other countries using those credits as offsets to reach their climate targets.

OLD CREDITS

Another stubborn roadblock had been whether carbon credits created under the old Kyoto Protocol, the Paris Agreement’s predecessor, should be included in the new offset market system.

Negotiators had been wrangling over a compromise that would set a cut-off date, with credits issued before that date not being carried forward.

The latest text would carry over any offsets registered since 2013. That would allow 320 million offsets, each representing a tonne of CO2, to enter the new market, according to an analysis by the NewClimate Institute and Oko-Institut non-profits.

Campaigners had warned against flooding the new market with old credits, and have raised doubts about the climate benefits of some.

The latest compromise got a mixed response.

The 2013 date “is not good. So now it will be buyer countries’ jobs to just say ‘no’ to them,” said carbon markets expert Brad Schallert with non-profit World Wildlife Fund.

Some countries said it was unfair that old credits would be allowed in the new market, while they feared credits awarded under a forest scheme known as REDD+ were not explicitly included.

“Panama will not accept the proposed text in Article 6 as it currently stands,” Juan…