What are carbon markets and why are they important?

illuminem summarizes for you the essential news of the day. Read the full piece UNDP Global or enjoy below

🗞️ Driving the news: The rising interest in carbon markets around the globe is seen as a crucial part of the solution to reducing greenhouse gas emissions
• These trading systems offer companies and individuals a way to offset their emissions by buying credits from entities that sequester or reduce emissions

🔭 The context: The Intergovernmental Panel on Climate Change (IPCC) 2021 report reveals that greenhouse gas emissions continue to rise across all major sectors
• The cost of renewables is now often cheaper than coal, oil, and gas, and the focus is turning to carbon markets, with both compliance and voluntary types, to help bridge the financial gap and accelerate emission reductions

🌎 Why it matters for the planet: Unless drastic emission reductions occur immediately, scientists warn of surpassing 2°C warming this century
• Carbon markets, by assigning a cost to pollution, motivate emission reduction
• However, ensuring transparency, integrity, and observance of social and environmental safeguards is vital to avoid problems like double-counting emission reductions and greenwashing

⏭️ What's next: Despite the completion of the "Paris Rulebook" at COP26 in Glasgow, negotiations related to the operation of the Article 6 mechanisms under the Paris Agreement continue
• Future discussions will take place at the UNFCCC meetings in Bonn, Germany and COP28 in Dubai, United Arab Emirates

💬 One quote: "If held to high standards of integrity and transparency, carbon markets can help accelerate the transformation needed, by effectively putting a price on pollution and creating an economic incentive for reducing emissions." (Antonio Guterres, UN Secretary-General)

📈 One stat: As per the latest IPCC report, financial flows are three to six times lower than levels needed by 2030 to achieve climate action goals

Click for more news covering the latest on carbon