On Wednesday 11th September 2024, the Independent Evaluation Unit (IEU) hosted a Learning Talk on Carbon Markets and Safeguards.

The GCF aims to make a significant and ambitious contribution to the aims of the UNFCCC and the goals of the Paris Agreement through promoting a paradigm shift towards low-emission and climate resilient development pathways. 

Panellists explored the potential of carbon markets to support this goal, the interplay between compliance and voluntary markets, the role of safeguards, and how multilateral climate funds like the GCF may be able to play to better support developing countries achieve country NDCs through carbon markets.

Discussion Highlights

Carbon markets allow the trade of emission reduction offsets to achieve greenhouse gas emission reductions

Two key types of markets: compliance (regulated by governments) and voluntary (driven by firms and facilitators)

Article 6.2 of the Paris Agreement enables bilateral agreements for emissions trading, while 6.4 offers a global market mechanism through the Paris Agreement Crediting Mechanism

Article 6.4 incorporates a Sustainable Development Tool to ensure participants apply robust and environmental safeguards to minimize and avoid negative environmental and social impacts

Developing countries face hurdles in setting up national registries and inventories

Readiness programmes were suggested as tools to overcome these hurdles

Blockchain could offer unique IDs to avoid double counting, double claiming and double use

Need for approaches to enable private sector engagement while ensuring alignment with NDCs

Consider partnering with technology networks to advance climate solutions.

Key questions

Are flows within carbon markets included as climate finance within the New Collective Quantified Goals?

To what extent should developed countries be able to use Article 6 to meet climate commitments under the Paris Agreement?

How will the Sustainable Development Tool within Article 6.4 work in practice?   

What role can technology play in meeting safeguards and offset integrity?

Learning Outcomes

The potential of carbon markets to promote a paradigm shift and support the achievement of developing countries’ climate goals.

Key distinctions between compliance and voluntary markets and their operational dynamics.

Learning the lessons from past challenges within flexibility mechanisms, such as from the Clean Development Mechanism, and the need for robust and rigorous safeguards and verification processes.

The potential for GCF to better support developing countries engagement with and use of carbon markets to meet country NDCs. 

Panelists

• Alisher Mamadzhanov, Multilateral Goverance Senior Specialist, OGA
• Emmanuella Doreen Kwofie, Member of Ghana's Delegation of Negotiators for the UNFCCC (Personal Views Only)
• Ben Vickers, Sector Senior Specialist, Land-use, Forests and Ecosystem, DPAC
• Neeraj Joshi, Climate Change Monitoring and Evaluation Specialist, DPSF

Moderator

• Martin Prowse, Evaluation Specialist, IEU 

The Learning Talk recording may be accessed here.