What is a Carbon Credit? It’s Role in Emission Reduction and Article 6 of the Paris Agreement

Carbon credits play a key role in global efforts to combat climate change by providing financial incentives for reducing emissions. Through mechanisms such as Article 6 of the Paris Agreement, countries can cooperate internationally and trade credit to achieve their climate goals, ultimately driving investment in sustainable practices and technologies. They provide a market-based mechanism to reduce emissions and offset CO2.

What are carbon credits?

Carbon credits allow their holders to emit a certain amount of carbon dioxide (CO2) or an equivalent amount of other greenhouse gases. In contrast, a credit typically represents the right to emit one ton of carbon dioxide or an equivalent amount of other greenhouse gases. It aims to provide financial incentives for companies and countries to reduce emissions. In this cap-and-trade system, companies would receive specific credit quotas that would decrease over time; therefore, they would have an incentive to innovate to minimize emissions. If it is able to reduce its allowances below emissions, it will sell additional allowances to other companies that may need them to meet the regulatory requirements it imposes.

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Carbon credits are designed to create a market aimed at reducing overall greenhouse gas emissions and helping to control climate change. This trading mechanism not only helps create accountability but also facilitates investment in the right types of renewable energy practices and technologies.

Article 6

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Article 6 provides an important tool through which countries can cooperate internationally in the implementation of climate action, allowing countries to trade carbon credits in exchange for their contribution to achieving their Nationally Determined Contributions (NDCs) – nationally agreed-upon commitments to limit greenhouse gas emissions. goals).

Article 6 consists of several elements:

Article 6.2: This enables countries to enter into bilateral agreements for the trading of carbon credits and allows them to essentially count these transactions towards their nationally determined contributions. This flexibility helps countries achieve climate goals more effectively by taking advantage of emissions reductions achieved elsewhere.468

Article 6.4: This will establish a single instrument similar to the Kyoto Protocol’s Clean Development Mechanism, which will facilitate the generation and trading of credits generated by project-based emission reduction projects. It seeks to ensure that these credits should contain high standards of verification and integrity.

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Article 6.8: This article recognizes non-market ways to enhance the implementation of mitigation and adaptation actions and provides a means to enable countries to cooperate on climate action without resorting to market mechanisms.

Implementation of Article 6: Implementation of Article 6 is critical to strengthening global climate goals and provides a pathway for international funds to flow from developed to developing countries to support projects above their nationally determined contributions and contribute to reducing global emissions. make significant contributions.

Carbon credits are an important tool for reducing global emissions through market mechanisms. Article 6 of the Paris Agreement strengthens international cooperation to enable countries to trade credit more efficiently and achieve climate goals. This collaborative approach fosters innovation, investment and progress towards a sustainable low-carbon future.

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Source: https://dinhtienhoang.edu.vn
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