The Future of Carbon Offsetting – What Impact will the Resolutions from the COP26 Climate Conference have on the Voluntary and Mandatory Markets?
The experts all agreed that the offsetting of unavoidable CO2 emissions continues to serve as an important and immediately effective instrument within an overarching climate strategy. The resolutions from COP26 provide greater clarity for this and simultaneously send out a strong signal for transparent and regulated climate protection in the private and public sectors. The time frame in which the rules will be implemented globally remains to be seen, the participants believe.
At the myclimate live event on 17 May, the panel participants discussed how carbon offsetting works, the changes we can expect to see after COP26, and the differences and parallels between the voluntary and mandatory offsetting markets. The event was moderated by Caroline Roth and was enlivened by further questions from the audience.
Regulations to Prevent Double Counting
The volume of the voluntary offsetting market has grown steadily over the past few years. For many companies, reducing their own ecological footprint has been on the agenda for some time, frequently with the aim of becoming a “climate-neutral” company or selling a product or service as “climate-neutral”.
At COP26 in Glasgow in November 2021, regulations were agreed upon to provide clear guidelines for the future as to how CO₂ certificates will be traded. Among other things, the established set of rules is intended to prevent any double counting of emissions reductions between its parties for projects in both the voluntary and mandatory markets.
Article 6 of the Paris Rulebook governs the mechanisms of voluntary and mandatory carbon offsetting, as well as trade in emissions certificates. The Rulebook proposes that countries may also work together to achieve their climate targets – so-called Nationally Determined Contributions or NDCs. These framework conditions and binding rules were officially established at the Climate Conference in Glasgow (COP26) last autumn.
Article 6.2 governs the mandatory market, including cooperation between states. Article 6.4, meanwhile, is dedicated to the voluntary offsetting market. An important goal of this body of rules is to prevent any double counting of emissions reductions. To ensure that emissions saved are counted only once, accompanying measures are required between countries and organisations – so-called corresponding adjustments. These can ensure that companies can continue to call themselves “climate neutral” in the future too. Following the adoption of Article 6, it is now a question of implementing the body of rules in specific terms and developing the structures needed for this.
Despite the clear definition of the mechanisms for offsetting and for trading in emissions reduction certificates, certain details of the regulations are not yet completely clear, and there is also still some uncertainty regarding the timeline. Nevertheless, it is important to prepare for changing framework conditions. myclimate aims to continue to realise as many climate protection measures as possible in cooperation with businesses, private individuals and political players.
For companies and private individuals alike, support for effective carbon offset projects, whether via the instrument of offsetting or not, remains an effective immediate measure for combating climate change.