International carbon markets need better frameworks both at domestic and international level, and consistent guidance on the role of carbon credits and their legal nature, a report by the World Bank has found.
The report, presented at the World Bank's Innovate4Climate conference in Berlin today, calls for better harmonisation at several levels, including governance structures but also extending to frameworks such as integrity initiatives, independent standards, verification bodies, registers, transaction registries or exchanges.
The World Bank also urges progress on the framework for a new UN-supervised carbon market under Article 6 of the Paris climate agreement at the UN Cop 29 climate conference in November in Baku, Azerbaijan.
Article 6.4 additionally provides for so-called mitigation contribution units, which could be used in the voluntary carbon market for "appropriate claims", the World Bank said.
Greg Murray, founder of the KoKo networks which sell carbon units from projects providing efficient cookstoves to African households, called at the conference today for Europe to show "more leadership" on carbon markets at Cop 29. Article 6 negotiations failed last year to a large degree because of the EU's fears of insufficient environmental safeguards for the more regulated Article 6.4 mechanism.
There was "big enthusiasm" at Cop 28 in Dubai last year about the work carried out by the Integrity Council for the Voluntary Carbon Market (ICVCM) and the Science Based Target Initiative (SBTI) to raise standards, Hania Dawood, contributor to the report and World Bank practice manager for climate finance and economics, said at the conference today. But this enthusiasm has had no impact on the market, Dawood said.
Agreement is still lacking in ongoing Article 6 discussions on key operational issues related to transparency, environmental integrity and the avoidance of double counting of mitigation outcomes.
But the long debates over Article 6 are precisely to ensure the mechanism does not suffer the same fate as the voluntary carbon market, said Swiss climate negotiator Simon Fellermeyer, who has also been a member of the Article 6.4 supervisory body.
