And will action by governments work to harness investment? Or hinder it?
Last Thursday, November 3, a few days before the opening of COP27 (tomorrow !), Gold Standard published a new paper prepared in collaboration with EY Law that explores how the new context under the Paris Agreement, with the adoption of an Article 6 rulebook and the implementation of Nationally Determined Contributions (NDCs) in most countries, might shape the way governments engage with the carbon market, and what this could mean for the private sector.
About the new Paper "Carbon Credit Rights under the Paris Agreement" (supported by the Swedish Energy Agency):
Categories of rights are proposed: to generate, to own and to use.
Categories of action: tracking (e.g. national registries), approval, authorization and corresponding adjustments, incentives and legal classification
Taxation
Important situations are discussed, "for example, if the government of Peru were to permit mitigation outcomes achieved within its national borders for use by other countries, such as Switzerland, with which it has a bilateral agreement". Or "the use of mitigation outcomes by aircraft operators". And much others.
Governments may place limitations on use-purposes
Positive side: project developers may have more certainty about the legal and accounting treatment of their carbon credits by the host government, providing assurance for end-buyers and clearer claims
Negative side: a period of uncertainty following the adoption of Article 6 guidance, while national governments establish policy and processes for managing carbon market activities. And be subject to greater sovereign risk, considering that governments will have the ability to change or withdraw authorisations or approvals.
It is expected, though, that many national governments are likely to see the carbon market as an opportunity for inward investment, climate mitigation and to generate broader social, economic, and environmental benefit.
Conclusions: a) Uncertainty itself can cause disruption, b) Markets involve shared interests, c) Local contexts matter and d) Market action continues to matter
If you follow the (global) develoments of Carbon Credit Markets, you should read it fully.
Last but not least, as you will see, Gold Standard also disclosed "New Impact Registry Functionality". It will enable its carbon credits to be labelled as authorised and correspondingly adjusted under Article 6, underpinning its transparent and robust implementation.
Click below to access. This is a must read. Immediately.
