Role of carbon markets in the COVID-19 recovery
Now that the global COVID-19 pandemic is straining public finance and fuelling a rise in government debt, it is more important than ever to find the most cost-effective action to abate carbon emissions, and to increase the role of private finance in doing so, an EBRD paper published in December 2020 points out.
The paper urges a broader uptake of carbon markets, which can help lower the cost of achieving mitigation targets and help countries ratchet up the ambitions set out in their NDCs to implement policies and practices that could limit global warming to 1.5 °C. Carbon markets are starting to build further momentum and there is a groundswell of interest among private sector actors as evidenced by the newly formed Taskforce on Scaling Voluntary Carbon Markets, launched by Mark Carney. Already one-third of the countries that have so far submitted NDCs say they intend to make use of international carbon markets – this includes Turkey, which in its first NDC submission “aims to use carbon credits from international market mechanisms to achieve its 2030 mitigation target in a cost effective manner”. This can be further leveraged if the rules under Article 6 are clarified and adopted by COP26, and if countries recognise the ability to adopt deeper emission reduction cuts in subsequent NDC updates.