The carbon projects are funded by individuals and companies across the world who buy the so-called carbon credits, each equivalent to one ton of CO2, to offset emissions from their home countries.
This is just one of the ways CO2 is traded worldwide, and one of the carbon market models that will be discussed by negotiators at the UN Climate Change Conference (COP 25) in Madrid. . The aim is to arrive at a regulatory framework for a carbon market system, a complex issue foreseen in Article 6 of the Paris Climate Agreement.
Nearly 200 countries have ratified the historic climate agreement aimed at limiting global warming to 2 ° C above pre-industrial levels by the end of the 21st century, with the optimum level being 1.5 ° C. However, the current reduction targets set by each country – called Nationally Determined Contributions (NDCs) – make both goals unrealistic. Based on current figures, experts project a global temperature rise of at least 3ºC.
In Madrid, two different carbon trading systems will be discussed. The first aims to enable countries that exceed their climate goals to sell excesses to nations that are struggling to achieve their own goals.