Countries reached a milestone agreement around midnight on Saturday — the final day of the 29th U.N. Climate Change Conference in Baku, Azerbaijan — that formalizes the framework and rules for a global market to buy and sell carbon credits.
The agreement, which supporters say will help countries reach their emissions targets while mobilizing billions of investment for clean energy projects, has been in the making for 10 years. It couldn’t fully launch until countries hashed out two aspects of the all-important Article 6 of the 2015 Paris Climate Agreement.
The first, Article 6.2, agrees on additional rules that govern how countries trade carbon credits through bilateral or multilateral agreements. This allows for country-to-country trading of carbon credits, also known as internationally transferred mitigation outcomes, or ITMOs. The second, Article 6.4, allows for the launch of a centralized global carbon trading mechanism that will be overseen by the U.N. Framework Convention on Climate Change, or UNFCCC. Trading could begin as soon as next year.