How Carbon Trading Can Unlock Carbon Dioxide Removals

Carbon trading has long been identified as a key policy tool as part of a broader policy framework to help achieve the goals of the Paris Agreement. With COP28 scheduled to take place in UAE later this year, there is much interest in carbon markets and the role of carbon removals. Multiple Article 6 memoranda of understanding (MOUs), which are the first step to allow international carbon trade, have been signed and many more are anticipated in the future.

However, universal acceptance of carbon trading as a key tool for raising climate ambitions remains a challenge. In this Energy Comment, the importance of carbon trading and the challenges it faces are presented including how carbon trading can help countries achieve net zero. In particular, based on a combined academic and industry review, this article focuses on the importance of carbon dioxide removal (CDR) activities and examines the role that carbon trading can play in unlocking their potential and highlighting, as a top priority, the need for carbon removal projects to be internationally recognized and supported particularly within Article 6 of the Paris Agreement. The article concludes with key policy recommendations including:

1. recognizing that trading of CDRs should be identified as one of the key levers to achieve decarbonization
2. technology has an integral role to play towards improving the deployment of CDRs through carbon markets, and
3. capacity building across stakeholders is key for further deployment.

By: Malek Al-Chalabi , Hasan Muslemani