It is an exciting time for carbon markets. After years of unsuccessfully trying to reach a consensus, mechanisms for Article 6.4 of the Paris Agreement received approval at COP29. The door is now open for countries and businesses alike to trade credits on a UN carbon market. This article explores how the carbon credit space has given rise to a business model for technologies that reduce or remove carbon dioxide.
Of course, the concept of a carbon market is nothing new. For many decades, the importance of finding a financial mechanism to address CO2 emissions has been recognized, but the global approach has remained disjointed. Compliance carbon trading markets such as the EU ETS (Emissions Trading System), where industries must lower their carbon footprint or purchase additional allowances for unabated emissions, have already been established by governments in several regions. About ¼ of all global anthropogenic CO2 emissions are now covered by some form of compliance carbon pricing.
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