Cross-Border, Nature Based Market Solutions to Protect Blue Carbon Coastal Ecosystems in the Californias

March 2022

one day have inregulated carbon markets. Proceeds of the carbon credits generated can be used to finance further mitigation, conservation or restoration initiatives, such as payment for ecosystem services programs, and that remains a potential opportunity along the Baja California peninsula. Furthermore, the UN Framework Convention on Climate Change (UNFCCC) celebrated its 26 th Conference of the Parties (COP26) in November 2021 in Glasgow, where the rulebook for Article 6 on international carbon markets (an unfinished business inherited from COP21 in Paris) was finalized and adopted. As drafted, Article 6 will not only ensure quality and permanence of reductions sought after the international carbon markets, but it will also dynamize the international carbon markets in two ways. First, through Article 6.2, it will enable international transfers of carbon market units amongst signatory countries. In addition, it allows nations to authorize carbon credits for the voluntary carbon markets. For any of this “authorized carbon credits”, the host country must apply corresponding adjustments thus taking those reductions off from country wide NDC mitigation accounting and effectively allowing other entities to claim the reductions. This last section “enables the voluntary carbon market to generate and use carbon units that are backed by corresponding adjustments,” thus giving projects a high degree of credibility, and investors certainty, as these are backed by host countries. In that sense, the rulebook achieved at the COP26 aims to tackle the additionality issue by helping to avoid double-counting of emissions reductions, by requiring countries transferring carbon credits abroad to make the corresponding adjustment in their own mitigation accounting. Furthermore, companies and investors wishing to buy carbon

credits in the voluntary market, can then buy credits linked to country’s corresponding adjustments. According to Chirag Gajjar, head of subnational climate action within the climate program at the World Resources Institute, “the rules agreed to in Glasgow will make offsetting programs stricter”. 71 Furthermore, the Taskforce on Scaling Voluntary Carbon Markets (TSVCM) released a Phase II Summary Report in July of 2021, proposing new and rigorous quality standards called Core Carbon Principles. These are meant to make sure that they have a measurable, meaningful impact on emissions and to establish a strong Measuring, Reporting and Verification (MRV) process that is consistent across both voluntary and mandatory markets. The TSVCM also announced it is working to establish a global governance body, which will finalize the standards and oversee voluntary carbon markets globally. Before such guidelines, creating, accounting and verifying carbon credits came down basically to the private sector and verification organizations. All these efforts will contribute towards building higher quality, permanent, and additional emissions reductions, but will also provide the higher degree of confidence and credibility in the markets—both voluntary and mandatory—needed for them to scale up, bring the carbon price to a point that more truly reflects the negative externalities global warming pollutants bare, and thus play a more meaningful role in the fight against the climate crisis. According to the UNFCCC, before COP26, around two thirds of the 2015 Paris Agreement signatories had already included some sort of carbon pricing mechanism in their NDCs, and the World Bank estimated that, “using carbon pricing approaches on a large scale to meet the emission reduction

71 https://www.greenbiz.com/article/what-passage article-6-means-carbon-markets

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