GLASGOW (BLOOMBERG) - Talks on creating a global carbon market have run into new obstacles, threatening a key benchmark of success for the COP26 global climate conference in Glasgow, Scotland.
Negotiations on carbon trading exposed fault lines late on Thursday (Nov 11), with countries disagreeing on how to account for emissions credits that get sold in the global market, according to people familiar with the matter, who asked not to be identified because the information is private.
Talks will continue on Friday - with less than 24 hours to go until the summit is due to wrap up.
Getting a deal on rules for global carbon trading would mark a major success for this round of climate talks as negotiators have tried and failed for six years to nail an agreement. The hope is that an accord on trading can help emissions, funnel cash to poor countries and boost investment in clean energy technology.
But the risk is that a weak deal would enshrine in the system rules so loose that they could end up allowing for emissions to rise rather than fall.
Talks on carbon trading collapsed in 2019 at the last round of climate talks in Madrid, with Brazil and the European Union (EU) at loggerheads on topics including how to avoid counting the same emissions reductions twice. Those accounting issues remain a stumbling block, and other obstacles have also emerged during the talks in Glasgow.
Going into the talks, the chances of success had been looking up. Brazil had shown some flexibility, and the EU was encouraged.
Earlier on Thursday, Brazil even thanked others for the "hard work and constructive spirit over the past days that have allowed us to now be as close as we have ever been to an agreement".
The draft compromise on accounting rules backed by Brazil was also supported by the US and Japan, according to the people with knowledge of the talks.
Yet while Brazil's flexibility represents "a bit of a breakthrough," the proposed solution on accounting rules hasn't won support from some other countries, according to the International Emissions Trading Association.
"We know that neither India or China has so far agreed to this new Brazilian position, and therefore more work is needed," IETA said in a newsletter, adding those two nations could be prepared to compromise.
The spat on how to avoid double counting of carbon offsets is one of three key stumbling blocks in the talks.
Nations are also apart on how big a share of revenues from trading should be funneled toward climate-vulnerable countries and whether to allow the use of old carbon credits in the new market.
Espen Barth Eide, Norway's minister of climate and environment, said late Thursday that as talks were approaching "crunch time," several issues remained open.