UNCTAD advises to expand carbon markets in impoverished countries

Geneva, Nov 4 (Latin press) Carbon markets can offer a way to mobilize funds towards the most vulnerable economies in the world, an UNCTAD recommendation said today.

November 4, 2024
13:45

In UN Commerce and Development opinion (UNCTAD), less advanced countries (PMA) were among the first to join carbon markets, but currently have a limited influence due to the small size of their economies and infrastructure challenges, technology, technology and institutional capacity.

Also geographical concentration is an important problem: only six PMA (Bangladesh, Cambodia, Democratic Republic of Congo, Malawi, Uganda and Zambia), represent more than 75 percent of all carbon credits issued in volunteer markets and 80 percent of the credits under the clean development mechanism (MDL) of the Kyoto protocol, the UNCTAD report submitted on Monday.

Although the aforementioned states constitute only 1.5 percent of the MDL global projects, this concentration highlights a significant opportunity to expand participation and create more inclusive carbon markets that benefit all PMA, the institution judged.

In general, PMA countries participated in carbon markets, but their financial income is modest compared to other sources of financing, such as development aid, direct foreign investment and remittances.

In 2023, the market value of carbon credits from the PMA was approximately 403 million dollars, only one percent of bilateral credits for development, it illustrated.

The less developed countries (PMD), estimated the agency, need a billion dollars annually to achieve sustainable development objectives by 2030; that is, carbon markets alone cannot cover the existing financing gap, but can provide additional support.

In the opinion of UNCTAD, PMDs have a significant unexploited potential for climate action in sectors such as forestry and agriculture.

This potential could be equivalent to 70 percent of carbon dioxide (CO2) emissions of the global aviation industry in 2019, or about two percent of total global emissions, the institution estimated.

Due to the calculations of UNCTAD, investments in projects based on the use of the Earth would need to be profitable at carbon price of 100 dollars per ton.

In addition, PMDs have substantial opportunities to expand renewable energy with a view to satisfying local electricity needs and improving access to service. Carbon markets, summarized, can help collect part of the necessary funds, offering a promising way to take advantage of renewable resources, promote sustainable growth and modernize their economies.

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