Countries participating at the two-week COP29 climate summit reached on Monday concensus on new standards that govern the trade of carbon credits, which are critical to launching a U.N.-backed global carbon market that would fund projects that reduce greenhouse gas emissions.
The green light was an early deal on day one of the U.N. conference in Baku, Azerbaijan. Governments are also meant to hammer out a climate finance agreement, although expectations have been muted by Donald Trump's U.S. election win.
President-elect Trump has said he would again pull the U.S. out of the global Paris climate agreement, which lays the groundwork for the planned U.N.-backed carbon market.
COP29 president Mukhtar Babayev, on the other hand hailed the "breakthrough" but said more work was needed.
Other key aspects of the overall framework still need to be negotiated, experts said, but the decision brings closer a long-sought U.N.-backed market trading in high-quality credits.
"It's hugely significant," Erika Lennon, from the Center for International Environmental Law (CIEL), told Agence France-Presse (AFP) in Baku, saying it would "open the door" for a fully-fledged market.
Juan Carlos Arredondo Brun, a former climate negotiator for Mexico who now works for carbon market data and souring company Abatable, said the endorsement "will bring us closer to operationalizing the carbon market before any single party may decide to move away from the Paris Agreement."
Global carbon market
Monday's deal could allow a U.N.-backed global carbon market, which has been years in the making, to start up as soon as next year, one negotiator said.
Since the Paris climate agreement in 2015, the U.N. has been crafting rules to allow countries and businesses to exchange credits in a transparent and credible market.
The benchmarks adopted in Baku will allow for the development of rules including calculating how many credits a given project can receive.
Carbon credits theoretically allow countries or companies to pay for projects anywhere on the planet that reduce CO2 emissions or remove it from the atmosphere and use credits generated by those projects to offset their own emissions.
Examples of projects could include cultivation of CO2-absorbing mangroves, or distribution of clean stoves to replace polluting methods of cooking in poor rural communities.
The market could be one route for U.S. companies to keep participating in global efforts to address climate change, even if Trump were to quit the Paris accord. If that happened, U.S. firms could still buy credits from the U.N.-backed market to meet their voluntary climate targets.
While the standards approved in Baku were aimed at allaying concerns that many projects do not deliver the climate benefits they claim, campaigners said they fell short in areas including protecting the human rights of communities affected by projects.
"A lot of funders are worried that the markets aren't stable enough, credible enough to be able to invest more in," Rebecca Iwerks, a co-director at non-profit group Namati told Reuters.
"It could actually hinder the development of the market if you don't have a strong standard," she said, of Monday's deal.
Some negotiators were also critical of the way the deal was done. The standards were agreed by a small group of technical experts, with some countries saying they had not been given a fair say in the final rules.
Kevin Conrad, executive director for the Coalition for Rainforest Nations and former climate envoy for Papua New Guinea said the supervisory board had overstepped its mandate.
"We endorse what they have done, not the way they have done it," he said.
Countries at COP29 will also try to finish other rules aimed at creating a robust market.
The International Emissions Trading Association (IETA), a business group that backs global carbon markets, has said total trading in the U.N.-backed market could by 2030 generate $250 billion a year and cut 5 billion metric tons of carbon output annually.