In her monthly Expert Take column, Selva Ozelli, international tax advisor and CPA, covers the intersection between emerging technologies and sustainability, and provides the latest developments in tax, AML / CFT regulations and legal issues affecting the crypto and blockchain.
The 2021 United Nations Climate Change Conference (COP26), where I exhibited my art, was held in Glasgow, Scotland, and ended with the adoption of the Glasgow Climate Pact, bringing nearly of 200 countries of maintaining the global temperature increase of 2100 below 1.5 degrees Celsius. .
The conference remained more focused on emissions reductions than on arrangements for developed country assistance to developing countries, as noted in UN-Energy’s summary of the ministerial thematic forums, which outlined recommendations and steps. keys to achieving the goal of sustainable development 7 and net-zero emissions. Key elements of the global roadmap include:
- Closing the energy access gap: Provide access to electricity to the 760 million people in the world who lack it. Ensuring clean energy cooking solutions for the 2.6 billion people who depend on harmful fuels.
- Rapid transition to clean energy: Abandon all planned coal plants and reduce coal-fired electricity production capacity by 50% by 2030. Rapidly increase energy transition solutions to reach 8,000 gigawatts of renewable energy by 2030 by increasing the annual energy efficiency rate of 0.8% to 3.0%.
- Leave no one behind: Integrate equity and equality into energy sector policy by planning and financing, creating green energy jobs and integrating energy sector policies and strategies into those that provide fair energy transitions.
- Mobilize adequate and well-directed funding: Triple investments in clean energy globally by 2030 to accelerate access to finance. Phase out inefficient fossil fuel subsidies to support market-based transitions to clean energy. Create favorable policy and regulatory frameworks to leverage private sector investments in clean energy.
- Harness innovation, technology and data: Develop the supply of energy innovation that fills key gaps and increases demand for clean and sustainable energy technologies and innovations through market-oriented policies, harmonized international standards and carbon pricing mechanisms.
The COP26 conference made history as the first climate summit to explicitly include a ‘coal phase-out’ in its decision, and it set new rules for carbon market mechanisms, commonly referred to as Article 6. A recent research paper estimated that putting a global carbon market in place would save around $ 300 billion a year by 2030.
Related: Pandemic year ends with symbolic carbon cap and trade solution
Article 6 of the Paris Agreement, which covers international cooperation – including carbon markets – established new rules for trading carbon credits representing a metric tonne of carbon that has been reduced or withdrawn from the atmosphere. The new rules create an accounting system intended to avoid double counting of emission reductions and composed of two parts: a centralized system open to the public and private sectors, and a separate bilateral system that will allow countries to trade credits that they can use to achieve their decarbonization goals.
Related: Climate Chain Coalition advocates for the creation of a green economy at COP26
Joseph Pallant, Director of Climate Innovation at Ecotrust Canada and Founder and Executive Director of the Blockchain for Climate Foundation, explained to me:
“The results in reducing emissions are the most important assets, and soon the most valuable, in the world. “
He continued, “The BITMO platform, built on Ethereum, enables cross-border collaboration on emissions reductions, distributing the benefits of clean energy, natural climate solutions and better infrastructure across the world. world.”
The BITMO platform is a project of the Blockchain for Climate Foundation, which created it to advance Article 6 of the Paris Agreement and use blockchain technology to build a more global carbon market. effective and efficient. It enables the issuance and exchange of “Blockchain Internationally Transferred Mitigation Results” (BITMO) on the Ethereum blockchain as ERC-1155 Non-Fungible Tokens (NFTs). Each token represents a metric ton of CO2, and the relevant carbon credit data is fed into the NFT.
Related: How will blockchain technology help fight climate change? Expert response
Article 6 aims to link global opportunities for emission reductions to the necessary capital and demand. For a global carbon market to reflect actual emission reductions, the accounting infrastructure must ensure integrity, cooperation and avoid double counting of emission reductions. The BITMO platform acts as a secure record for the issuance, transfer and withdrawal of internationally transferred mitigation results from each country which can be integrated or reconciled with national carbon registries and future requirements of the Convention- United Nations Climate Change Framework. BITMOs help meet global climate goals by making all relevant data easily visible, accessible to the public, and settled immediately when exchanged, thus avoiding double counting of emission reductions.
Another of the main talking points among world leaders at the COP26 conference in Glasgow included the implementation of a carbon tax, which shifts responsibility for the consequences of climate change to responsible polluters, according to the World Bank. Currently, 69 countries apply carbon taxes, ranging from $ 1 to $ 139 per metric tonne.
Related: The need to report carbon emissions in the context of the coronavirus pandemic
The administration of United States President Joe Biden announced $ 555 billion in spending to tackle climate change as part of the Build Back Better Act, which includes a proposed methane royalty designed to incentivize oil and gas companies to reduce their methane emissions.
The views, thoughts and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Selva ozelli, Esq., CPA, is an international tax lawyer and chartered accountant who writes frequently on tax, legal and accounting matters for Tax Notes, Bloomberg BNA, other publications and the OECD.