Mauricio shared his insights on the current and future state of play in Latin American carbon markets and his expectations for negotiations at COP28.
Overall, the first report of the global stocktake proves that the global community is lagging behind on climate action. While some countries have built the tools to set and achieve their Nationally Determined Contributions (NDCs), for others, the challenge lies in identifying the first steps to take action. But some of this is already happening in Latin America: countries are facilitating the establishment of economic, financial, and market instruments to catalyse investment in climate action, and seizing great opportunities.
2022 has seen this paradigm shift accelerate. From what I see in terms of developing regulation and policy signals on a national and subnational level makes me confident that the necessary market tools will be widespread within the next year. Multiple instruments, from ETSs to Article 6 regulations, and registries such as corporate carbon neutrality for exporters of the region and green taxonomies, will be in place as part of the new public policy toolkit.
Thanks to these launches, different compliance markets in the region will be able to channel funds to a green economic transition, moving from 'business as usual' towards a more sustainable society overall. Additionally, the changing landscape of carbon markets via the operation of several bilateral agreements under Article 6 of the Paris Agreement will generate impact on both the public and the private sectors across the region.
These new developments are spearheaded by a handful of countries: Chile, Brazil, Colombia, Peru, and Costa Rica are the primary trailblazers. I believe they will lead the way in implementing market-based solutions to channel funds towards a greener economy. But as a whole, using and committing to climate finance centres as investment vehicles allow countries to achieve the climate vision of meeting their NDCs.
However, the private sector is a critical element in this equation. Regional corporations can lead by decarbonising their value chains, funding climate action, and increasing their competitiveness in maturing global compliance markets. New, greener technologies will enable significant advances in these regional transitions. Among the various ways to finance this transition, Article 6 of the Paris Agreement will be the primary mechanism for carrying this out.
To catalyse business opportunities and create market conditions, educating the market is a must. Everyone, across the public and private sectors, needs to know about the benefits associated with a green economic growth path in order to build capacities and address the challenges they are facing. Here, I believe building and sharing knowledge across sectors and industries is the first step towards speaking a common language and igniting the proverbial flame of change and opportunity in Latin America.
We want COP28 to give nations more clarity on negotiations under Article 6 (6.2, 6.4 and 6.8). In my view, it is essential that the negotiations create a simple, but not reductive, step-by-step guide. This will then enable the smooth implementation of Article 6 to go ahead among UN members.
This process is essential for countries in the Global South, whose lack of capacity and resources makes it especially difficult to implement these goals. Among the Global South countries, Latin America, as a region, will try to take advantage of its substantial strategic ecosystems and biodiversity to secure sustainable funding.
Nevertheless, these changes go hand in hand with the broader evolution of the carbon market and global momentum towards channeling finance towards sustainability through economic instruments. That's what we need to make every solution we have and use a sustainable one.
