As time is running out until the end of the COP26 climate summit in Glasgow, a key piece remains unanswered: the rules for global carbon markets which experts say are key to reducing emissions that cause the climate to emerge. climate change.

Signs of a breakthrough on one front emerged on Thursday as negotiators laid out a plan to create two types of emissions credits to address issues that have been outstanding for years.

The so-called “Article 6” rules for carbon markets are the subject of heated debate and contribute to the derailment of the previous Madrid COP in 2019, which was widely deemed a failure.

The rules would pave the way for a system in which countries that exceeded their climate targets would be able to sell units representing emission reductions to other countries to use to meet their own commitments. They would also create a new market for the shares to be traded by the public and private sectors.

Divisiveness remains over several major issues, including how to count units, what credits should be allowed and whether some of the money from the sale of units should go to developing countries.

Speaking to the FT on Thursday, Norwegian Minister Espen Barth Eide, who is helping lead Article 6 negotiations, said they were working on a “new approach” on how to avoid double counting.

This could happen, for example, if a country planted a carbon-absorbing forest and recorded the resulting emission reduction in its own accounts, while selling units to another country which used it to offset its own pollution.

Under the proposed plan, a category of units could be traded by countries and used to meet their emission reduction targets. Only one country would be allowed to claim an emission reduction credit. The second class of units would not be allowed to be used by countries to achieve these goals, but could be sold to other buyers, such as businesses.

Experts said there was a clear desire among negotiators to finalize the rules, with countries keenly aware of the growing interest in carbon “offsets” – tokens that organizations buy to offset their emissions.

I think we’re at the point where each party has to come to terms with something they won’t be happy with

“Without a rulebook, there will still be activity in the international carbon market,” said Andrea Bonzanni, director of international policy at the International Emissions Trading Association. “This is a change – a change in the larger context in which the negotiations are taking place.”

James Cameron, independent advisor to the COP26 presidency, said countries could see from the dollars paid in the compensation that “the big sums of money are getting closer” – which was an incentive to finalize the rules .

But with just two days until the conference ends, country delegates are still grappling with several other technical issues.

One of them is whether pre-2020 credits should be allowed in the new system. Many of them are deemed not to provide the climate benefits they claim and were generated under the auspices of the Kyoto Protocol in 1997.

Developing and middle-income countries, such as Brazil, favor the possibility of “postponing” some of these credits, arguing that their cancellation would deprive the projects through which they were generated – such as tree planting programs – essential funds.

“There will be room for a limited postponement,” Eide said Thursday.

A “buyer’s club” of nations that only buy newer, better credits could also emerge, experts following the negotiations have said.

Another question is whether a tax should be imposed on all bilateral trade, with the money going into a fund to help developing countries meet the growing costs of climate change adaptation.

Although many developing countries are in favor of this idea, many rich countries, such as the United States, are reluctant to accept it. Instead, they aim to negotiate an agreement whereby the money for adaptation is distributed in another way.

This question is “where is the real fight, and we don’t know [a compromise] looks like, ”said a person familiar with the talks.

There was “a general sense of hope that we will actually reach agreement on Article 6 this time around.” I haven’t had so much hope in the past three years, ”said Kelley Kizzier, vice president for global climate at the US nonprofit advocacy group Environmental Defense Fund.

The three issues had long been “major sticking points,” Bonzanni said. But he thinks an agreement will finally be found: “Progress is being made. I think we’re at the point where each party has to come to terms with something they won’t be happy with. “

Additional reporting by Neil Hume

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