Carbon markets in Latin America are gaining global prominence as the region showcases a unique capacity to implement various climate solutions beneficial to both the region and the world. To ensure the longevity and success of these projects, they must incorporate a strong social approach.
These were some of the main reflections around which the Latin America Climate Summit (LACS) was held. This event was organized by the International Emissions Trading Association (IETA) and Asocarbono, from June 25 to 27, in Cartagena de Indias, Colombia. According to the organizers, the LACS is the most important event in Latin America and the Caribbean carbon markets.
Quadriz’s team, as a member of IETA, participated alongside delegations from 42 countries. We had the opportunity to forge valuable connections and share insights about ongoing nature-based carbon projects in the Paraguayan Chaco. Additionally, we gathered pertinent information from various sessions and plenaries, which we believe will be of interest to our audience.
Carbon projects: importance, pricing, and latest developments
During the opening remarks, Francisco Ocampo, CEO of Asocarbono, emphasized the need to strengthen carbon markets in Latin America, describing them as the “most efficient tool against climate change from environmental, economic, and social perspectives.”
Ocampo highlighted the necessity of a collective approach to carbon markets, involving the private sector, governments, and local communities to achieve high-quality and successful projects.
Hania Dawood, Practice Manager for Climate Finance and Economics at the World Bank, delivered one of the first presentations. She noted that despite limited price increases, carbon pricing revenues surpassed USD 100 billion for the first time last year. Over half of this revenue funded climate and nature-related programs.
Dawood provided insights into carbon credit issuance in Latin America and the Caribbean (LAC): 22 countries have issued carbon credits, with five countries concentrating 85% of the total issued credits. Notably, Brazil accounts for almost half of all credits.
She also highlighted the growing momentum of Article 6.2 of the Paris Agreement in Latin America, particularly in Chile, Costa Rica, Colombia, the Dominican Republic, and Paraguay, which all signed MoUs (Memorandum of Understanding) in 2023.
Communities’ relevance and safeguards
Dirk Forrister, President and CEO of IETA, highlighted during his opening remarks that Latin America plays a crucial role in carbon markets and climate action due to the region’s potential to offer numerous solutions. He emphasized that the Latin America Climate Summit is unique in bringing together diverse voices and perspectives on this topic.
Local community representatives actively participated in these discussions. Wasinton Carabali, from AMUCIB (Association of Black and Indigenous Peasant Women of Buenaventura), expressed that his organization’s members view carbon markets as an opportunity to remain on their lands, because “territory is the base of (their) transformation.”
During the plenary session “Indigenous People and Local Communities: Safeguards, Benefit Sharing, and Equitable Distribution of Resources,” Sebastian Lema, Climate Finance Director of the Center for Clean Air Policy (CCAP), discussed the importance of safeguards. He described them as “the golden rule that allows projects to be sustainable over time”.
Financing carbon projects
The breakout session titled “Making the Finance Flow to Nature: Evolving Approach” discussed the inadequacies of the current policy landscape in supporting the critical investments necessary for carbon projects. According to IETA’s presentation of the session, realizing the full potential of nature can deliver one-third of global mitigation efforts.
Speakers at this session emphasized that trust is crucial for gaining financial support for carbon projects. This requires the media to responsibly inform the public about carbon markets and companies to provide reliable information and educate about their roles.
They also identified additional factors that could help increase financing for carbon projects: the establishment of a clear and solid legal framework in the countries where projects are implemented, community empowerment, high project integrity, and tax incentives.
Role of the public sector
Representatives from various governments in the region shared their perspectives throughout the summit. Adriana Gutiérrez, a Carbon Markets consultant at Colombia’s Environmental Ministry, stressed the importance of aligning carbon markets with Article 6 of the Paris Agreement. This alignment involves enhancing transparency, increasing ambition, and producing real and verifiable outcomes, she explained.
Juan Pedro Searle, Chief of the Climate Change Unit at Chile’s Ministry of Energy, talked about the role of Chilean society in pushing for the creation of the Climate Change Law. He highlighted the need for consistent public policy that remains stable over time, despite political changes or elections.
A plenary session dedicated to the role of subnational governments in carbon markets and achieving climate commitments underscored the importance of focusing on the subnational level due to their physical proximity to the natural resources that need protection.
Main conclusions
The Latin America Climate Summit underscored the region’s pivotal role in the global carbon markets and the multi-faceted approach required to bring climate solutions effectively. From emphasizing the importance of trust and transparency in carbon projects to advocating for robust public policies and community empowerment, the discussions highlighted the need for collective action.
The involvement of local communities, the alignment with international agreements like Article 6 of the Paris Agreement, and the contributions of subnational governments were all identified as crucial elements for successful and sustainable carbon market initiatives. The summit served as a platform for diverse voices, fostering collaboration and sharing insights that will drive forward the region’s climate action efforts.
Events of this kind play a crucial role in bringing together key players in the carbon markets to collaborate on solutions, share insights and innovations, and strengthen networks. Given the global and dynamic nature of the carbon markets, such gatherings facilitate invaluable opportunities for collective action and knowledge exchange.
(*) Claudia Merlos is a journalist and communicator with over a decade of experience in both media and international organizations. Most recently, she focused on development communications within the United Nations System (UNDP, FAO). Claudia holds a master’s degree in Development from the London School of Economics (LSE) and brings her expertise to Quadriz, where she joined as a PR and Communications Specialist in April 2024.