Nothing brings home the urgency of climate change more than living 1.5 metres (5ft) above the rising seas as my country, the Maldives, does.
But to cope with climate change, developing countries – like the Maldives and others in the 74-nation Climate Vulnerable Forum – need money.
The most vulnerable nations need an estimated $490bn a year by 2030 to fund their climate strategies, including mitigation, adaptation and the cost of loss and damage. And yet, the provision of climate finance from major emitters remains woefully inadequate.
It is an indictment of an outdated global financial architecture that turns a blind eye to those on the climate front lines. What good is a global financial system if it denies the world’s most vulnerable the opportunity to build resilience against climate devastation while others pump out the carbon pollution driving rising temperatures?
In this context, carbon markets hold the potential to mobilise urgent climate finance crucial to narrowing the funding gap and advancing climate justice.
The Climate Vulnerable Forum and Vulnerable 20 Finance Ministers (CVF-V20) recognise carbon markets as one of the levers that, by 2030, could unlock an additional $20bn annually to V20 countries. This would significantly strengthen climate resilience, reduce economic losses and enable these nations to pursue sustainable development.
Scaling carbon markets through high-integrity, standardised projects could expand nature and climate investment pipelines, halving the cost of implementing national climate plans, known as Nationally Determined Contributions (NDCs), and supporting other development goals. It would provide governments with increased revenue, particularly for nature-based solutions, mitigation and resilience while aligning emissions reductions with national priorities. The result could mean a sevenfold impact for the host country of carbon projects.
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Many of the V20 countries possess unparalleled capacity for emissions reductions and carbon sequestration, for example through preserving and restoring tropical and temperate forests. This makes them ideally placed to host impactful carbon-creditable projects, which help achieve both domestic and international climate goals.
Yet these countries with the most to gain from carbon markets are typically unable to access carbon finance and benefit from its full potential because they are often the least equipped with specialised knowledge along with tailored market infrastructure, including appropriate policies and regulation.
These barriers hold back emerging markets and developing economies from leveraging carbon markets to help drive decarbonisation and build climate-resilient economies while simultaneously advancing their sustainable development priorities.
To minimise the risk of carbon markets exploiting developing economies and maximise potential climate impact and development benefits, climate-vulnerable countries must be empowered to make informed and sovereign decisions about carbon market engagement and management.
That’s why the CVF–V20 is partnering with the Voluntary Carbon Markets Integrity Initiative (VCMI) to help developing countries strategically integrate carbon market access into their climate prosperity plans. Climate prosperity plans are multiphase national strategies for investment and access to technology designed to support climate-vulnerable nations to transform climate risks into bankable opportunities.
As part of this effort, the CVF–V20 will leverage VCMI’s updated carbon markets access toolkit to help its members evaluate and navigate engagement with diverse carbon markets, from voluntary schemes to those established under Article 6 of the Paris Agreement.
Building on the learning from VCMI’s Access Strategies Programme, the toolkit will provide V20 nations with a step-by-step guide to key decisions, including how to address legal and institutional considerations and how to host high-integrity carbon projects that yield tangible benefits.
Since 2021, VCMI’s Access Strategies Programme has helped countries establish frameworks and best practices for generating and selling high-integrity carbon credits that meet their needs. This has included developing best practice guidance for carbon markets in the Mexican state of Yucatan to address concerns over the unfair treatment of local communities and a decision matrix tool for the government of Benin, which identified a climate investment gap of $11.3bn by 2030.
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Initiatives like this are all the more important given that, to date, the international community has underserved climate-vulnerable countries with financial support to address climate change.
While calling for reforms in the global financial architecture, these nations are simultaneously strengthening their domestic capacity to unlock additional capital for investment in climate, development and nature. Climate-vulnerable countries are working together with partners like VCMI to find solutions that address the urgency and scale of the challenges we face.
V20 nations can access this support to make strategic use of carbon markets to build resilience – both nationally and globally. Our very survival depends on it.
The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.