Striking deal on emissions-trading scheme proves elusive again at COP26

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After six years of failed efforts, there is hope COP26 could produce a long-awaited deal on rules for a global carbon market, seen as key to helping countries and companies cut emissions while driving investment into low-carbon projects.

Generally, most countries are in favour of a carbon-trading system as a way to cut the emissions behind climate change. 

But a major stumbling block in the negotiations has been agreeing on how a carbon-trading system would work and how much credit each country could earn toward their emissions targets.

A general framework was included in the 2015 Paris Agreement, which more than 190 countries have ratified. But the specifics are still unclear — and that's why it remains a proposal instead of a solid agreement.

During the two-week climate conference in Glasgow, COP26 president Alok Sharma remarked that while progress had been made on the issue, there also was much more work to be done.

"Clearly there's a political consensus that has to be built on this," he said, while also describing how people will be "astonished" if talks once again fail, since "we've been discussing this for six years."

The system would allow countries that have exceeded their emissions reductions to sell that credit to other countries; credit which would then be used in the name of meeting their own climate targets — known as an offset. It could also create a trading market for such credits, to be used by both public and private sectors.

There is a sense of urgency to these talks, however, as some private carbon markets already exist in various regions of the world — but without any established accounting rules or oversight.

A number of companies are prepared to spend on environment projects in order to earn carbon offsets in the name of helping them reach net-zero climate goals, including technology and energy companies in Canada.

WATCH | How a global carbon-trading market could work:

The aim is that all of those dollars could ultimately help fund clean energy projects around the globe.

The carbon-trading system is officially referred to as Article 6 of the Paris Agreement and there are two main elements under negotiation.

The first is about allowing an exchange of carbon credits from one country to another, essentially allowing one nation to pay another to cut emissions on its behalf.