The BRICS nations—Brazil, Russia, India, China, and South Africa—have recently taken a significant step toward deepening their collaboration on climate action by signing a Memorandum of Understanding (MOU) that lays the groundwork for establishing joint carbon market projects and targets. This MOU represents a strategic move by the BRICS countries to leverage their collective influence in the global climate policy arena and to develop their own mechanisms for carbon trading, which could serve as a counterbalance to the existing systems predominantly shaped by developed nations.
Key Aspects of the MOU
The MOU outlines several key areas of cooperation among the BRICS nations, including:
- Development of Joint Carbon Markets: The BRICS nations have agreed to explore the establishment of interconnected carbon markets. This would allow them to trade carbon credits amongst themselves, thereby creating a larger and more diverse market that could potentially influence global carbon pricing and standards.
- Harmonization of Carbon Accounting and Reporting Standards: The MOU calls for the harmonization of carbon accounting and reporting standards among the BRICS countries. This is crucial for ensuring that carbon credits generated and traded within the BRICS framework are credible and comparable across borders.
- Capacity Building and Technology Sharing: The agreement emphasizes the importance of capacity building and technology sharing to enhance the ability of BRICS nations to monitor, report, and verify emissions reductions. This could include sharing best practices, joint research, and development of new technologies for carbon capture and storage (CCS) and other mitigation measures.
- Support for Sustainable Development: The BRICS nations have committed to ensuring that their carbon market projects are aligned with broader sustainable development goals. This includes focusing on projects that contribute to poverty alleviation, economic development, and environmental sustainability.
Unified Stance Against Green Protectionism
During the announcement of the MOU, Russian Economic Development Minister Maxim Reshetnikov highlighted the unified stance of the BRICS nations against what they perceive as unilateral “green protectionist” measures imposed by developed countries. These measures, which often include carbon border adjustment mechanisms (CBAMs) and other trade policies linked to environmental standards, are seen by BRICS countries as unfairly penalizing developing nations.
Reshetnikov’s remarks reflect the broader concerns of the BRICS nations that such measures could disrupt global supply chains and harm the economic interests of developing countries. By creating their own carbon markets and establishing a coordinated approach to climate action, the BRICS countries aim to protect their economies from potential negative impacts while contributing to global climate goals.
Implications for Global Climate Policy
The MOU signals a shift in the global climate policy landscape, as the BRICS nations assert their role in shaping the future of carbon markets. If successfully implemented, the joint carbon markets envisioned by the BRICS could provide a viable alternative to existing markets dominated by developed nations, potentially leading to more equitable and inclusive climate solutions.
Moreover, the BRICS’ opposition to unilateral green protectionist measures could lead to increased tensions in international climate negotiations, particularly with developed countries that advocate for such measures as part of their climate strategies. The success of the BRICS carbon market initiative could also inspire other developing nations to pursue similar regional or global collaborations, further diversifying the global carbon market landscape.
The MOU is a supplementary document to a broader framework of climate action that touches on multiple aspects like mitigation, adaptation, funding and research. It can be seen as part of the broader geopolitical picture in which the U.S., UK and EU are seen as competitors to BRICS when it comes to determining the exact path of achieving net zero emissions.
In this sense the framework is designed to oppose measures that might put developing economies at a disadvantage like the existing EU Carbon Border Adjustment Mechanism and its rumored equivalents in the U.S. and UK.
BRICS already making carbon markets progress
The BRICS nations have been proactive in developing carbon markets, each taking significant strides towards establishing frameworks that align with their national climate goals. Brazil, for instance, has set an ambitious target to launch its carbon market before the COP30 conference, which is scheduled to take place in Manaus next year. This move reflects Brazil’s commitment to addressing climate change through market-based mechanisms, aiming to leverage carbon trading as a tool for reducing greenhouse gas emissions while driving sustainable economic growth.
India, another key BRICS member, is also making notable progress. The country is in the final stages of developing its carbon market scheme, with efforts focused on refining the details and forming a steering committee to oversee its implementation. India’s approach signals its intention to integrate carbon markets into its broader climate strategy, providing a platform for industries to trade emissions while encouraging investment in cleaner technologies.
China, the largest BRICS economy, has already established itself as a leader in the carbon market space. Its national carbon market, which is often cited as the world’s largest by some metrics, continues to evolve. In August, China introduced new methodologies to enhance the market’s effectiveness, further solidifying its role as a global frontrunner in carbon trading. These developments underscore China’s commitment to leveraging market mechanisms to meet its climate targets, while also influencing global carbon market dynamics.
The proactive steps taken by BRICS members demonstrate their recognition of the importance of carbon markets in achieving sustainable development and addressing climate change. Each country’s efforts reflect a tailored approach to integrating carbon markets within their unique economic and environmental contexts, highlighting the growing momentum within the BRICS bloc towards market-based climate solutions.
One of the questions being raised by this MOU is how connected and aligned the carbon markets between the five countries would be with the UN initiative to develop a common market under Article 6 of the Paris Agreement.
As it stands the countries in the group account for 44% of global crude oil production with pledges to phase out fossil fuels considerably after the deadlines set by the G7 countries.
