COP29: Breakthrough for agreement on UN-supervised carbon market

Although the COP29 climate summit ended amidst heavy criticism, one important milestone was achieved: the approval of standards for a UN-supervised greenhouse gas market under Article Six of the Paris Agreement. After years of delays, the agreement marks a turning point, writes Kenneth Möllersten, senior researcher and expert on international climate policy.

"COP29 leaves behind feelings of relief and frustration. Relief that the process was upheld, several important outcomes were achieved and decisions were taken on financing and greenhouse gas markets. Frustration at the lack of agreement on the global stocktake and that some parties tried to reopen negotiations on previous agreements, including on fossil fuel phase-out.

The new collective quantified goal (NCQG) on climate finance was one of the key issues ahead of the summit. The decision taken has received a lot of attention. It means that developed countries pledge to contribute at least USD 300 billion annually from 2035 to the global fight against climate change. The developing countries, who had sought more than one trillion US dollars in annual support, expressed deep dissatisfaction with the decision, arguing that it does not give them the necessary resources to meaningfully address the complexity of the climate crisis.

But although COP29 ended amidst heavy criticism, it did achieve an important milestone: the approval of standards for a UN-supervised greenhouse gas market under Article 6.4 of the Paris Agreement. After years of delays, this is a breakthrough. The agreement at COP29 marks a turning point, and paves the way for countries and businesses alike to trade in a UN-supervised market where the review of calculation methods, verification of credits and issuance of GHG credits takes place under UN oversight.

Markets for trading GHG credits have been criticised for some time, which has weakened interest in trading. In recent years, voluntary GHG markets have focused on self-regulation, and initiatives such as the Integrity Council for the Voluntary Carbon Markets (ICVCM) have established credible quality labels to promote GHG credits that meet strict quality requirements. It will now be possible to trade greenhouse gas credits on a UN-supervised market. If confidence in the market is strengthened, this has the potential to unlock and channel finance from the global North to the global South.

Buying greenhouse gas credits is not an alternative to companies' work to reduce emissions in their value chains. But contributing to climate investments in developing countries can be used to complement ambitious efforts to reduce emissions at home, and thus deliver climate finance where it is most needed.

This year's climate summit was far from perfect. Now we need to look to the future. The main task for the next climate meeting, COP30, will be to raise the ambition level for the next round of national climate plans, or NDCs. By then, countries will have to submit their updated climate plans for the next NDC cycle."

A longer analysis has been published in Impact Alpha, a news service on finance and sustainability. Read it here. External link, opens in new window.

If you have any questions, contact:
Kenneth Möllersten, kenneth.mollersten@ivl.se, tel. +46 (0)10-788 68 79