The 29th UN Climate Change Conference (COP29) in Baku has made significant strides in establishing carbon market regulations, particularly regarding Article 6 of the Paris Agreement. The conference has approved rules for bilateral trading and a centralized mechanism for a global carbon market.
Despite these advancements, critical issues remain unresolved, including the definition of non-market approaches and the management of carbon credits generated from carbon removal. The framework for carbon markets is now largely defined, but political divergences persist, particularly concerning accountability and environmental integrity.
Under Article 6.2, the finalized regulatory framework includes a dual-layer registry system aimed at enhancing transparency and tracking Internationally Transferred Mitigation Outcomes (ITMOs), which represent authorized emission reductions. However, concerns about the authorization process and the potential for double counting emissions reductions continue to be debated.
Article 6.4 has facilitated the transition from the Clean Development Mechanism (CDM) to new project frameworks, yet apprehensions regarding the permanence and effectiveness of carbon removal credits remain. The COP29 has acknowledged these issues without providing definitive solutions, as many operational decisions have been deferred to a Supervisory Body that will commence work in 2025.
Moreover, the agreement highlights the need for improved methodologies and monitoring mechanisms to ensure that the credits issued are of high quality and that risks associated with emission reversals are effectively managed. The establishment of a platform for registering non-market approaches has yet to see any recorded cases, with developing countries requesting quantitative analyses to better understand how these approaches can support the implementation of Nationally Determined Contributions (NDCs).
The next steps involve further negotiations between 2025 and 2026 to fully define Article 6.8, emphasizing improvements in the platform and increased stakeholder engagement.