Overview
At COP29, countries adopted remaining technical guidance on Article 6 of the Paris Agreement. Article 6 lays out how countries can work together to meet their climate goals voluntarily.   

As a result, country Parties to the Paris Agreement and non-Party stakeholders (NPS)—that is, civil society, subnational governments, and individuals—have what they need to turn the Paris Agreement’s carbon market provisions into actual carbon credit trades. This can create economic incentives for more climate action on the ground. More specifically, the guidance agreed at COP29 provides further clarity on the parameters for carrying out international transfers of carbon credits and establishes the criteria for mitigation activities to be eligible for crediting under the Paris Agreement, reducing uncertainty and building trust in the integrity of international carbon credit markets. With this, the Paris Agreement now has a fully operational “rulebook.”

The COP29 Article 6 decisions reflect a shared understanding of what high-integrity carbon credit markets mean. In other words, transparent carbon markets that deliver real, verified, and additional emissions reductions and removals to meet ambitious climate goals, including mitigation co-benefits and necessary safeguards. This shared understanding renews trust and enables carbon credit markets to increase transparency, build capacity in decarbonization solutions and deliver climate finance at scale. Carbon credit markets—under Article 6, the voluntary carbon market (VCM), and domestic crediting mechanisms—that uphold high-integrity principles also contribute to the achievement of broader sustainable development goals, in developed and developing countries alike. 

In face of numerous differing, and often criticized crediting approaches, both in the voluntary space and the Kyoto Protocol’s Clean Development Mechanism (CDM), Article 6 guidance and independent global governance bodies for the VCM, particularly the Integrity Council for the Voluntary Carbon Market (ICVCM) and the Voluntary Carbon Market Integrity initiative (VCMI), are well positioned to support the adoption of more coherent policy  for the issuance of carbon credits, trading, and use at the international and national level.  

Establishing policy coherence is vital to scaling the impact of carbon credits globally. Countries are developing strategies that optimize the use of different carbon pricing systems—including international carbon credits—to achieve their Nationally Determined Contributions (NDCs); and non-party stakeholders are engaging in the supply and demand of carbon credits for voluntary and compliance purposes, making climate action a prominent form of international cooperation this critical decade.   

Benefits of Clarity for Integrity Principles 

Parties also set out high-level integrity principles for mitigation activities and clear processes at COP29. These ensured no double counting of emissions reductions or removals occurs under Article 6.2, which sets the accounting rules for ‘cooperative approaches’ involving the exchange of carbon credits as internationally transferred mitigation outcomes (ITMOs) among Parties or Parties and NPS. Essentially, the rules detailed guidance to make sure that the credits are not double counted. The agreed arrangements include support for countries that wish to issue credits through the international registry instead of their own, enabling more developing countries to participate in bilateral trades. Further clarity on transparency requirements to engage in these trades will be beneficial by decreasing investment risks and supporting  related domestic policymaking.  

COP26 in Glasgow established the need for a statement of authorization, whereby a country must specify the use of ITMOs toward achievement of NDCs, and toward other international mitigation purposes, including corporate voluntary goals. Elements of this authorization statement had remained largely undefined until COP29. COP29 specifies this statement will be public and include all the Party(ies) and/or NPS involved, if known, a reference to any carbon pricing regulation, standard, methodology and tracking infrastructure in place as relevant, as well as any circumstance that could trigger changes in the statement. Market participants will also be able to check on the level of inconsistencies in reporting detected by the UNFCCC review team, if any, providing useful information to assess the risks involved in trade and potential impacts  on price, including having ITMOs be unusable as long as material inconsistencies remain unresolved. 

 With Article 6.4 modalities and procedures in place and the approval of methodologies and removals standards at COP29, the centralized Paris Agreement Crediting Mechanism (PACM) (equivalent to the Clean Development Mechanism (CDM) under the Kyoto Protocol) stands as the internationally recognized carbon credit compliance framework for market participants to adopt. Countries can decide to use Article 6.4 carbon credits as mitigation contribution units toward domestic compliance schemes or authorize them for international transfer, immediately or at a later time, depending on strategy and carbon price. The Supervisory Body of the Mechanism (SBM) will continue to add specificity to baseline setting, additionality, permanence, stakeholder consultation and sustainable development integrity criteria linked to the approved standards, and update CDM methodologies accordingly in 2025. While this work is underway, Parties and NPS already have the essential elements to align and prepare the submission of methodologies for the technical SBM to review and approve for crediting.  

The following stand out amongst newly adopted integrity criteria for crediting eligibility under the PACM:  

• the ‘downward adjustment’ of baselines, involving a closer alignment of the ‘business as usual’ emissions scenario to a pathway that reaches the long-term temperature goal of the Paris Agreement 

• avoidance of approaches that lock-in emissions, as one way to prove the additionality of the mitigation activity. 

COP29 also clarified its position toward forest activities under REDD+, the framework that Article 5.2 of the Paris Agreement has established to reduce emissions from deforestation and forest degradation. REDD+ activities can be submitted for SBM approval to the extent they follow the Article 6.4 guidance, sending a strong signal of support to conservation efforts. 

Lastly, at COP29, Parties adopted guidance for carrying out the second phase of the work program under Article 6.8, aimed at better identifying and developing cooperative initiatives that will not involve the transfer of carbon credits, or non-market approaches (NMA), through learning-by-doing. A dedicated platform is available to facilitate connections between Parties that are seeking support and those Parties and NPS that are offering it, for example, in terms of finance for adaptation, technology transfer, capacity building, and collaboration with NPS to support Parties achieve their NDCs.