COP29: Shaping the future of global carbon markets

As global leaders gather in Baku for COP29, carbon markets face a defining moment. The decisions made at this conference will significantly influence the future of climate action— particularly under Article 6 (A6) of the Paris Agreement, which enables international collaboration on emissions trading.

Article 6: Building trust and opportunities in carbon markets

A6 of the Paris Agreement creates a pathway for nations to collaborate on emissions reductions via carbon markets, enabling more efficient achievement of climate targets.

Following COP26’s initial rule establishment for Article 6.2 (bilateral carbon trading) and Article 6.4 (a centralised mechanism), several technical and implementation issues remain unresolved. COP29 is expected to address key priorities that will shape the future of carbon markets. We believe negotiators need to prioritise:

Standardisation of credits

Developing frameworks for high-integrity nature-based credits is essential. COP29 discussions will likely advance stringent guidelines to ensure that credits from forestry and land use meet global credibility standards, ensuring long-term integrity and reducing risks like double counting.

Improved carbon accounting for removals

Reliable carbon accounting is crucial, particularly for nature-based solutions like forest management. Clearer, universally accepted methods for accounting will streamline entry into both compliance and voluntary markets, enhancing project accessibility and transparency.

Strengthening centralised A6 mechanisms

The development of Article 6.4, which focuses on creating a centralised international trading platform, could unlock global demand for nature-based credits. Success in this area will foster a regulated market for forest-based carbon credits, aligning public and private interests in climate goals.

Clarifications around Nationally Determined Contributions and voluntary credits

As countries clarify how NDCs interact with voluntary carbon markets, COP29 could enhance voluntary market credibility, supporting private buyers seeking high-integrity credits.

Establishing carbon removal guidelines

Defining consistent guidelines for carbon removals will be a top priority. These guidelines will shape how forest carbon sequestration is monitored and validated, simplifying reporting requirements for smaller projects and increasing project accessibility for small-scale landowners.

Global standardisation: a key deliverable for COP29

Achieving global standardisation across carbon markets is imperative for scalability and trust.

Currently, markets are fragmented by inconsistent methodologies, certification criteria, and verification standards. COP29 presents a critical opportunity to harmonise rules for measuring, reporting, and verifying carbon credits, both for emissions reductions and removals.

The EU’s CRCF framework already exemplifies such efforts, setting a consistent foundation for carbon farming and removal practices that COP29 can further support. Corresponding adjustments will be essential to ensure that credits are not double-counted across NDCs, preserving transparency and market integrity.

Standardising these processes would enhance market credibility and lower transaction costs, encouraging broader participation from both developed and developing countries.

Capacity building to enable inclusive and effective carbon markets

Developing countries often lack the financial and technical capacity to fully engage in carbon markets. COP29 must prioritise capacity-building initiatives by providing resources and infrastructure for effective monitoring, reporting, and verification (MRV) systems.

Support is needed to empower local institutions with data technology, MRV systems, and skilled personnel. And although past efforts like the UNFCCC’s Capacity Building Initiative for Transparency have helped, they lacked the funding for sustained impact. For COP29 to succeed, a commitment to long-term resources and technical support is essential.

Establishing regional MRV hubs staffed by technical experts could create a robust foundation for equitable carbon trading. By investing in these capacities, COP29 could enable broader participation in the carbon market, benefiting both developed and developing countries while ensuring integrity across carbon trading systems.

High-integrity carbon removal, especially for nature-based options

Nature-based solutions (NbS), such as forest carbon projects, are pivotal to effective climate action. COP29 must focus on creating transparent, science-based accounting and monitoring tools within A6 to secure confidence in NbS as credible removals.

At Arbonics, we hold transparency and accountability to the highest standard, and we recognise that robust MRV standards are vital to delivering verifiable forest carbon credits that buyers and landowners can trust.

Without these standards, the credibility of NbS is hurt, reducing private investment and stalling the growth of nature-based removals. Adequate tools and enforcement standards will ensure that NbS contribute meaningfully to climate targets, supporting growth in voluntary markets aligned with global climate goals.

Integrating carbon farming into global climate policy

Carbon farming encompasses a range of practices that sequester carbon across ecosystems, including soil, forests, wetlands, and seagrass meadows.

The EU’s comprehensive Carbon Removals and Carbon Farming (CRCF) framework is designed to incentivise activities like reforestation, biochar production, and soil carbon sequestration. The framework serves as a prominent example of how these practices can be incorporated into carbon markets, benefiting both the climate and farmers.

The EU’s proactive approach in establishing standardised, transparent monitoring frameworks could serve as a template for other nations, especially as COP29 provides a stage to influence global policy. COP29 could further this integration by advancing precise, science-based methodologies to measure various sequestration methods across soil, reforestation, and wetland management.

Here, EU representatives have an opportunity to advocate for integration of nature-based removals into the international carbon market under A6, helping to set global standards and building trust in these practices.

What success looks like at COP29

Success at COP29 will depend on creating a standardised, transparent, and equitable carbon market system that can scale globally.

By prioritising standards, capacity building, and robust MRV, COP29 can create a resilient carbon market, facilitating widespread adoption of carbon farming and removals as integral components of climate strategy, ultimately supporting the world’s goals under the Paris Agreement.