COP-29: Progress in the Operationalization of the International Carbon Credit Market

On November 11, 2024, one of the first substantive outcomes of the 29th Session of the UN Conference of the Parties to the UN Framework Convention on Climate Change (COP29) was approved. The President of COP19 introduced a draft decision of the Conference of the Parties Serving as the Meeting of the Parties to the Paris Agreement (CMA) Bodies. The decision took note of the Article 6.4 Supervisory Body’s adoption of two standards (one on “methodologies” and one on “removals”), while also reiterating the authority of the Supervisory Body to prepare the rules for the implementation of Article 6.4.

Article 6.4 of the Paris Agreement aims to replace the Clean Development Mechanism (CDM) of the Kyoto Protocol, and to establish a global carbon credit market to promote the reduction of greenhouse gas (GHG) emissions. The standards prepared by the Supervisory Body establish criteria for the implementation of this global market, and aim for a uniform approach for two elements of the mechanism: (i) the development and evaluation of the methodologies applicable to Article 6.4; and (ii) the requirements for activities involving GHG removals under the Article 6.4 mechanism. These standards will assist project developers in creating and submitting their methodologies, and allow projects to be registered under the Article 6.4 mechanism.

The decision allows the Supervisory Body to review and amend such standards, once ratified by the CMA, ensuring the ability to quickly adjust the Article 6.4 mechanism when necessary. The guidelines set out in the Standards are not yet finalized and may be amended, based on contributions from the signatory countries of the Paris Agreement and revisions by the Supervisory Body.

The standard on Methodologies states that methodologies must be “real, transparent, conservative, [and] credible.” In addition, the methodologies must encourage ambition over time, be aligned with countries’ NDCs, and impose standard baselines. It is also concerned with demonstrating additionality, leakage, non-permanence and reversals. In regard to GHG removals, the document establishes the core tenets, in addition to requirements for registration under the Article 6.4 mechanism, including monitoring, reporting, accounting for removal, addressing reversals, avoiding leakage, and respect for human rights and those of indigenous peoples.

The decision of the CMA is a forward step in the implementation of the Article 6.4 mechanism, but does not yet conclude the structure of Article 6.4, nor does it finalize the regulations necessary for the international carbon-credit market.