The recent agreement on the Article 6.4 framework under the Paris Agreement is a landmark development for carbon markets, setting a high standard for transparency and quality that will elevate the credibility of carbon credits globally. By creating a robust mechanism for generating certified emissions reductions, or “A6.4ERs,” with clear rules to prevent double counting, this framework enhances integrity and confidence for both corporate buyers and investors in the voluntary carbon market (VCM).

These standards, combined with sustainable development goals, align directly with the values our clients and stakeholders expect, ensuring that emissions reductions contribute positively to host communities and are verifiable.

The Sustainable Development Tool’s emphasis on do no significant harm and indigenous rights reflects an increasing focus on ensuring that carbon market projects adhere to environmental and social safeguards. This sets the stage for deeper discussions on how carbon markets can contribute to the Sustainable Development Goals (SDGs) while avoiding negative impacts. The tool requires activity participants to conduct a risk assessment based on safeguards’ elements and implement environmental and social management action plans. The tool applies to all Article 6.4 activities, including those transitions from the Clean Development Mechanism.

Additionally, the methodology standards align with global climate goals, ensuring that projects are ambitious over time, and that conservative carbon accounting practices are in place, which is essential for building trust in the global carbon trading system. They elaborate on the principles for methodology development and ensures alignment with broader climate goals, such as Nationally Determined Contributions (NDCs) and the long-term temperature goal of the Paris Agreement.

Methodologies should encourage ambition over time, ensuring that projects move toward lower emissions baselines and more sustainable practices; address additionality i.e. the emission reductions would not have happened without Article 6.4 support, and ensure conservatism, credibility and transparency in carbon accounting. Importantly, the standard also flags the requirement for provisions to avoid leakage where possible and the need to address reversals of removals and emission reductions using an approach consistent with the standard on requirements for activities involving removals under the Article 6.4 mechanism.

The introduction of removal-specific requirements is critical for COP29 negotiations, as the role of carbon removals (e.g., reforestation, carbon capture) becomes central to achieving net-zero targets. The inclusion of provisions to monitor reversals and the use of a Reversal Risk Buffer Pool ensures that carbon storage projects are both effective and durable. We expect parties at COP29 to likely explore whether current methodologies are fully aligned with evolving definitions and standards, particularly the durable storage of GHGs, further shaping the future of carbon markets under the Paris Agreement.

Procedurally, a risk assessment must be conducted to identify and mitigate reversal risks and credits must be transferred to the Reversal Risk Buffer Pool Account based on the assigned risk rating for each project. Importantly, the role of insurance for mitigating reversal risk is also highlighted.

Finally, we are looking forward to the discussion on the need for global cooperation in scaling up carbon markets, especially to ensure broad participation from developing countries, support for capacity-building, and a shared commitment to more ambitious climate action. The outcomes of COP29 could set the stage for a more transparent, equitable, and effective global carbon market that is critical to achieving the Paris Agreement’s long-term climate goals.