Recent adoption new standards for the UN carbon market represents a significant step for international climate cooperation. These rules, under the supervision of the Article 6.4 Supervisory Body, led by Martin Hession and Maria AlJishi, finally align the granting of offset credits with the Paris Agreement. They provide a reference point for countries and investors in a world where all states are expected to continuously increase their climate ambitions.

The role of the Supervisory Authority is to correct the course so that climate ambitions are met, countries' priorities are supported, social and environmental integrity is ensured and a sound framework for investment is offered. The fundamental question is: are the rules effective in achieving real results and fair in balancing the interests of all stakeholders?

Important progress has been made in the last two years. Extensive standards have been adopted for calculating emission reductions also emissions removalA backlash risk management system was put in place and mandatory environmental and human rights protection measures, as well as an independent complaints and appeals process. However, without a steady stream of investment, this progress will remain largely on paper.

The adoption of the new benchmark standard in May opened a new phase that will allow more ambitious credits. There is a clear and rigorous standard to guide the implementation of stronger crediting benchmarks. In today’s context, it offers a more realistic starting point for measuring credible emission reductions and removals. Under this benchmark, credits can only be claimed for reductions compared to conservative estimates of what would have happened without the project. Projects can no longer claim credits for smaller improvements compared to business as usual; they must use more conservative benchmarks that reflect increasing climate ambition. For example, the methodology may require crediting levels to be at least 10 % below historical emissions or to be benchmarked against best-in-class and then reduced by at least 1 % annually. This gradual tightening ensures alignment with the path to zero net emissions balance, reduces the risk of over-granting credits and helps host countries retain more of the benefits from emission reductions, thereby supporting future ambitions.

The next important step is standard regarding leaks emissions, although more needs to be done to address the impacts of emissions at the national or sectoral level. It aims to ensure that projects that reduce emissions in one place do not cause emissions elsewhere. For example, if a reforestation project protects one area but displaces logging in a nearby region, the overall benefit could be lost. The standard requires projects to identify and track such indirect impacts and subtract them from claimed emission reductions.

These technical standards are essential to ensure environmental integrity. But their success also depends on trust and participation, especially from the countries hosting the projects. These countries will understandably want to retain a share of the benefits of the investments when approving credits and crediting programs. The new standards help in this, but more needs to be done. The Paris Agreement Crediting Mechanism (PACM) already embeds the roles and responsibilities of host countries in its processes.

The authors emphasize the need to avoid repeating the mistakes of the past, when carbon credits were criticized for over-promising and under-delivering. From the outset, they have worked to improve on previous models and apply lessons learned. The context for crediting has changed significantly since the Clean Development Mechanism (CDM), which served as a benchmark for many voluntary programs. While it will build on the methodologies and experience of the CDM, it must adapt to a more ambitious framework that responds to the expectations of host countries, for which the CDM was not designed.

The new rules are moving forward with renewed confidence. The new rules allow for top-down updates to old carbon credit methodologies – meaning they can be revised centrally for key sectors. The first draft of a completely new bottom-up methodology has also been adopted, where ideas come directly from project developers or local actors. The first PACM credits could be issued later this year. Although the process has been criticised for being slow and complex, the positive adoption of the framework at the COP29 climate summit in Baku has accelerated progress.

Of course, more needs to be done. Later this year, detailed rules to assess and insure against the risk of backsliding will be considered. The aim is to see the full framework in action by early next year. Implementation will take a practical, agile approach. General standards set the direction; individual methodologies will be detailed but designed to evolve. Implementation will be phased, with room for continuous feedback and improvement.

The Supervisory Authority welcomes the review not only for reasons of accountability, but as an essential part of its mission of fair and effective implementation for high-quality UN integrated carbon market. Spring