The recent adoption of new standards for the UN carbon market represents a significant step for international climate cooperation. These rules finally harmonize the granting of offset credits with The Paris Agreement and provide a reference point for countries and investors in a world where all states are expected to continuously increase their climate ambition.

The Article 6.4 Supervisory Body, which oversees the rules of this UN market under the Paris Agreement, is aware that it serves a diverse range of actors. Its task is to find a path that delivers climate ambition, supports countries’ priorities, ensures social and environmental integrity, and offers a sound framework for investment. The central question is whether the rules are effective in achieving real results and fair in balancing the interests of all market participants.

Progress and new standards

Important progress has been made in the last two years. Broad standards for calculating emissions reduction also emissions removalAn emissions reversal risk management system and mandatory environmental and human rights safeguards, as well as an independent complaints and appeals process, have been put in place. However, without a steady flow of investment, this progress will remain largely on paper.

By adopting a new baseline standard A new phase was entered in May of this year, allowing for more ambitious credits. There is now a clear and rigorous standard guiding the implementation of stronger crediting benchmarks. In the current 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 the current situation; they must use more conservative baselines that reflect increasing climate ambition. For example, the methodology may require that credit levels be set at least 10 % below historical emissions or be benchmarked against best-in-class performance and subsequently required a reduction of at least 1 % per year. This gradual tightening ensures alignment with the net-zero emissions pathway, reduces the risk of over-crediting and helps host countries to sustain more emission reductions, thereby supporting future ambition.

The next important step is leakage standard, although work is still needed 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 the emissions they claim to have reduced.

Lessons from the past and future steps

These technical standards are essential to ensure environmental integrity. But their success also depends on trust and participation, particularly from the countries hosting carbon credit projects. As they consider whether to approve credits and crediting programs, they will naturally want to retain a share of the benefits of reducing emissions from investments. The new standards help address this issue, but more needs to be done.

Carbon credits have long been under scrutiny for over-promising and under-delivering. Rulemakers are aware of the need to avoid repeating past mistakes. From the beginning, they have worked to improve previous models, applying lessons from the Clean Development Mechanism (CDM)The context for crediting has changed significantly since the early days of the CDM. While it will continue to build on the methodologies and experiences of the CDM, they need to be adapted to a more ambitious framework that responds to the expectations of host countries for which the CDM was never designed.

New rules are being moved forward with renewed confidence. The new rules allow for updates to old carbon credit methodologies from top to bottom – meaning they can be revised centrally for key sectors. The first draft of a completely new methodology has also been adopted through bottom-up process, where ideas come directly from project developers or local actors. And the first credits from the Paris Agreement Crediting Mechanism (PACM) could be issued later this year.

Although the Supervisory Authority has faced criticism for its slow progress and the complexity of the process, reaching political agreement on the implementation framework for the new UN carbon market took time. However, the positive adoption of the framework at the COP29 climate summit in Baku helped to accelerate progress. Thanks to the excellent work of the expert panels, the detailed standards were adopted quickly and are considered both ambitious and clear.

There is still more work to do. Detailed rules for assessing and insuring against the risk of emissions reversal will be considered later this year. The aim is to see full frame in action until the beginning of next year. A practical, agile approach to implementation is being adopted. 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 inspection, not only for accountability, but as an essential part of its mission of fair and effective implementation for the UN's high-integral carbon market. Spring