The Future of Carbon Credits: Key Takeaways from COP29

During the United Nations Framework Convention on Climate Change (UNFCCC) 29th Conference of the Parties or COP29, a significant milestone was reached in the fight against climate change. After nine years of intense negotiations, carbon trading rules between countries and the private sector were finally approved. Under Article 6.4 of the Paris Agreement, these rules promise to reshape the landscape of carbon markets.

Key decisions included: 

• Implementation of the Paris Agreement Crediting Mechanism (PACM): The approved rules for PACM are designed to ensure that carbon trading is environmentally sound and transparent. The IPCC and governments endorse this initiative, highlighting the essential role of carbon markets in addressing climate change.
• Transition of CDM Credits: Allowed transition of Clean Development Mechanism (CDM) credits to PACM, focusing on maintaining credit quality.
• Quality Standards and Methodologies: Tasked Article 6.4 Supervisory Body with developing standards for carbon credits, including baselines and additionality.
   

What Does This Mean for Carbon Credits?

The new rules will soon see carbon credits certified under a UN-backed standard. Countries can use these credits to meet their targets under the Paris Agreement or by companies and organizations for voluntary purposes. Importantly, any emission reduction project that earns these credits must have a letter from the host country. This letter will confirm that a country’s government will adjust its own targets under the Paris Agreement if the credits are exported, ensuring that the global emission reduction goals are met.
 

Looking Ahead

The first projects registered under PACM are expected to hit the market in early 2025. This is an exciting development, as several countries are anticipated to purchase PACM credits to meet their Paris Agreement targets. For the voluntary carbon market, PACM is expected to set a new benchmark for high-quality carbon credits, raising the bar for environmental integrity and transparency.
 

Navigating the New Carbon Market

As the world of carbon credits evolves, navigating this complex landscape can be challenging. World Kinect experts are here to help you understand and engage with carbon credits and carbon removal projects, ensuring you can contribute effectively to the fight against climate change.
 

Why partner with World Kinect?

Find optimal carbon credits that align with your business and sustainability strategies by partnering with our experts. Whether through our workshops or one-on-one consultations, we can help you locate the right projects at the right price.

Contact us today to learn how we can support your business.