Even though growing evidence casts a doubt on the effectiveness and benefits of carbon markets, they are expected to play a significant and potentially contentious role at COP31. These concerns are echoed by UN Special Rapporteur Elisa Morgera, who has cautioned that carbon markets risk undermining human rights and climate obligations.

Although negotiations around Article 6 are expected to be limited this year, last year’s COP demonstrated that discussions, even when there is apparently little room on the agenda for Article 6, can still result in decisions with real-world implications.

As lobbying from polluters intensifies and efforts to undermine decisions aimed at ensuring higher integrity persist, CMW will continue to challenge fundamentally unjust solutions and call for action based on science.

Our demands are in line with what the climate crisis urgently requires: a reduction of emissions at their source and a just transition away from fossil fuels. The biggest polluters must stop relying on carbon offsetting and instead deliver drastic, immediate cuts to their actual emissions.

Countering carbon market myths

How a collection of misconceptions keeps the false solution of offsetting alive in the context of Article 6 and elsewhere, and what countries at COP31 must do to counter them.

Carbon credit markets are often championed on assumptions about their efficacy and benefits for the climate and people. However, these assumptions have long been challenged by real-world evidence and scientific research.

We unpack 6 common myths about carbon credit markets that countries must consider carefully when discussing Article 6 or other carbon credit markets at COP31.

Does carbon market finance qualify as climate finance?

NO

Carbon markets have repeatedly been promoted as a means of channeling finance towards countries with lower levels of development and income to fund mitigation actions and infrastructure development. While there is some truth to this statement, it reveals only a small part of the story, and ignores the transactional reality of carbon markets.

Article 6 is being used as a “cost-effective” solution to achieve climate goals. This means buyer countries, which are typically wealthy, purchase cheaper emissions reductions generated predominantly in Global South countries, rather than cutting emissions at home, which is often more costly. Buyers therefore have a financial incentive to purchase carbon credits. Likewise, in the voluntary carbon market, carbon credits are also used to support business-as-usual activities, for instance with big oil companies. Therefore, carbon credits must be seen as purchases of assets, not as “finance”. Moreover, the benefits that buyers derive from these transactions can far outweigh the finance that ultimately reaches project host countries, which is explained in further detail in myth 4, “Are Article 6 carbon markets a win-win for host countries and buyers?”.

This all stands in stark contrast to the principle of Common But Differentiated Responsibilities and Respective Capabilities (CBDR-RC), embedded in the UNFCCC and the Paris Agreement. This principle recognises that developed countries bear greater responsibility for tackling climate change, given their historic contribution to global emissions and their greater capacities to act, and provides the legal foundation for climate finance obligations under Article 9 of the Paris Agreement, obligations that were reaffirmed by the International Court of Justice in its July 2025 Advisory Opinion.

To meaningfully fulfil these obligations, climate finance should be grant-based and support domestic mitigation efforts, adaptation to the adverse effects of climate change, and remedy climate-related loss and damage. Conflating this with payments made through carbon credit markets risks weakening established climate finance goals and exacerbating existing inequalities between the Global North and South. Moreover, under the Paris Agreement, buyer countries are not even permitted to count carbon credits that they use towards achieving their NDCs as climate finance (Decision 18/CMA.1, paragraph 121 (m)(iii)).

Our demand for COP31: Keep climate finance discussions strictly separate from carbon credit markets. Do not propose carbon credit markets as a means of channeling finance. Recognise that these transactions are payments for assets, just like any other commodity market.

Does most of the money paid for carbon credits end up with the communities on the ground?

NO

There is a popular claim that most of the money raised through the sale of carbon credits is distributed to communities on the ground, despite mounting evidence from community testimonies and research demonstrating persistent transparency gaps in the carbon market architecture.

Local communities have debunked this narrative firsthand. In the large-scale Kariba REDD+ forestry project, no more than 14% of the €100 million in carbon-credit revenues could be traced to community payments or infrastructure improvements, with the remainder shared between project developers and intermediaries. Similarly, in two cookstove projects in the same country, one of the largest developers of such projects before its bankruptcy, C-Quest, had reportedly received over $5 million in project revenues by the end of 2025, while none of this revenue was shared with local communities.

These cases are far from isolated incidents; rather, they reflect a systemic lack of clear and adequate benefit-sharing requirements and frequent human rights violations across voluntary carbon market standards and in Article 6’s predecessor, the Clean Development Mechanism (CDM). This problematic logic has unfortunately been transplanted into Article 6, where the absence of minimum financial benefit-sharing requirements and robust safeguards leaves their establishment largely to the discretion of individual countries, potentially triggering a race to the bottom.

The limited share of carbon market revenues reaching communities on the ground is also evident in the number of market participants involved in carbon-crediting projects and the share of project value they have been reported to capture. Brokers and other intermediaries, along with technical consultants, project developers and owners form a complex mosaic of economic interests and power dynamics within projects, constraining local communities’ ability to claim a meaningful slice of the pie.

Our demand for COP31: Recognise that carbon markets have not delivered for local communities. Equitable and transparent local benefits are not ensured, while local negative impacts are widespread. Upholding community rights must be on the agenda at COP31 to become a top priority for the Article 6.4 Supervisory Body processes and the forthcoming Article 6 review.

Does independent validation and verification ensure quality?

NO

The auditing process has long been regarded by stakeholders and the wider public as an important safeguard of credit quality. This confidence in third-party verification almost found its way into California legislation through a proposed bill that would have presumed verification, among other things, makes corporate environmental claims irrefutably valid. However, the current rules governing carbon credit verification fall short of ensuring genuine independence and fail to provide reliable guarantees of credit quality.

In both the VCM and Article 6.4, the auditors, respectively called validation and verification bodies (VVBs) and designated operational entities (DOEs), are selected and paid by the project developers whose work they are supposed to assess. This creates an inherent conflict of interest, as auditors are exposed to a self-serving bias risk to satisfy their clients, raising serious doubts about the reliability of the process. This problem is further compounded by the relatively small pool of auditors, as fair and conservative assessments may come at the expense of future auditing opportunities.

Moreover, the verification process does not ensure quality, as this is not the mandate of auditors under the current rules. As concluded from the latest relevant Carbon Market Watch report, auditors are only permitted to assess whether the project complies with applicable standards and methodologies and are not asked to evaluate the environmental integrity and quality of a project. The same situation exists under the current Article 6.4 framework.

This reality has inevitably led to the paradox of projects being verified and validated but failing to deliver high environmental integrity. One striking example is the CDM project 10415, which transitioned to the Article 6.4 crediting mechanism and which CMW found is on course to generate 26 times the credits it should, despite having undergone validation and verification and being deemed fully compliant. Another recent example is the Guyana Jurisdictional REDD+ project under Article 6.2, which was found to have issued 40% credits in excess due to a clerical error, despite having been through verification and validation. These examples show that the auditing process in carbon markets cannot be considered a strong safeguard for either quality or compliance under the current rules.

Our demand for COP31: Validation and verification in Article 6 needs to be overhauled. In Article 6.2, clear demonstration of independent auditing must be mandatory, and in Article 6.4, the Designated Operational Entity selection process must be made independent.

Are Article 6 carbon markets a win-win for host countries and buyers?

NO

Article 6 carbon markets are often portrayed as a win-win scenario for both the host and buyer countries, allowing the latter to achieve mitigation at lower cost while the former gains access to both financing and mitigation opportunities. But in practice, when coupled with the reality of weak rules and governance and a wealth mismatch between the two countries, the theoretical win-win actually plays out as a no-win situation.

A cookstove project in the context of Article 6.2 cooperation between Switzerland and Ghana provides a telling example of the inequality for host countries, as it appears to have offered substantial profit-making opportunities to market participants based outside Ghana. On top of that, these transactions can prove financially unfavourable for host countries: having sold their low-hanging fruit, they are left with costly and challenging options to meet their climate targets.

Moreover, the long-term environmental benefits for host countries are far from guaranteed, as some crediting activities (i.e. forestry, cookstoves) are susceptible to reversals, meaning that should a reversal occur credited mitigation benefits will be re-emitted and the host country’s mitigation burden will be increased.

Rather than raising climate ambition, carbon markets have replaced meaningful climate action, as reflected in the Nationally Determined Contributions of countries engaged in cooperative approaches under Article 6, such as the EU, Japan, South Korea, and Switzerland. The price of this is borne most heavily by countries on the front lines of climate change, which are often the very same countries that host Article 6 projects.

In the long run, carbon markets will not represent a win for buyer countries either. The scientific community has repeatedly raised a red flag about relying on carbon markets rather than decarbonising. According to the IPCC, delayed deep and rapid mitigation and adaptation would lock in high-emission infrastructure, raise the risk of stranded assets and cost escalation, reduce feasibility, and increase losses and damages. Moreover, according to civil society, this strategy weakens ambition and will cause reputational damage if purchased credits are found to be of low quality.

Our demand for COP31: Countries must consider their participation in Article 6 seriously, and only engage if they use it for the intended purpose outlined in Article 6, Paragraph 1: as a way to increase “ambition”, not to replace it.

Do we need carbon credit markets to reach our climate goals and protect nature?

NO

Portraying carbon credit markets as an indispensable tool for meeting climate targets seems far-fetched, particularly when evidence suggests they can be counterproductive: the UN Taskforce on Net Zero Policy (p. 49) states that non-state actors’ reliance on cheap carbon credits to offset emissions, rather than reducing them internally, has slowed overall climate action. And at the country level, participation in Article 6 may follow the same pattern: according to the Climate Action Tracker, when countries engage in carbon trading while their climate plans are not aligned with the 1.5°C temperature goal of the Paris Agreement, which is the case for the majority of countries engaging in Article 6, the outcome is at best a zero-sum game and most likely a net negative one for the climate.

Furthermore, while some carbon market projects have nature protection benefits, using carbon markets for offsetting, which is the dominant use case, harms these goals. It is deeply paradoxical for polluters like Shell to channel funding into nature-based projects in order to offset their fossil fuel emissions, which negatively impact the climate for millennia and contribute to the degradation of nature: the exact antithesis of the intended purpose of nature-based carbon markets.

Furthermore, the growing focus on carbon credit projects does little to address the systemic drivers of environmental degradation. Dedicating resources and political will to eliminate harmful and wasteful subsidies in the agricultural and fossil fuel sectors would likely have a much greater impact.

Our demand for COP31: Do not promote carbon credit markets as a solution for nature protection, but recognise that offsetting is a zero-sum game for the climate and for nature.

Are cookstove projects without permanence risks?

NO

Proponents of exempting biomass-based cookstove replacement projects from reversal requirements draw a distinction between the emissions avoided through reduced firewood consumption and the carbon stocks from which that firewood would have been sourced. They overlook the fact that trees spared from being cut down for firewood may still be cut down later, releasing the previously avoided emissions into the atmosphere – the exact same risks that exist for nature-based avoidance projects that limit emissions from other drivers of deforestation.

Whether mitigation benefits are accounted for as reduced emissions (flow-based) or as preserved carbon stocks (stock-based), the climate outcome is the same. Cookstove projects that reduce biomass consumption preserve carbon stored in trees, but if these trees are subsequently cut down, the mitigation benefits of these cookstoves are reversed, as clearly described in a recent information note from the Methodological Expert Panel of the Article 6.4 mechanism.

The reality is that accounting for reversal risks in cookstove projects reduces the amount of credits that can be sold: this is the main reason it has garnered strong opposition from carbon market actors, rather than because the underlying logic is incorrect.

Our demand for COP31: Article 6 rules must be informed by science and serve the goals of the Paris Agreement. Negotiators must ensure Article 6 rules are not weakened for financial or political gain.

“Implementation of Article 6 currently falls far short of what is required to protect people and serve the Paris Agreement goals. Countries at COP31 must act to limit the damage.”

Isa Mulder, Expert on Global Carbon Markets

Resource library

Introductory guides

For an introductory guide on how international carbon credit markets work (including Spanish, French and Portuguese translations), see our Carbon Markets 101.
For an assessment of the current effectiveness and shortcomings of Article 6 rules, see our report By the book: How effective are Article 6 carbon market rules?
To find out more about how your country is participating in Article 6, see our guides for finding out information on Article 6 projects.

Deep dive into Article 6 and international carbon markets

To see how the first Article 6.2 carbon trades are being judged by reviewers, see A tick-the-box exercise.
To find out what the risks are for indigenous peoples and local communities from current carbon trading rules under Article 6.4, see Trading carbon credits for human rights: Does Article 6.4 of the Paris Agreement protect indigenous peoples and local communities?

Where to find us

📅 Monday 9 November 2026

15:00 – 18:00, Meeting Room: TBC, COP31 Blue Zone
Article 6.2 Ambition Dialogue: Open discussion on authorization and ambition

📅 Tuesday 10 November 2026

13:15 – 14:45, Side Event Room 4 – AŞIK VEYSEL
Reducing human rights risks for communities in the context of Article 6

📅 Thursday 12 November 2026

15:45 – 16:45, Pavillion: Asia Climate Solutions
Paper Mitigation, Real Risk: Integrity in Article 6

📅 Thursday 12 November 2026

17:00 – 18:30, SPE6 Theatre
Official UNFCCC Capacity-building event
Straight talk: PACM and international carbon markets under Article 6

📅 Friday 13 November 2026

18:30 – 20:00, Meeting room TBD, COP31 Blue Zone
PACM (Article 6.4) official side event
From Design to Delivery: What’s Next for the Paris Agreement Crediting Mechanism CMW