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United Nations carbon markets

The United Nations Framework Convention on Climate Change (UNFCCC) has created international market mechanisms that are meant to provide an economic incentive to reduce emissions.

The next generation of these global carbon markets has its foundation in Article 6 of the 2015 Paris Agreement. At COP 26 in Glasgow in 2021, countries finally agreed on a package of rules to govern and implement two international carbon market mechanisms based on Article 6. Article 6.2 allows countries to trade emission reductions and removals with one another through bilateral or multilateral agreements. Article 6.4 will create a global carbon market where businesses can directly purchase credits.

These new markets replace the Kyoto Protocol’s controversial Clean Development Mechanism (CDM), which is now being phased out. The idea underpinning the CDM was that rich countries could finance climate projects in developing countries to compensate for some of their continued pollution at home. These unstable foundations resulted in a CDM riddled with problems. It has not reduced emissions globally and some projects funded under it have been linked to human rights violations and environmental destruction.
As opposed to the Kyoto Protocol that required emissions reductions only from rich countries, the Paris Agreement markets must function in a world where all countries contribute towards the overall goal of limiting global warming to 1.5℃.

While the overall frameworks for these markets were hammered out at Glasgow, many important technical details and rules remain to be finalised. As an official observer at UNFCCC negotiations, Carbon Market Watch campaigns for full transparency in these markets and strong social and environmental safeguards to ensure that any climate project not only protects the environment but also upholds human rights and benefits local communities.

What is CMW doing about it?

At the UNFCCC, Carbon Market Watch focuses on:

  • Observing negotiations at the annual Conference of the Parties (COP) and the intersessional conference in Bonn
  • Researching and presenting recommendations for Article 6 markets
  • Investigating and reporting on the implementation of CDM markets

“People should care about Article 6 of the Paris Agreement because it will have real-world consequences on climate action and ambition.”

Jonathan Crook


Policy expert on global carbon markets

“People should care about Article 6 of the Paris Agreement because it will have real-world consequences on climate action and ambition.”

Jonathan Crook


Policy expert on global carbon markets

What changes is CMW demanding?

Focusing global efforts primarily on slashing real emissions rapidly enough to achieve the goals of the Paris Agreement

Designing and implementing the architecture of Article 6 carbon markets to ensure that they fulfil their role as a supplementary climate tool

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The EU’s double counting problem

Motivated by a desire to keep down the cost of achieving its climate targets, the EU has failed to rule out the double counting of emissions reductions under its Carbon

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COP28: Article 6 failure avoids a worse outcome 
Torn between countries demanding that Article 6 carbon markets be available with virtually no restrictions and countries insisting on upholding transparency, human rights, and climate ambition, negotiators at COP28 failed to break the deadlock. With all the unresolved problematic issues, the fact that they reached no deal was better than agreeing to a bad one that would torpedo the Paris Agreement.

Up to 2.8 billion ‘zombie’ credits from the Kyoto era could fall under Article 6.4

A minimum of 2% of carbon credits under Article 6.4 must be cancelled without being used

A minimum of 5% of carbon credits under Article 6.4 must be used to support climate adaptation

Contact our experts

Gilles Dufrasne
Lead on Global Carbon Markets

gilles.dufrasne[at]carbonmarketwatch.org

Jonathan Crook
Expert on Global Carbon Markets

jonathan.crook[at]carbonmarketwatch.org

Isa Mulder
Expert on Global Carbon Market

isa.mulder[at]carbonmarketwatch.org

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