In the last months of 2024, the COP 29, held in Baku, Azerbaijan, has captured global attention, generating a heated debate.
Among the results that have aroused criticism from developing countries and the need for time to evaluate in a more objective way what has been discussed, even for us at Up2You it is time to take stock.
What were the concrete results of this conference? And how could updating Article 6 of the Paris Agreement affect future climate strategies? Let's find out together!
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Climate finance: what does it consist of? Promises and realities of the Baku agreement
The Baku Conference of the Parties concluded with an agreement that many developing countries have defined unsatisfactory.
The final document commits industrialized countries to allocate at least 300 billion Of dollars per year to developing countries by 2035, tripling the previous target of 100 billion per year set for 2025.
However, this figure remains well below the 1,300 billion years indicated by experts as indispensable to effectively address the climate crisis.
The 300 billion per year will be disbursed progressively over the next 11 years through non-repayable grants and loans at reduced rates, with the contribution of both public and private resources. Developed countries will play a central role in mobilizing these funds, but the exact methods of implementation still raise doubts.
In parallel, the agreement establishes the objective of mobilizing 1,300 billion dollars a year by 2035, drawing on public and private sources that have not yet been clearly identified.
This objective, while essential to meet the needs of the global South, remains free of legal constraints, disappointing the most vulnerable countries that require immediate funding for urgent adaptation projects and often without economic returns.
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Article 6 of the Paris Agreement finalized: COP 29 unlocks carbon markets
At the COP26 in Glasgow in 2021, after years of negotiations, the section of theParis Agreement dedicated to international cooperation and carbon markets: the Article 6.
With COP 29 in Baku, Article 6 was further finalized, outlining three fundamental approaches that allow participating countries to cooperate voluntarily to achieve their emission reduction and adaptation goals, known as Nationally Determined Contributions (NDCs).
Here are the three main subcomponents of Article 6.
Article 6.2: de-centralized mechanism
- It allows the collaboration between countries through bilateral or multilateral agreements to transfer emission reductions through authorized units, called ITMO (Internationally Transferred Mitigation Outcomes).
- It is based on a de-centralized mechanism, managed directly by the parties involved.
- It guarantees transparency and traceability for Prevent double counting of reductions, that is, when the same emission reduction project is registered in multiple programs or registers, generating duplicate credits.
Article 6.4: centralized mechanism
- Create a international carbon market supervised by the UNFCCC (United Nations Framework Convention on Climate Change).
- It allows the generation of carbon credits, both authorized and unauthorized, deriving from certified projects for the reduction or removal of emissions.
Article 6.8: non-market mechanisms
- It introduces a work program to promote cooperative approaches that They are not based on carbon markets.
- It favors collaboration through technological transfers, financial support or shared initiatives, without the direct transfer of mitigation results.
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6.2 vs 6.4: different approaches to managing carbon credits
Article 6 of the Paris Agreement defines two main pillars to encourage international cooperation in reduction of emissions.
Let's see how they work in detail.
Article 6.2: bilateral or multilateral trade
Article 6.2 introduces a de-centralized mechanism which allows countries to collaborate through bilateral, multilateral and, according to some interpretations, even unilateral agreements, known as”cooperative approaches”.
The reductions in emissions traded between countries are called Internationally Transferred Mitigation Outcomes (ITMO). These can be measured in tons of carbon dioxide equivalent (CO2 eq) or in other parameters, such as kilowatt hours (kWh) of renewable energy.
Article 6.4: the global carbon market
Article 6.4 establishes an international carbon market supervised by the United Nations through theArticle 6.4 Supervisory Body (SBM). This body will be responsible for ensuring that projects meet high standards of environmental integrity and transparency.
Let's see how it will work.
- Project registration: project developers must submit their initiatives for approval by both the host country and the Supervisory Body.
- Issuance of credits: once approved, projects will be able to issue certified carbon credits, called Emission Reduction Units (A6.4ER) pursuant to Article 6.4.
- Purchase of credits: these credits can be purchased by countries, companies and even individuals, favoring a global market that encourages the reduction of emissions.
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How PACM works: the news in 6 points
During COP 29, a consensus was reached on fundamental rules, methods and procedures for the trade and accreditation of carbon credits, aimed at compensation of CO emissions2, through the Paris Agreement Crediting Mechanism (PACM). These measures aim to make the system more transparent, effective and inclusive.
Here are the main points identified:
1. Defined procedure for authorizing emission reductions
Host countries will need to provide an official declaration of authorization to confirm whether emission reductions can be used to:
- the achievement of Nationally Determined Contributions (NDC);
- other international purposes.
2. Creation of an international registry
A new registry will be implemented to track and record:
- emission reductions;
- carbon credit transactions.
The main objective is to avoid double counting, ensuring transparent and rigorous accounting.
3. Definition of evaluation methods
Standardized methodologies will be developed for:
- evaluate emission reductions;
- monitor carbon removal activities, addressing the risk of non-permanence (for example, the release of sequestered carbon).
4. Technical and scientific support
The PACM, within the framework of Article 6.4, will have the task of providing:
- technical and scientific expertise to support the development of methodologies;
- guidelines for improving the effectiveness of carbon reduction and removal projects.
5. Transition from CDM to PACM
Reforestation activities registered under the Clean Development Mechanism (CDM) may be transferred to the PACM. This transfer will need to:
- comply with the new rules and procedures provided for in Article 6.4;
- comply with stricter assessment criteria to ensure high standards of environmental integrity.
6. Involving local communities and indigenous peoples
COP 29 emphasized the importance of including:
- independent experts;
- local communities and indigenous peoples.
This approach aims to ensure that methodologies and guidelines are sustainable, inclusive and respectful of territorial realities.
