November 12, 2024: In a move that has sparked both optimism and controversy, the Azerbaijan Presidency of the 2024 UN Climate Change Conference (COP29) announced the early adoption of standards for the creation of carbon credits under Article 6.4 of the Paris Agreement. The decision is being hailed as a significant step toward unlocking international carbon markets, but it has also faced sharp criticism for bypassing thorough discussions among participating parties.
The announcement, made by COP29 President Mukhtar Babayev on Monday, asserts that the new modalities will foster climate action by boosting demand for carbon credits and ensuring the integrity of the international carbon market, all under the supervision of the United Nations. The Presidency emphasized that the finalization of Article 6—the section of the Paris Agreement dealing with voluntary cooperation among nations to meet climate targets—could reduce the cost of implementing national climate plans by as much as $250 billion annually, through cross-border cooperation.
"This is a game-changing tool to direct resources to the developing world. After years of stagnation, the breakthroughs in Baku have begun. But there is still much more to deliver," Babayev said.
The adoption centers around two key standards, one on carbon credit methodologies and another on carbon removal technologies, which were endorsed by the Article 6.4 Supervisory Body. These standards are intended to operationalize the Article 6.4 Mechanism, which facilitates the creation and trading of carbon credits to support climate action efforts.
While some negotiators have praised the decision as a long-awaited breakthrough, others have raised concerns about the speed and process of the adoption. The standards were introduced by the COP29 Presidency without extensive discussion or formal approval from all parties, leading to criticism from some quarters that the decision was rushed.
India and China, however, expressed their approval of the adoption of the carbon credit modalities, with negotiators from both countries highlighting the importance of kick-starting the carbon markets. "This has been a long-standing issue, and we have been waiting for ten years," said Yalchin Rafiyev, Azerbaijan’s Lead Negotiator for COP29. "We’ve made a very important start."
Despite the support, the decision has drawn sharp criticism from various environmental groups and nations, including those from the Global South, who argue that it may undermine the Paris Agreement’s principles of equity and fairness. The swift adoption of the standards, without more inclusive dialogue and scrutiny, has raised concerns over transparency and the potential for exploitation in the carbon credit market.
An official from the supervisory body confirmed that the recommendations on methodologies and removals are just the beginning, and further developments are expected over the next year. “Many Clean Development Mechanism (CDM) projects are already transitioning to these new methodologies,” the official said, noting that the first issuance of 6.4 carbon credits is expected to happen soon.
As COP29 continues, negotiators remain divided on the broader implications of the new standards, with some praising the momentum toward climate finance and others warning that hastily implemented frameworks may not achieve the desired climate outcomes. The coming days will be crucial in determining how the adoption of these standards shapes the future of international climate cooperation and carbon markets.