Accelerating decarbonization might be the most complex yet crucial task of our time. Carbon markets have emerged as a potential solution for organizations to curb net-emissions, but much work still needs to be done to ensure the mechanism runs its intended purpose without harming people and the environment. Ahead of COP29, the body under the Paris Agreement has agreed on mandatory environmental and human rights safeguards for the UN Carbon Market.

Opportunities & Challenges

Carbon markets allow governments, businesses, and organizations to purchase and sell carbon credits as a part of their decarbonization efforts. This mechanism has gained traction over the years and is seen as potentially cost-effective by many. According to the 2021 Emissions Gap Report, the full use of the market can save costs up to 40-60% in 2030.

However, many have doubts about the mechanism. For instance, ecologists have warned about the dangers of prioritizing tree planting for the carbon market above biodiversity and ecosystem conservation. Certain practices can drive native plants to extinction and cause more frequent wildfires. 

On the other hand, many are also wary of how companies participate in the market without any real strategies to change their business practices to be more responsible and sustainable, also known as an act of greenwashing. Therefore, a clear mechanism, framework, and disclosure are needed to ensure responsible practices and harness the full potential of the carbon market.

Environmental & Human Rights Safeguards

The international carbon market is regulated under Article 6 of the Paris Agreement. Under this article, countries are allowed to trade carbon credits earned from reducing greenhouse gas emissions to help other countries meet their climate targets. In 2023, 143 of 154 parties cited the plan and possibility of using carbon credits under Article 6’s provisions to achieve national targets.

Considering the potential downsides of the mechanism and the growing need for regulations, the Supervisory Body responsible for setting up the UN Carbon Market has agreed to mandatory environmental and human rights safeguards in October 2024. Under this framework, those participating in the UN’s Paris Agreement Crediting Mechanism must identify, evaluate, avoid, minimize, and mitigate potential risks associated with carbon credit projects.​ 

Furthermore, the rules also protect environmental and social rights through a mandatory tool that asseses and monitors project impacts throughout their lifespan. Earlier this year, the Supervisory Body also agreed on a mechanism allowing people affected by carbon market projects to file complaints, aiming to further safeguard human rights.

Developing Responsible Carbon Market Practices

For the next step, the Supervisory Body aims to finalize two key documents required to put these rules in place. The Body has also formally adopted the Sustainable Development Tool for monitoring and assessment and will review and update it every 18 months based on stakeholder feedback.

“These safeguards will not remain static – we aim to continue to iterate and strengthen them over time,” said Maria Al Jishi, Chair of the Supervisory Body responsible for implementing the Paris Agreement Crediting Mechanism.

Editor: Nazalea Kusuma

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Kresentia Madina

Reporter at Green Network Asia | Website |  + postsBio

Madina is the Assistant Manager of Stakeholder Engagement at Green Network Asia. She holds a bachelor’s degree in English Studies from Universitas Indonesia. As part of the GNA In-House Team, she supports the organization's multi-stakeholder engagement across international organizations, governments, businesses, civil society, and grassroots communities through digital publications, events, capacity building, and research.

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