The United Nations has taken a major step in global carbon markets. A UN panel has approved the first methodology under Article 6.4 of the Paris Agreement. This marks the start of a new era in international carbon trading. The system will help countries and companies offset emissions under one global standard.
A New Chapter for Global Carbon Markets
Article 6.4, also known as the Paris Agreement Crediting Mechanism (PACM), aims to build a global market where countries can trade verified emission reductions. It replaces the old Clean Development Mechanism (CDM) from the Kyoto Protocol, which registered more than 7,800 projects between 2006 and 2020. This new system makes sure carbon credits come from real and measurable emission cuts.
The UNFCCC Supervisory Body met in mid-October 2025 to review new market methods. Their approval of the first one marks a major step for climate finance projects around the world.
The first approved method supports renewable energy projects, especially small wind and solar developments in developing countries. These projects are key to reducing emissions and expanding access to clean energy.
The International Energy Agency (IEA) says renewable energy in developing economies must triple by 2030 to reach global net-zero goals.
What Article 6.4 Means
Article 6.4 is part of the Paris Agreement’s cooperation plan. It lets one country fund emission reduction projects in another country and count those reductions toward its own climate goals. The system aims to:
- Stop double-counting of emission reductions.
- Improve transparency through strict monitoring.
- Build trust between developing and developed nations.
This system will help countries meet their Nationally Determined Contributions (NDCs) faster. The World Bank estimates that NDC cooperation could cut up to 5 billion tonnes of emissions annually by 2030. It could also unlock around $250 billion in climate finance each year, giving investors a clear way to support credible carbon projects.
At COP29 in Baku, world governments agreed on a new global climate finance goal for after 2025. They pledged to scale up funding for developing countries to at least $1.3 trillion per year by 2035 from public and private sources.
Developed nations will lead by mobilizing $300 billion annually, expanding on the earlier $100 billion target. The agreement allows developing countries to count their own contributions voluntarily. It also includes all multilateral development bank (MDB) climate finance. This aligns with expert estimates that developing nations need $3.1–3.5 trillion yearly by 2035 to meet climate investment and adaptation goals.
From Rules to Real Markets
Until now, discussions around Article 6.4 have focused mainly on rules and design. The panel’s decision moves the system from theory to action. It shows that global carbon trading is ready to begin.
Experts predict global demand for carbon credits could reach 2 billion tonnes by 2030, and as high as 13 billion tonnes by 2050. The UN wants to make sure only verified, high-quality credits enter this fast-growing market.
Developing nations stand to benefit the most. Many have strong potential for renewable energy, reforestation, and methane reduction projects. Africa alone could supply up to 30% of the world’s high-quality carbon credits by 2030. These projects could create billions in new revenue for clean growth.
The new methodology allows these projects to earn credits that can be sold internationally, helping communities build clean energy and adapt to climate change.
Ensuring Integrity and Transparency
Old carbon markets faced criticism for weak integrity and unclear reporting. Article 6.4 aims to fix that. Every project must pass strict checks by independent auditors before earning credits. Credits will only be issued if real emission cuts are proven.
The Supervisory Body’s framework includes steps for:
- Setting clear baselines for emissions.
- Measuring reductions over time.
- Monitoring performance using standard tools.
This process will help rebuild trust and attract new investors. Each credit will have a digital record, allowing buyers to trace where it came from and what impact it had.
Countries and companies with net-zero targets will finally have a credible tool to meet their goals. Over 160 nations now have net-zero pledges. Around 60% of global companies already use or plan to use carbon credits to reach their climate goals.
- SEE MORE: High-Quality Carbon Credit Prices Hit Record Levels, Driven by Integrity and Market Shifts
How Business and Finance Are Responding
The approval of the first methodology will draw major interest from the energy and finance sectors. Many firms have been waiting for a reliable, UN-backed system.
The voluntary carbon market was worth about $2 billion in 2023, according to McKinsey. It could grow to more than $100 billion by 2030 as Article 6.4 trading begins. The new system will also pressure companies to buy only verified and transparent credits, cutting down on “greenwashing.”
Regional exchanges and carbon registries are preparing to include Article 6.4 credits once the market launches. Exchanges in Asia, Europe, and Latin America are already aligning with UN rules. This will help stabilize global carbon prices, which currently range from under $5 per tonne in voluntary markets to more than $90 per tonne in the EU system.
More stable prices could encourage long-term investments in clean energy and climate projects. Experts expect Article 6.4 credits to trade at a premium once investors recognize their higher quality.
ESG and Environmental Impact
The new UN system supports Environmental, Social, and Governance (ESG) goals worldwide. Companies that buy Article 6.4 credits can cut their carbon footprint while funding sustainable projects in vulnerable regions.
Renewable energy projects such as solar and wind farms in Africa and Asia create jobs, cleaner air, and better access to power. The International Renewable Energy Agency (IRENA) reports that renewable energy jobs reached 13.7 million in 2024, with strong growth expected in developing countries. These social benefits align with the UN Sustainable Development Goals (SDGs) for clean energy and climate action.
With stronger oversight, the UN aims to stop misuse and deliver real results. As carbon markets expand, credit integrity will define success. A 2024 study found that up to 40% of older offset credits lacked verifiable emission savings. Article 6.4 aims to close that gap.
Toward a Fair, Transparent, and Unified Carbon Future
Challenges remain before the new system reaches full scale. The next step is to approve more methods for areas like forestry, agriculture, and industry. These sectors are complex and need careful rules to avoid overstating emission cuts.
Negotiations between countries will also continue. Some worry that carbon trading may let others delay domestic cuts. Others believe it will open new funding for clean energy and climate adaptation.
The UN says developing countries will need about $4.3 trillion each year by 2030 to meet climate and energy goals. Article 6.4 could help fill that funding gap.
The Supervisory Body will meet again before COP30 in Belém, Brazil, where it may approve more methodologies. Governments and investors are watching closely as the system expands.
The UN system promises a fair and transparent market for everyone. As carbon prices become more consistent, the focus will shift to ensuring projects deliver real benefits for people and the planet.
- FURTHER READING: Carbon Credits Supply to Skyrocket 35x by 2050 – But at What Price?
