The World Bank has stated that the recent agreement on international carbon markets at the 2024 Conference of the Parties of the United Nations Framework Convention on Climate Change (COP29) in Baku, Azerbaijan, could enhance market participation and potentially increase investment flows to low-income countries.

Source: MENAFN

WB analysts emphasize that the establishment of UN-administered carbon markets has created an alternative pathway for market involvement, which is crucial given the heightened scrutiny surrounding the integrity of voluntary carbon markets in recent years.

This agreement provides clarity on the rules for cross-border transfers of carbon credits under Article 6 of the Paris Agreement. With the agreement in place, focus will transition to operationalization, which will require building countries' capacities-from setting up institutional and regulatory frameworks to deploying market infrastructure, such as registries.

In November 2024, the COP29 Presidency announced the conclusion of a decade-long negotiation process regarding high-integrity carbon markets under Article 6 of the Paris Agreement. This achievement was one of the Presidency's key priorities for the year and was made possible through rigorous dual-track technical and political negotiations. This approach successfully overcame years of deadlock and resolved the last remaining issue within the Paris Agreement.

Article 6 offers reliable and transparent carbon markets for nations as they work together to fulfill their climate objectives. This international collaboration is anticipated to lower the costs of implementing national climate plans (NDCs) by as much as $250 billion annually.