UN tackles carbon credit credibility with new standards
A UN body responsible for establishing the international carbon market under the Paris Agreement has adopted crucial new standards to ensure the credibility of emissions-cutting projects, marking what officials described as a "historic step" towards full operationalisation.
The Paris Agreement Crediting Mechanism (PACM) was established under Article 6.4 of the 2015 Paris Agreement to enable countries and organisations to collaborate on emissions reductions through high-integrity carbon credits. The mechanism allows countries to raise climate ambition and implement national action plans more affordably by identifying and encouraging opportunities for verifiable emission reductions, attracting funding to implement them, and enabling cooperation among countries and other groups to conduct and benefit from these activities.
Unlike existing carbon markets, the PACM aims to provide a UN-supervised framework that directly supports national climate commitments and raises global ambition. The mechanism is designed to generate and trade high-integrity carbon credits in support of global climate goals, offering countries and other actors a structured way to work together on reducing greenhouse gas emissions.
The development comes after years of criticism over the integrity of carbon credit systems, with concerns that many projects have overstated their environmental benefits or failed to deliver genuine emissions reductions. The UN-backed standards are hoped to help boost the integrity of the new market and combat fears over 'greenwashing'.
The new standards represent a decade-long effort to create a robust, internationally recognised carbon trading mechanism that can support global climate goals while avoiding the pitfalls of previous schemes. The establishment of the PACM has been "a decade in the making" according to reports, designed to address integrity concerns that have plagued existing carbon credit systems.
The PACM Supervisory Body agreed two key standards that will govern how carbon credit projects measure their actual emissions reduction impact. The rules aim to ensure credits issued under Article 6.4 of the Paris Agreement are, "ambitious, real, additional and verifiable."
The first standard establishes new requirements for measuring baseline emissions, what would have happened without the project. It includes an initial downward adjustment, such as setting baselines 10% below business-as-usual emissions, plus a minimum 1% annual reduction across all approaches. These measures are designed to prevent over-crediting and drive continuous improvement.
The second standard addresses "leakage", unintended emissions increase elsewhere due to project activities. It clarifies that forest protection projects must align with host countries' national strategies to qualify for credits.
Martin Hession, Chair of the Supervisory Body, said the agreement ensures "crediting levels are set consistently with a pathway to net neutrality." The body also agreed measures for equitable benefit-sharing with host countries and enhanced capacity building support.
However, fewer projects than expected are transitioning from the previous Clean Development Mechanism, creating a short-term funding gap until new PACM projects begin in 2026. The first methodologies are expected for approval by year-end.
