COP (Conference of the Parties) global climate summits have been running for nearly three decades[1]. The most recent of which, number 27, concluded on Sunday 20th November after 13 days of talks held in Sharm el-Sheikh, Egypt. The planned agenda[2] was rigorous and ambitious, but the reality was less productive, and the finalisation of some crucial topics was kicked like the proverbial can down the road, to next year’s meeting. One such example was the well-kicked metaphorical can of previous conferences: global carbon markets.

But what exactly is a Carbon Market?

Carbon markets encourage states and organisations to contribute actively to the mitigation of climate change through existing market mechanisms and “carbon credits”. A single, tradable carbon credit is “earnt” by reducing, sequestration or avoiding 1 tonne of carbon dioxide equivalent (i.e., carbon dioxide or another greenhouse gas). While carbon markets have existed in some form since 1990, this article specifically relates to voluntary markets and references two mechanisms. First formally outlined in Article 6 of The Paris Agreement[3], the concepts are an evolution of the Clean Development Mechanism (CDM) from the Kyoto Protocol[4] and allow bilateral international trade. The first (under article 6.2) happens simply between countries: those who have either earned credits or chosen to buy them. The second (under article 6.4) happens between carbon-cutting projects (whose work earns credits) and emitting countries – or organisations – who can again, choose to buy them. However, the carbon-cutting projects should be approved by the Supervisory Body within the UN to earn reputable, certified credits[5].

Ok, that was heavy reading and informative but what is the point?

Rewind to COP26, and there was great applause when the rules to govern global carbon market mechanisms were approved[6]; onlookers were hopeful and excited about the potential benefits. The monetisation of emissions incentivises the move to net zero and the encouragement of emitting organisations to take, and support, sustainable action across the globe. Carbon markets are an innovative tool to limit the 1.5-degree temperature rise and help states meet NDC’s (Nationally Determined Contributions) emissions[7].

What’s not to like about that? But what has COP done to support it?

The aim for which COP26 was to make theory a reality by creating a set of global governing rules for the currently inconsistent playing field that is voluntary carbon markets. Although this mission had been delayed for a few years, success was tangible: standards were set, and various problematic loopholes were shut down[8].

However, instead of making progress, it seems that COP27 has reversed some of last year’s hard work. The new decision texts mean that double counting, as well as “confidentiality” around each carbon credit, are possible[9]. Both changes revoke the environmental integrity that was beginning to build around voluntary carbon markets. For example, where double counting has occurred, both the country hosting the carbon-cutting project and the organisation buying the credits will have accounted for the same effort. Hence, progress towards emission targets, net zero and other environmental goals can seem falsely fast-moving. Moreover, confidentiality around carbon credits allows for all sorts of irregularities. For example, unapproved, “positive-impact” carbon-cutting projects selling credits below the market rate might tempt and claim funds that should be supporting a more genuine cause. Hence, carbon credits – and their markets – risk becoming meaningless or even illegitimate, yet still traded and marketed as integrous. Essentially, the whole system could, sadly, join the greenwashing epidemic.

Should we be grateful for the further delay and just abandon the ship?

The reality is that carbon markets are far from the perfect solution, and their success depends on a multitude of “ifs”. There is a huge amount that needs to be agreed upon and changed before they can have a significant, verifiably positive effect. While some will be disappointed with the delay in implementation, others will be relieved, and wondering if voluntary carbon markets should be banished from the climate agenda once and for all. Can we genuinely distinguish those who wish to profiteer from a global market from those who believe it to be the fastest route to net zero?

Where else can we turn?

One question that results from every aspect of this article relates to the efficacy of the money spent. Whether it is to buy carbon credits or to build and solidify global carbon markets, there is a significant amount in or poised for, circulation and careful thought must be given to where it ends up. Would the return on investment, ROI, be higher for both the emitting organisation and the planet if spending focused on actively reducing their emissions? Would there be more accountability if we could not pay to be a part of someone else’s net-zero journey? Are we losing focus on the true goal of climate action and wasting funding? It’s all possible.

If you have money to spend on climate action and have budgeted for ‘carbon credits’, check yourself – are you sure that this will yield the best ROI for both the people and the planet? Perhaps look closer to home and consider investing in your own Scope 3 carbon reduction and elimination programs first. Feel free to contact Allison Ford-Langstaff , 4C Head of Services and Thought Leadership, to help kick start your emissions management programme or simply to have a chat and share thoughts.


[1] (n.d.). What is a COP? UN Climate Change Conference UK 21.

[2] (2020). UN Global Compact at COP 27 Full Schedule of Events. United Nations Global Impact.

[3] (2016). The Paris Agreement. United Nations Framework Convention on Climate Change (UNFCCC).

[4] Watson, S. K. (2021). Carbon markets from Kyoto to COP26, explained. Popular Science.

[5] Crook, J. (2022). COP27 FAQ: Article 6 of the Paris Agreement explained. Carbon Market Watch.

[6] Farand, C., Gerretsen, I., & Lo, J. (2021). The breakdown: What is in the Glasgow Climate Pact? Climate Change News.

[7] (2022). What are carbon markets and why are they important? UNDP Global Climate Promise.

[8] Farand, C., Gerretsen, I., & Lo, J. (2021). The breakdown: What is in the Glasgow Climate Pact? Climate Change News.

[9] Farand, C. (2022). Greenwash alert as Cop27 draft allows double claiming of carbon credits. Climate Home News.