- Carbon markets weren’t in COP30 document, but several developments bolstered them
- Open Coalition on Compliance Carbon market was launched, with 18 jurisdictions
- EU submits climate plan that allows carbon credits to account for 5% of emissions reductions
- Article 6 Ambition Alliance is formed
- Coalition to Grow Carbon Markets gains new members
November 28 – Reading the text of the final deal at COP30, which was agreed on Saturday after more than two weeks of talks in Belém, it would be easy to miss the role of the carbon markets in the fight against climate change.
The carbon markets are not even mentioned directly in the document, besides a vague nod to the importance of Article 6 of the Paris Agreement, which sets the framework for how countries can use carbon credits to meet their emission-reduction commitments under their nationally determined contributions, including trading credits between themselves.
Few would claim that the carbon markets have fully recovered from a series of scandals, beginning in 2022, that shook confidence in credit schemes. Coming out of COP30, however, there is some evidence that efforts to revitalise the carbon markets are gaining momentum.
“I do think there is constant progress,” says Beatriz Granziera, senior climate policy adviser at The Nature Conservancy. “2025 has been an important year for carbon markets, and specifically carbon markets under the Paris Agreement.”
Some of the trickiest issues around the carbon markets were partially resolved last year at COP29 in Baku, when governments finally reached a deal on bringing Article 6 into operation. While technical negotiations did continue on some of the finer details of implementing Article 6, it was never likely that carbon markets would find a place in the high-level political negotiations in Belém.
Yet the venue of the talks in the Amazon meant it was impossible to ignore the potential of the carbon markets to help tackle one of the key drivers of the climate crisis.
The Amazon rainforest has lost around a fifth of its former area over the past half century. Large parts of the rainforest are no longer a carbon sink, but instead release carbon dioxide into the atmosphere, mainly due to fires.
The Amazon is also one of the best places in the world for carbon credit projects. The ability of trees to grow at prolific rates in this tropical climate means it is possible to issue carbon credits within just a few years of planting.
Field trip to visit Mombak carbon removals project, one of the world’s largest forest restoration projects, during COP30 Purchase Licensing Rights, opens new tab
And the carbon markets could be the key to financing the forest’s future. Ana Carolina Avzaradel Szklo, technical director for markets and standards at the Voluntary Carbon Markets Integrity Initiative, notes that $7 billion a year is needed to conserve the Amazon, yet less than $6 billion has been mobilised over the whole of the last decade.
Szklo warns there has been a “lack of clarity” among potential buyers about what constitutes a high-quality carbon credit and how these can be used in corporate net-zero strategies. For Brazil, she argues, it is important to establish robust standards as carbon projects scale up. “Setting the bar high is important so that we really drive a shift in the market.”
One of the carbon developers to have spotted the potential of the area is Brazilian carbon removals company Mombak. Around 125km south of Belém, the company is working to turn a former cattle ranch back into a thriving rainforest.
Mombak has secured offtake agreements with major tech companies, including Google and Microsoft. But Peter Fernandez, the company’s executive chairman, acknowledges that voluntary demand alone will not be enough.
“Voluntary demand is amazing, and I think that it will continue to grow, but I don’t think that it will get to the level of 10 billion tonnes per year,” he says, referring to the level of carbon removal , opens new tabscientists believe is needed by 2050 to meet the goals of the Paris Agreement.
Multiple jurisdictions have already established regulated carbon markets. In some cases, companies can offset carbon taxes by purchasing carbon credits, although most jurisdictions currently require companies to purchase credits from domestic projects. However, Fernandez is one of many who sees a greater role for the international trade in carbon credits.
“It just makes sense that these markets will begin to fuse and become more porous with one another over time,” he says. “I think it’s ultimately what’s going to get us to the degree of demand that is required to achieve humanity’s goal.”
European Commission President Ursula von der Leyen attends the Leaders’ Summit ahead of COP30 in Brazil. Carbon market experts said the EU’s decision to allow high-integrity carbon credits to meet 5% of the bloc’s 2040 climate targets was “a game-changer” in terms of generating demand. REUTERS/Adriano Machado Purchase Licensing Rights, opens new tabBelém took a step towards convergence between regulated markets with the launch of the Open Coalition on Compliance Carbon Markets, opens new tab. Some 18 jurisdictions signed up to the initiative, including the European Union, Brazil and China. Its initial focus will be on sharing best practices in monitoring, reporting and verification, and in establishing common carbon accounting standards.Meanwhile, in the run-up to COP30, the EU announced it will impose a 2040 target to reduce emissions by 90%, compared to 1990 levels. Some 5% of this reduction can come from high-quality international carbon credits.
The move by Brussels “would be a game changer for Article 6 demand”, says Granziera. She notes that EU countries would require a minimum of 200 million tonnes to meet this 5% figure, which would approximately double the current level of demand from buyer countries under Article 6.2.
The EU decision is a “huge change”, agrees Sheri Hickok, CEO of investment firm Climate Impact Partners. Hickok also highlights the importance of the Science Based Targets initiative – which has spent more than a year wrestling with internal divisions over carbon offsets – deciding to create a mechanism for companies to use carbon credits in their net-zero strategies in the latest draft of its Corporate Net-Zero Standard.
More than 11,000 companies have committed to adopting net-zero targets through the SBTi. Its updated guidance, therefore, has potential to spur a significant increase in demand for carbon credits.
Another initiative that gained momentum at COP is the Coalition to Grow Carbon Markets. Announced during London Climate Action Week in June, the Coalition is led by the UK, Singapore and Kenya and intends to promote harmonised policies that will help drive demand for credits. At COP, several more countries endorsed, opens new tab the Coalition’s Shared Principles for Growing High-Integrity Use of Carbon Credits, bringing the total number of endorsements to 11.
Fred Teo, CEO of Singapore-based carbon markets investor GenZero, describes the growing role of governments in promoting the carbon markets as “extremely important”. At a stage when the market is still nascent, he argues that “government participation lends credibility and certainty”, helping corporates to feel greater confidence in purchasing credits.
Singapore, despite its diminutive size, has emerged as a leader in the carbon markets space. The city state has signed Article 6 agreements with multiple countries, allowing Singaporean companies to purchase credits from approved projects in those countries to offset part of their carbon tax obligations. The Singaporean government itself announced in September that it will contract more than 2 million tonnes of nature-based carbon credits from projects in Ghana, Peru and Paraguay to help meet its NDC.
Teo says it is “instinctive” for a small country like Singapore to look beyond its borders, but adds that the international trade in credits should be an important part of the solution globally. Credit purchases under Article 6 will help provide a new source of climate finance for the Global South, he says, while also reducing carbon compliance costs for companies and helping to mitigate climate change.
A view of the central business district skyline in Singapore May 27, 2025. Singapore is a leader in the carbon markets space. REUTERS/Edgar Su Purchase Licensing Rights, opens new tabYet another initiative to launch at COP30 is the Article 6 Ambition Alliance, opens new tab. The 10 member countries intend to use Article 6 deals to go beyond their NDC commitments. Meanwhile, a series of bilateral Article 6 agreements were announced at the summit, including between Switzerland and Zambia.
But for all the optimism coming out of COP30, there are still multiple issues to resolve before the carbon markets can play a bigger role in protecting and restoring ecosystems like the Amazon.
Teo laments a “weird narrative” that favours projects that remove carbon from the atmosphere (such as through tree planting) over those that seek to reduce or avoid emissions (such as through preserving existing forests). World Bank data shows that the average price for forestry removals credits is now around three times higher than for avoidance equivalents.
“We have a danger of misallocating capital and over-allocating towards removals and under-allocating towards protection,” Teo warns.
There is also an ongoing debate about how “permanent” carbon removals need to be. The Article 6.4 Supervisory Body, which is tasked with drawing up standards for credits, had been leaning towards stringent rules that critics warned would effectively exclude nature-based projects.
“If we go with 100-year-plus permanence, we completely kick out nature,” says Hickok of Climate Impact Partners. “Is that really a pragmatic approach with what we are trying to accomplish?”
The Supervisory Body conceded that its critics had a point in October, with a draft standard that preserves greater flexibility. Further decisions are expected in 2026.
While COP30 did not see decisive breakthroughs on the key disagreements around how the carbon markets should operate, some of the key players in the market seemed to leave the Amazon with a spring in their step.
“There is a growing consensus that there is at least a place for carbon credits to help with the overall decarbonisation journey,” says Teo.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Ethical Corporation Magazine, a part of Reuters Professional, is owned by Thomson Reuters and operates independently of Reuters News.