Colleagues and friends,
Welcome to this event on high-integrity carbon markets, taking place during the seventh session of the United Nations Environment Assembly, or UNEA-7. At this Assembly, the focus is on advancing sustainable solutions for a resilient planet. Carbon markets can certainly offer one such solution, if we get them right by achieving both high integrity and scale.
Let me start with a quick overview on where we stand on climate change. While we have made some progress including through efforts on financing adaptation and efforts to reverse deforestation at the climate talks in Belm the world remains off track to deliver commitments made under the Paris Agreement.
Even with many new Nationally Determined Contributions submitted this year, global warming projections over this century are 2.3-2.5C. The multi-decadal average of global temperatures will exceed 1.5C, very likely within the next decade.
We need rapid and unprecedented cuts to greenhouse gas emissions to make this overshoot minimal and temporary and to reduce an escalation of costly climate impacts. To get on a path to limiting overshoot to about 0.3C, we would need to cut 2030 emissions by 26 per cent and 2035 emissions by 46 per cent.
And as we hurtle towards greater climate damage, developing countries will need adaptation finance of US$310 to US$365 billion per year by 2035 12 times as much as current international public adaptation finance flows. The world is simply not prepared for what is coming.
But when carbon markets are done right, they can accelerate actions at scale: mobilizing finance for mitigation and adaptation, driving innovation and rewarding real emissions cuts. Carbon markets are no silver bullet. But they are a critical lever for climate action.
Colleagues,
We are seeing accelerating progress on carbon markets. After nearly a decade of work, countries at COP 29 agreed on the final building blocks that set out how carbon markets will operate under the Paris Agreement, making country-to-country trading and a carbon crediting mechanism fully operational, under articles 6.2 and 6.4 respectively.
COP 30 built on this significant development.
Inside negotiations, we saw a clear signal that the Supervisory Body of Article 6.4 should focus on implementation, while increasing transparency. While nature-based credits in Article 6.4. will not be available for a few years, Article 6.2 is ready to support high-integrity transactions in this category. Such transactions will be subject to increased scrutiny. We also saw strong calls from developing countries to simplify rules and reduce transaction costs, in the spirit of delivering faster and more action and ambition. With mutually agreed rules and mechanisms, simple does not need to mean weak.
Outside negotiations, Brazil advanced a proposal for integrating carbon markets, aiming to reduce fragmentation and increase transparency by harmonizing standards and linking existing carbon credit trading systems. Countries that are part of the Coalition to Grow Carbon Markets reaffirmed their commitment to high-integrity crediting. Meanwhile, market participants announced US$1.1 billion worth of investments between November 3-21, a roughly 40 per cent increase on COP 29, with a strong focus on nature.
This all builds on a trend of increasing volumes of trading.
Demand in the Carbon Market for International Aviation (CORSIA) continues to surpass estimates and is approaching a volume of 160-210 MtCO2, which is comparable to emissions from Spain or the United Arab Emirates.
The value of transactions was US$535 million in 2024. However, in 2024, the value of broader financing commitments in voluntary markets, including long-term offtake agreements, was US$16.3 billion, or 18 times larger than the value of retirements.
This trajectory underscores the strategic importance of voluntary carbon markets as a complement to compliance markets and national climate strategies.
Importantly, the use of carbon market proceeds to support adaptation is gaining attention. Article 6 and the voluntary carbon market can meaningfully expand funding for adaptation, though they cannot replace public finance.
Investment in adaptation will come from contributions from Article 6.4. to the Adaptation Fund at five per cent of issuance. A similar rate is encouraged for transactions in Article 6.2. As carbon market integrity improves and participation broadens, the share of proceeds can become a predictable and growing resource for adaptation. Ghana has been a forerunner in this space, allocating part of the proceeds to implement its national adaptation plan.
So, what do these developments mean?
For countries, there is confirmation that markets will play an important role in NDC strategies.
We already had 78 per cent of Parties to the Paris Agreement intending to use Article 6 mechanisms, signalling widespread adoption of market-based approaches. Countries planning to purchase internationally transferred mitigation outcome carbon credits under Article 6.2 represent an estimated 0.181.5 GtCOe by 2030, underscoring the scale of opportunity. Now, we have clearer timelines and rules of the game. Simplification and interoperability could lower costs and increase participation.
For investors, it means that integrity requirements are tightening, with demand continuing to shift to high-quality credits that command a price premium.
High-integrity nature-based credits will remain attractive not only because of their climate impact for example, avoiding the Amazon transitioning to a savannah but also because of their non-carbon benefits, such as biodiversity conservation and local livelihoods.
But, friends and colleagues, as carbon markets look set to grow fast, we must prioritize robust governance, transparency and integrity standards to maximize impact.
Without robust baselines, credible permanence provisions, and transparent governance, carbon markets cannot deliver real mitigation. Integrity protects environmental outcomes, investor confidence and the climate regime.
But integrity alone is not enough. We need to scale. And while integrity without scale is climate-ineffective, scale without integrity is climate-counterproductive.
Even the most rigorous standards accomplish little if markets remain inaccessible to countries and sectors with significant mitigation potential, like energy and nature. We must scale smartly. Learn from mature sectors. Apply insurance-type mechanisms, portfolio-based risk management, and trusted crediting systems. We need to learn from past attempts and avoid requirements that equate to exclusion.
We also must ensure that carbon markets are both local and globally connected.
Indigenous Peoples, alongside Local Communities, must be involved in decision-making and benefit-sharing to ensure sustainability and equity. Countries need flexibility to use markets strategically based on local circumstances. At the same time, voluntary and compliance markets must converge to achieve scale. Fragmentation increases transaction costs and reduces mitigation impact.
Colleagues,
Amidst this complex landscape, UNEP is committed to ensuring trust and transparency
UNEP has established a Carbon Market Cluster, composed of experts from its Divisions and Regional Offices to support countries in benefiting from carbon markets of high integrity. UNEP supports countries to engage with Article 6 and CORSIA, establish domestic compliance mechanisms and access voluntary carbon markets. UNEP also collaborates with initiatives like the Integrity Council for the Voluntary Carbon Market (ICVCM).
With the developments at COP 30, we at UNEP expect greater demand for our support. You can expect out support to be commensurate with the potential, opportunities, and constraints that engaging with Carbon Markers might generate for your ambitions and implementation.
In conclusion, carbon markets cannot deliver net zero alone, and they should certainly not be used to avoid the deep decarbonization needed in critical sectors such as energy, industry, transport and infrastructure. But carbon markets can help to move the world in the right direction on mitigation, while delivering crucial funds to developing countries for climate adaptation and other development needs if policymakers prioritize robust governance, transparency and integrity standards to maximize impact.
Thank you.
