Global Agreement Reached on Carbon Markets at COP29 in Baku

Breakthrough deal marks milestone for Paris Agreement's Article 6, co-chaired by New Zealand and Singapore.

Countries attending the United Nations Climate Change Conference (COP29) in Baku, Azerbaijan, have achieved a historic agreement on carbon markets under Article 6 of the Paris Agreement. The landmark deal was co-chaired by New Zealand’s Minister of Climate Change, Simon Watts, and Singapore’s Minister for Sustainability and the Environment, Grace Fu.

The negotiations, which spanned several years, culminated in consensus among all 196 Parties, effectively operationalizing international carbon markets under the Paris Agreement.

“This decision resolves one of the most sophisticated and technical challenges in climate diplomacy. International carbon markets are now fully operational,” Minister Watts announced. “It sends a clear signal to unlock investments in emission reduction projects and enables countries to collaborate effectively to meet their climate goals.”

The Article 6 agreement aims to foster global cooperation on reducing emissions by enabling countries to trade high-quality carbon credits. It is expected to catalyze renewable energy projects and sustainable initiatives worldwide, supporting the transition to a low-emissions future.

Minister Fu underscored the importance of the decision: “The confidence provided by these decisions will facilitate the trading of robust carbon credits, mobilizing private capital to accelerate global mitigation efforts. This is crucial to keeping global temperature rise below 1.5 degrees.”

Both Ministers have been instrumental in advancing discussions on Article 6, having co-facilitated consultations in previous COP meetings, including COP26 in Glasgow and COP27 in Sharm el-Sheikh. Their leadership at COP29 was pivotal in securing this breakthrough.

“Singapore and New Zealand remain committed to supporting the Paris Agreement and are honored to have helped the Presidency reach consensus on this critical outcome,” the Ministers said in a joint statement.

While the deal represents significant progress, further technical rules and guidelines will need to be developed in 2025 to fully implement the framework. Nonetheless, this outcome provides a major boost for carbon trading proponents, overcoming years of stalemates and disagreements.

Key Implications of the Agreement:

Global Cooperation: The operationalization of Article 6 paves the way for increased collaboration among nations, enabling them to trade carbon credits and support each other in achieving emissions reductions targets.

Private Sector Investment: The deal creates a stable framework to attract private capital, funding projects that promote renewable energy, forest conservation, and other climate mitigation efforts.

Economic and Environmental Impact: The agreement is expected to unlock billions of dollars in global investments, creating opportunities for sustainable economic growth while reducing emissions.

As COP29 continues, attention now turns to unresolved issues, including climate finance and adaptation measures, with hopes that the momentum from the Article 6 agreement will inspire further breakthroughs.

This milestone reaffirms the commitment of the international community to collective action under the Paris Agreement, offering new tools and pathways to combat the global climate crisis.