UN: Demand already emerging for high-quality carbon credits

High-integrity carbon markets can reduce the cost of implementing nationally determined contributions (NDCs), mobilize climate finance and help cut emissions, Perumal Arumugam, Manager of the Climate Change Mitigation Division at the Secretariat of the United Nations Framework Convention on Climate Change (UNFCCC), said during a panel discussion held as part of Baku Climate Action Week 2026 (BCAW 2026).

He said discussions on carbon markets in Baku are particularly significant because decisions on the practical implementation of Article 6 of the Paris Agreement on climate change were adopted at COP29 in 2024.

"Carbon markets can help close this gap by reducing the cost of emissions reductions. They can unlock emissions-reduction opportunities that would otherwise remain unfunded and channel investment into low-carbon technologies, resilient infrastructure and national development priorities," he said.

According to the UNFCCC representative, the Clean Development Mechanism under the Kyoto Protocol previously helped mobilize up to $350 billion in investment.

He also noted that Article 6 provides a stronger foundation for international cooperation in line with the goals of the Paris Agreement. According to him, the mechanism has the potential to reduce the annual cost of implementing NDCs by more than $250 billion, while more than 168 countries have already expressed their intention to use it.

He added that demand for high-quality carbon credits is already emerging from governments, the international aviation sector and corporations, including for offsetting Scope 3 emissions.