With national climate plans through to 2035 due in the coming weeks, some governments are planning to use carbon offsets purchased from other countries to meet their new emissions-cutting goals. But early efforts by Japan to develop such credits highlight potential problems for the new Paris Agreement offsetting mechanism, which experts fear could unleash a fresh wave of greenwashing.
Bilateral agreements to transfer emission reductions from one country to another are taking off after rules were finalised at COP29 last November, with countries looking for new ways to fund climate action and achieve targets set out in their updated national plans.
But long before the climate summit in Baku, Japan had already spent over a decade setting up its international carbon offsetting mechanism modelled on Article 6.2 of the Paris Agreement. Tokyo says the scheme will “contribute to the decarbonization of the world”, while providing a reservoir of credits that, in future, both Japan’s government and its companies can draw on to meet their climate goals.
But a Climate Home News analysis of Japan’s current projects – from forest protection to energy-efficient lighting in Southeast Asia – raises questions over the climate benefits and environmental integrity of some of the offsets.
In one of Cambodia’s most endangered ecosystems – the Prey Lang forest – Climate Home found that tree-cutting has soared since the start of Japan’s largest such project, whose offsets rely on deforestation falling. Meanwhile, across the developing world, Tokyo earns carbon credits by using public subsidies to fund emissions reductions by its corporate giants, including fast-fashion firm Uniqlo.
Booming trade
Article 6.2 of the Paris Agreement allows countries to trade “mitigation outcomes”, such as carbon credits, directly through bilateral deals. Typically, a wealthy nation funds programmes in a developing country to cut pollution in exchange for units known as ITMOs. These can help governments meet their national climate targets or be used by companies to comply with carbon-offsetting schemes, such as CORSIA for airlines.
Activity under the mechanism has accelerated this year after governments ironed out some of its final details at COP29 in Baku. There are now over a hundred bilateral agreements between more than 60 countries, with many more signalling in their nationally determined contributions (NDCs) their intention to draw on Article 6.2 to meet part of their emissions-reduction goals.
Yet, as the profile of bilateral offsets grows, observers are concerned that Article 6.2’s light-touch regulations and limited oversight will usher in a new wave of poor-quality offsets that will reduce emissions only on paper – as has been the case in the voluntary market before recent top-level efforts to improve integrity.
Agreed on the back of tumultuous negotiations, the framework for Article 6.2 gives countries near-total freedom. They can decide amongst themselves how emission reductions are calculated and which environmental or social safeguards to put in place.
‘Free-for-all’
“We have this nice bit of text saying that ITMOs should be real, verified and additional – but that doesn’t really mean anything as there is no system in place that guarantees that,” said Federica Dossi, an Article 6 expert at Brussels-based group Carbon Market Watch. “It’s a free-for-all”.
After approving the terms of trading between themselves, countries are required to submit to the UN climate change body only limited information, which is reviewed by a technical team in what observers have described as a “box-ticking exercise”.
Industry says carbon capture still an expensive last resort to cut emissions
The UN’s expert panel can admonish countries if their disclosure around bilateral offsetting is incomplete, but it is forbidden from casting judgement on the quality of the cooperative activities.
Unlike in the nascent UN carbon crediting mechanism under Article 6.4 or the voluntary carbon market, there is no way to prevent countries from generating, or using, offsets that have little or no integrity.
“There are essentially no enforcement measures,” said Injy Johnstone, a research fellow in Net-Zero Aligned Offsetting at the University of Oxford. “This is one of the biggest gaps.”
Japan leads development
Few other countries have been at the forefront of the development of Article 6.2 like Japan. Long before the gavel came down approving the framework, Tokyo had already spent years working on its mechanism for bilateral offsetting: the Joint Crediting Mechanism (JCM).
“Countries that had already agreed partnerships would have never agreed to more stringent rules that could have invalidated their work up until then,” said Johnstone, who has closely followed the development of Article 6.2 governance and co-authored guidance on how countries can engage responsibly with the mechanism.
According to analysis by the UNEP Copenhagen Climate Centre, more than three-quarters of the 162 existing Article 6.2 projects fall under Japan’s Joint Crediting Mechanism (JCM), a scheme through which the Japanese government earns carbon credits by partnering with developing nations on emissions-reduction initiatives.
-
“Public health emergency”: Report shows fossil fuel impacts on every stage of life
The Global Climate and Health Alliance documents how fossil fuel extraction and use harms people throughout their lives, with the worst effects on marginalised groups -
COP observers invited to reveal who is bank-rolling their participation at climate talks
As UN climate change body introduces new voluntary transparency measures, campaigners welcome “much needed step” to keep fossil fuel influence out of the talks -
Countries trail COP30 clash over global response to shortfall in national climate plans
China, India and Saudi Arabia rejected a COP30 dialogue on an upcoming UN review of climate plans, widely expected to show the world is not on track to limit global warming to agreed levels
The JCM is effectively a forerunner to the bilateral offsetting mechanism introduced by Article 6.2. Tokyo set it up in 2013 – before the Paris Agreement came into being – after refusing to renew its support for the Kyoto Protocol amid growing frustration with its carbon-offsetting tool, the Clean Development Mechanism (CDM).
“Japan thought [the CDM] was too heavily regulated,” Yuri Onodera of Friends of the Earth Japan explained to Climate Home.
Thirty-one countries have signed up to Japan’s scheme, with India being the latest – and largest – to join in August.
Additionality concerns
The JCM serves multiple purposes. When fully implemented, it will grant Japan a steady supply of credits that can either be counted by the government towards its international climate targets or used by companies to comply with carbon-pricing mechanisms.
But the JCM also directly supports Japan’s corporate giants both by providing ready-made markets for their low-carbon technologies or by subsiding their efforts to cut emissions overseas.
Fast Retailing, which runs an $80-billion clothing empire, has tapped the scheme to switch to more energy-efficient LED lights in its Uniqlo stores across Indonesia and Thailand with financial backing from the Japanese government.
Nearly a third of all JCM projects involve Japanese tech giants like Sharp or Panasonic installing solar panels in factories or shopping malls, which are often themselves run by subsidiaries of Japanese firms abroad.
Carbon market experts told Climate Home such projects would be regarded as low-integrity and possibly excluded from other carbon crediting mechanisms.
Renewable energy offsets last year failed to obtain a quality label from the Integrity Council for the Voluntary Carbon Market (ICVCM), a leading oversight body. That’s because existing rules do not go far enough to prove that the projects need the funding generated by selling carbon credits – a concept known as “additionality”.
Under Article 6.2, countries are free to come up with their own definition of additionality – and, Onodera said, Japan applies a “very lax and vague” one.
The Japanese government is planning to use the offsets generated by some of these projects to achieve its international emission-cutting targets under the Paris Agreement.
In its latest nationally determined contribution (NDC), published in early 2025, Japan said it aimed to accumulate ITMOs equivalent to 100 million tonnes of CO2 by 2030. If those are all counted towards the country’s NDC, it means about 15% of Japan’s planned emission reductions by 2030 will be achieved by funding measures to cut pollution overseas rather than taking action at home. The share of carbon offsets is set to rise to 20% in 2040.
Carbon Market Watch’s Dossi warned that the NDC process risks turning into “an accounting trick” if those ITMOs fail to meet high-integrity standards. “You would see countries claim that they are achieving climate targets when, in the real world, their emissions continue rising or stay at the same level,” she said.
Protecting Prey Lang?
The Japanese government, however, will not be the only beneficiary of the JCM. Japanese companies will also be able to use credits generated under the mechanism, for example, to comply with the country’s carbon pricing system.
The biggest existing JCM project is funded by Mitsui, a Japanese conglomerate with significant fossil fuel interests, in Cambodia. It aims to protect the Prey Lang, a vital biodiversity hotspot and one of the largest remaining lowland evergreen forests in Southeast Asia.
Prey Lang plays a key role in absorbing carbon from the atmosphere and combating climate change. But the forest has been plagued by widespread logging to harvest luxury timber, expand rubber plantations and set up mining operations – something experts say often happens with the complicity of the Cambodian government.
In 2018, the Cambodian environment ministry and Mitsui partnered up on a REDD+ project in a portion of the forest with the support of American environmental NGO Conservation International. Their stated goal was to reduce deforestation by bolstering law enforcement and improving the living conditions of local communities.
But trees have disappeared at a rapid rate since the project began. Forest loss nearly tripled between 2017 and 2024, according to Climate Home analysis based on data from monitoring service Global Forest Watch. In that period, around 4,000 hectares of forest vanished – an area equal to 12 times the size of New York’s Central Park.
“Deforestation has dramatically reduced the forest cover in the REDD+ project and it is extremely serious,” a spokesperson for the Prey Lang Community Network, a group of mainly Indigenous communities living in and around the area, told Climate Home by email.
Pressure from Cambodian authorities
The community network has been carrying out its own patrols and monitoring illegal activity in the forest since 2004 – long before the REDD+ project started. “The only reason Prey Lang is still there is because of the Indigenous people,” said Ida Theilade, a professor at the University of Copenhagen who has researched Prey Lang extensively. “Their lifestyle is tied to the forest.”
Sony Oum, Cambodia country director at Conservation International, said the NGO works “directly with the target villages to ensure broad participation […] and to support local communities’ role in conservation”.
But, despite its extensive local knowledge, the community network said it had been excluded from participating in the REDD+ project. The developers “have instead collaborated with sub-national and national authorities, which still oppose the activities of grassroots groups”, its spokesperson told Climate Home.
Observers have accused the Cambodian government of accelerating a crackdown against environmentalists and reporters who have documented illegal activities in the Prey Lang.
Journalist Uk Mao, who had reported on logging in the wildlife sanctuary, was arrested and charged with incitement and defamation in a case condemned by civil society groups and the UN special rapporteur for human rights defenders. Mao denied all the charges and told Mongabay he is being targeted because of his work.
Cambodian authorities have faced accusations of fuelling the drivers of deforestation in Prey Lang by handing out mining concessions, turning a blind eye to illegal wood harvesting and sanctioning the construction of power transmission lines across the reserve, as reported by Mongabay.
Questions over carbon accounting
Richard Jeo, senior vice president and chief Asia-Pacific field officer at Conservation International, told Climate Home that Prey Lang is “a complex environment”, but “we are seeing progress”. He added that the REDD+ project “is helping to slow deforestation rates compared to nationally reported baselines”.
Carbon credits from so-called ‘avoided deforestation’ activities, like Prey Lang’s, are underpinned by predictions of how many trees would have been cut down without the project, as well as how much carbon dioxide would have been released into the atmosphere as a result.
That is known as the baseline against which the project’s performance is assessed. This system has come under intense scrutiny over the last few years, with critics arguing that flawed methodologies for setting baselines compromise the integrity of carbon offsets.
In Prey Lang, project developers followed a rulebook drawn up by Conservation International and Mitsui themselves and approved by Japan’s JCM. It allowed them to derive the baseline from countrywide deforestation figures produced by the Cambodian government.
They also predicted which portions of the forest would be cut down. This matters because specific types of vegetation – like evergreen or semi-evergreen forest – can store significantly more carbon than others, such as deciduous trees that shed their leaves seasonally. Depending on where forest loss happens, the carbon savings – and the number of offsets issued – can vary significantly.
The project’s baseline anticipated that, in Prey Lang, the overwhelming majority of deforestation would happen in the carbon-rich evergreen and semi-evergreen portions of the forest. That scenario seemed to be confirmed in 2020 when, as part of an internal exercise, the team behind the project looked at satellite images to detect deforestation hotspots in the area and guide its patrols. That analysis found that, in the first two years of the project, close to 90% of forest loss had occurred in the evergreen and semi-evergreen areas.
But the first monitoring report required under the JCM before issuing carbon credits painted a completely different picture. Drawing on data from the Cambodian government, it recorded soaring forest loss overall. But it also reported that the evergreen portion was left untouched and the vast majority of the clearing happened in areas made up of deciduous vegetation and bamboo trees, which have lower or no capacity to absorb carbon and store it, respectively.
Despite rising deforestation in the Prey Lang, this meant project developers could still show that CO2 emissions caused by tree-cutting were not as high as the baseline scenario had anticipated. In December 2023, the JCM’s committee, made up of representatives from the Japanese and Cambodian governments, approved the findings and authorised the release of a first batch of over 600,000 credits.
University of Copenhagen researcher Theilade told Climate Home there appears to be “a lot of creative accounting” going on. “Can you actually say any carbon credits should be generated? I am not sure when you look at the deforestation happening,” she added.
Greenwashing risk
A spokesperson for Mitsui told Climate Home the firm has “helped provide resources that have led to a reduction in deforestation rates” against the project’s official baseline scenario, as well as giving funding for the development of a system that will enable community-led conservation in the future. “Meaningful forest protection takes time, and we will provide support to Prey Lang for as long as possible,” the statement added.
Conservation International’s Jeo said “protecting Prey Lang requires long-term, reliable funding” and carbon financing represents “a needed, viable mechanism” for achieving that.
“Lasting progress comes from doing the work, learning and adapting as data and methods evolve — that’s what this project is doing,” he added.
However, the lack of clarity over the methods used to measure avoided emissions reductions in this flagship programme, as revealed by Climate Home, suggests that governments will need to pay close attention to how they justify offsets under Article 6.2.
Given the power it affords to individual countries, Oxford University’s Johnstone said its integrity rests on them acting responsibly and building on the limited safeguards available.
Otherwise, she warned, the risk is that this mechanism “could enable greenwashing on a scale that we have never seen before”.
The post As governments bet on carbon trading, Japan’s early scheme spotlights pitfalls appeared first on Climate Home News.
As governments bet on carbon trading, Japan’s early scheme spotlights pitfalls
The United Nations has said the world must cut greenhouse gas emissions by nearly 6% per year to limit global warming enough to be able to return to the 1.5C goal by 2100, as decades of insufficient climate action have now made an overshoot inevitable.
In a video message accompanying the UN Environment Programme’s (UNEP) 2026 Emissions Gap Report, UN Secretary-General António Guterres said the world could no longer avoid overshooting the 1.5C limit and that the consequences were already devastating. However, he said it was still possible to return average global temperatures to 1.5C above preindustrial times by the end of the century.
“Overshoot is not surrender,” he said, adding that the report, released on Wednesday, sets out what is needed to limit warming. That entails cutting global greenhouse gas emissions by 18% by 2030, 45% by 2035 and 69% by 2040, all compared with 2025 levels.
This implies average annual reduction rates of 5.7% for 2025-2035, higher than the pathways laid out by the Intergovernmental Panel on Climate Change in its last major scientific report, which required annual reduction rates of about 5%, UNEP said.
Paris Agreement committee names three countries snubbing it over NDCs
The more ambitious emissions reductions – which countries are still far off achieving – would put the world on the lowest-possible overshoot pathway, giving a 50% chance of limiting peak warming to 1.7–1.8C around mid-century before bringing global temperatures back to 1.5C or below by 2100, the report said. Reaching this scenario will also require carbon removal from the atmosphere, it added.
UNEP noted that if countries fully implement their current national climate plans (NDCs), they would only reduce emissions by 5-8% by 2030 and 11-15% by 2035, relative to 2025 levels.
UNEP Executive Director Inger Andersen said the world must not give up on the Paris Agreement’s most ambitious warming limit, adding that every additional fraction of a degree and additional year of heating above 1.5C increases climate change impacts and risks, such as the deadly floods, heatwaves and wildfires that have plagued many nations this year.
“We must pull out all the stops to minimise peak warming and return to 1.5C by the end of the century. This is possible,” she said, adding that governments must urgently implement policies that deliver rapid and sustained emissions reductions.
Climate pledges fall short
New climate pledges since last year’s report have made a negligible difference to projected emissions and warming, UNEP said. Under current policies, the world is on course for 2.8C of warming this century, while full implementation of national climate pledges and continued similar efforts would limit warming to 2.6C, the report found.
UNEP said its projections had deteriorated, attributing this to the withdrawal of the United States from the Paris Agreement under President Donald Trump and revised estimates of historical emissions.
Even with the most optimistic pledge-based scenario – which assumes countries deliver both their current national climate commitments and additional net-zero targets – warming would now only be limited to 2.1C this century, the report found.
IPCC scientists vow to press on with climate reports despite political deadlock
Speaking to journalists ahead of the report’s launch, co-author Anne Ohlhoff said the US exit from the Paris accord meant that its previous national climate target was no longer included in UNEP’s global projections. The country has also dropped its net-zero emissions goal, she said, affecting the outlook because the US is the world’s second-largest emitter.
She warned that there is still a large gap between countries’ emissions commitments for 2035 and the reductions needed under the report’s lowest-possible 1.5C overshoot scenario.
Every five years of carbon dioxide (CO₂) emissions at current levels pushes peak warming up by around 0.1C, she said, adding that without urgent action, it could quickly become impossible to keep peak warming below 1.7–1.8C.
Describing the emissions gap as a “leadership gap”, UN chief Guterres warned that current national climate plans and policies “fall dangerously short” of what is needed to limit warming. He urged countries to adopt credible roadmaps for transitioning away from fossil fuels, accelerate clean energy deployment and electrification, invest in electricity grids and storage, cut methane emissions and halt deforestation.
Carbon removal needed, but risky
Alongside deep emissions cuts, removal of CO₂ from the atmosphere needs to be accelerated throughout the century, the report found. The world will need to remove and permanently store about 320 billion tonnes of CO₂ from the atmosphere to return global temperatures to around 1.5C by 2100.
The estimated carbon removal is equivalent to around eight years of global CO₂ emissions at 2024 levels. However, UNEP cautions that removing carbon at this scale remains uncertain because of technological and socio-economic challenges.
Keywan Riahi, a contributor to the report, said carbon could be removed through nature-based approaches, such as planting forests and improving wetland management, which help ecosystems absorb carbon emissions, as well as engineering solutions that capture emissions from energy production or remove carbon directly from the air.
However, he warned that both nature-based and technological approaches face risks and might not deliver carbon removal at the scale needed. This is because nature solutions such as planetary sinks are weakening because of climate change while techno-fixes remain uncertain, he added.
“All of those technologies come with risks,” Riahi told reporters, adding that what the world needs is to try “to keep the overshoot as low as possible, so that we do not need to rely on these technologies to take CO₂ out of the atmosphere later on”.
Renewable energy supports emissions cuts
Despite the expected overshoot of the 1.5C warming limit, the UNEP Emissions Gap Report underscored that the rapid growth of renewable energy and the impact of climate policies so far show that deeper emissions cuts remain possible.
It stated that since the adoption of the Paris Agreement in 2015, global renewable electricity capacity has grown three times faster than anticipated, while solar photovoltaic (PV) deployment has increased sevenfold compared with projections made a decade ago.
Maintaining the recent pace of renewable energy expansion, alongside stronger policies, could put the world on track to meet the global goal of tripling renewable energy capacity by 2030, the report said. It could also increase the share of wind and solar in electricity generation to levels consistent with the pathway that limits the overshoot of 1.5C to the lowest possible level, it added.
SE Asia speeds up plan for connected clean power grid after oil shock
Andersen said the explosion of renewable energy and slower-than-projected growth in coal energy supply showed that accelerating climate action is possible. However, she warned that progress remains insufficient, particularly in phasing down fossil fuels and halting forest loss.
“Nations must understand that the point of return begins now, not later,” she said, calling for “fast, deep and sustained emissions reductions”. She urged governments to strengthen their climate action at upcoming UN climate talks and accelerate efforts to keep the 1.5C pathway within reach.
Bill Hare, chief executive of Climate Analytics, said major fossil fuel-producing countries need to take greater responsibility for reducing their emissions, saying that big polluters such as the US and Saudi Arabia need “to stop playing politics and face the scientific reality”.
“Right now they are looking at the fire, denying it exists and pouring more petrol on it, while their own citizens increasingly face searing heat, wildfires and other impacts,” he said. “Governments [need] to get on with enacting policies that cut fossil fuel use as soon as possible.”
The post UN sets steep emission cuts to reverse 1.5C overshoot by end of century appeared first on Climate Home News.
UN sets steep emission cuts to reverse 1.5C overshoot by end of century