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cop29

This year’s COP29 summit will take place in Baku, Azerbaijan, from November 11-22. The focus will primarily be on delivering stronger climate finance and advancing a global carbon trading framework.

Interestingly, Bloomberg reported that Bank of America (BofA) has flagged liquidity concerns in carbon markets. It has highlighted the need for transparent and reliable trading standards, which is one of the key agendas of COP29. This is also a consequence of negotiators planning to change the dynamics of the carbon credit market in the future.

Here’s an in-depth look at what’s on the agenda for COP29 and why it matters.

COP29: Setting a New Climate Finance Target

For the first time since 2009, countries will meet at COP29 to reassess the funds required for climate action from developing countries. The decision will create a New Collective Quantified Goal (NCQG) for climate financing, which will replace the earlier fixed target of $100 billion per annum.

The NCQG aims to build the capacity of vulnerable nations to develop climate resilience and transition to low-carbon growth while protecting their communities from worsening climate impacts.

It’s already palpable that rising temperatures, extreme weather events, and increased costs for adaptation are imposing tremendous stress on developing countries. And this reassessment comes as a blessing during such inclement times.

Once there is mutual agreement on these issues, it will lay the foundation for carbon trading. This standardization will tackle liquidity challenges and broaden access to this facility for both developing and developed nations.

Bank of America Weighs in on Article 6.4 for the Future Carbon Credit Market

Article 6 of the Paris Agreement is another “high-stakes” topic to be discussed in COP29. Under this provision, countries are permitted to trade carbon credits with one another. Therefore, countries can meet their climate goals by investing in reducing emissions elsewhere.

For instance, a country rich in forest cover can sell credits generated from protecting its forests to fund its conservation efforts. The purchasing countries can then count these reductions toward their climate targets.

Negotiators are highly focused on Article 6.4, which sets up a new platform to harmonize carbon credit trading.

Abyd Karmali, Managing Director of ESG & Sustainable Finance at Bank of America, stated that Article 6.4 is vital for the future of the carbon credit market. He noted that this is a critical market and clear, legally binding standards are essential to ensure the carbon market supports emissions reduction goals.

Karmali is also an esteemed delegate who will be monitoring talks at the COP29 climate summit.

International carbon trading under Article 6, unlike the voluntary carbon market (VCM), will be subject to strict international oversight. These standards will help avoid some of the fraud and “greenwashing” charges that have plagued the voluntary markets and create a better and more trustworthy system for trading emissions reductions.

BloombergNEF’s Take on Carbon Trading

BloombergNEF has pointed out that new standards for carbon credits have boosted efforts to establish a global carbon trading system under the United Nations. However, these new guidelines seem to be weaker than the existing ones.

Even if they receive approval at the upcoming international climate summit in November, significant work remains to fully implement a mechanism that was first proposed in Article 6.4 of the 2015 Paris Agreement. However, experts hope that international standards can revitalize carbon trading and draw companies and governments away from the troubled VCM.

Layla Khanfar, a research associate at BloombergNEF, believes Article 6.4’s potential impact could be significant. She said,

“A finalized deal could lead to supply standardization and improve global liquidity. These are both valuable stepping stones towards a carbon credit market BNEF estimates could be valued at over $1 trillion by 2050.”

Voluntary Carbon Market’s Liquidity Problem

This leaves the VCM itself, in which nearly all corporations currently buy credits to offset their emissions, in deep trouble regarding liquidity.

We discovered from the same Bloomberg report that BofA has approached this market cautiously, citing low trading volumes and persistent accusations of greenwashing. These claims have eroded its credibility. According to MSCI, VCM volumes fell more than 20% last year, dropping to about $1 billion in trades.

Top companies such as Volkswagen, Telstra, and TotalEnergies have utilized the VCM as a method of balancing their emissions.

However, Karmali has said that “there’s simply not enough liquidity” to sustain it as a viable climate tool. He added that over the last two years, the market has experienced a steep decline, making it very difficult for participants to operate within the current systems.

The Transparency Milestone at COP29

COP29 marks the first full implementation of the enhanced transparency framework of the Paris Agreement. In this agreement, countries will have to submit their inaugural biennial transparency reports (BTRs) by the end of the year. These reports will contain details of their climate actions, including emissions reductions, adaptation strategies, and climate finance flows.

Subsequently, the Azerbaijani presidency launched the Baku Global Climate Transparency Platform to support this initiative. Notably, this platform particularly helps countries who are less familiar with climate reporting.

Transparent reporting will hold countries accountable and serve as a reliable resource for policymakers and stakeholders. The information in BTRs will be crucial for evaluating national climate commitments and identifying gaps in global action.

We expect COP29 will present an outstanding opportunity for a more sustainable and resilient future. Major emitters are stepping up with strong commitments, and financial institutions like Bank of America are backing these efforts. By encouraging collaboration and transparency, COP29 has all the potential to drive meaningful progress in carbon markets and climate finance.

Sources:

  1. BofA Calls Out Liquidity Barriers as Bankers Await CO2 Deal – BNN Bloomberg
  2. What to Expect at the 2024 UN Climate Summit (COP29) | World Resources Institute

The post Bank Of America Flags Liquidity Challenges in Carbon Markets: Will COP29 Usher in a New Era of Climate Finance? appeared first on Carbon Credits.

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Carbon Footprint

The Strategic Case for Nature-Based Carbon Investments

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Nature-based carbon investments deserve consideration when they address a specific business dependency and produce outcomes you can measure. Imagine Moonbucks, a global coffee roaster planning next season’s espresso blend. It is considering natural Grade 4 coffee from Jimma, in southwestern Oromia, Ethiopia. Its sourcing decisions affect the roasting schedule and the cash tied up in coffee purchases. Moonbucks needs to understand which measures could protect that supply, what they would cost and how it would judge the results.

1. Define the sourcing problem before choosing a project

Moonbucks needs a dependable component for its espresso blend. Its procurement team wants continuity of volume and an agreed cup profile. Replacing a shipment at short notice could require new sample approval and changes to the blend, and given the schedules for cultivation, processing, and freight delivery, is practically impossible. Moonbucks needs to get this right, and its initial concern is inconsistent deliveries. It commissions an assessment of the supplying farms and post-harvest chain. The questions cover land condition, harvest availability and whether drying or storage problems are affecting saleable lots.

This distinction changes the investment brief. A tree-planting proposal cannot be assumed to fix drying problems. Better storage cannot restore eroded land. The team must establish which problem exists before selecting the response.

CCC’s guide to finding nature-based solutions in your supply chain explains where to look. Here, the next task is to turn a broad concern into a testable proposal.

2. Develop nature-based carbon investments around the actual supply chain

The assessment would trace Moonbucks’ purchases back through the exporter and supplying producer groups. Which farms supply the contracted lots? Who controls land-management decisions? How long does the buyer expect to maintain the purchasing relationship?

Furthermore, Jimma natural Grade 4 cannot be treated as interchangeable with every Ethiopian coffee. Moonbucks would need to test any substitute against its own blend and quality requirements.

Suppose Moonbucks’ assessment identifies an opportunity to maintain shade trees and restore vegetation along exposed streambanks. The IPCC describes agroforestry as a way to store carbon in vegetation and soil, with potential benefits for erosion control and water quality.1 Moonbucks would need local advice on species, growing conditions and maintenance before deciding how these measures fit its sourcing plan.

The proposal now has a defined sourcing connection and a candidate intervention. The next steps are to test its effect on production, assess carbon eligibility and build the financial case.

3. Compare the proposal with other ways to protect supply

WBCSD’s Nature-based Solutions Blueprint recommends comparing nature-based options with other responses across their benefits and costs.2 For Moonbucks, that means evaluating the landscape proposal alongside drying improvements, storage controls and alternative sourcing arrangements.

The product’s natural-process designation matters. Moonbucks should examine the drying and dry-milling chain alongside land conditions. Its team would check storage practices, contamination risks and incoming-lot quality to see whether problems arise before or after the coffee leaves the farms.

The revised proposal might combine land stewardship with separate post-harvest controls. Each component needs its own purpose and budget. A sustainability label should not obscure which activity is expected to solve which problem.

The project develops as the evidence improves. Its scope should follow the diagnosis rather than preserve the first idea unchanged.

4. Establish what the carbon outcome could count toward

Moonbucks’ sustainability team now tests the proposed carbon case separately from the sourcing case. Is the objective a measurable change in Moonbucks’ value-chain emissions, verified credits for separate voluntary use, or distinct outcomes under carefully defined arrangements?

Scope 3 covers value-chain emissions. A purchasing relationship alone does not prove that a farm intervention can be included in Moonbucks’ inventory. The team needs an applicable accounting method, defensible boundaries and evidence supporting attribution.

SBTi’s FLAG Guidance (forest, land and agriculture), version 1.2, says purchased credits used as offsets cannot meet near-term FLAG or energy and industry targets. Eligible land-based removals are subject to accounting requirements.3 Moonbucks needs to test its proposal against those rules before including an outcome in its targets.

For Moonbucks’ Jimma proposal, maintaining existing trees and establishing new vegetation could involve different carbon questions. Specialists must examine the baseline and additionality, meaning what changes because the project proceeds. They must also assess measurement and the risk that stored carbon is lost. CCC’s MRV and additionality article introduces those tests.

Until that work is complete, Moonbucks should not budget an assumed Scope 3 reduction or credit-sale receipt. Direct emissions reductions remain the priority.

5. Build a financial case that survives weaker assumptions

Moonbucks’ finance team would now build a multi-year budget. UNEP’s State of Finance for Nature 2023 compares current finance with the investment needed to meet climate, biodiversity and land-restoration goals.4 The company would cost its proposed activities, farmer participation and ongoing monitoring. Verification, where required, is a separate expense. Maintenance and responsibility for replacing failed plantings must remain visible after the initial establishment budget ends.

Operational benefits need equally careful treatment. If fewer rejected lots reduce emergency purchasing, count that saving once. Do not add “supply resilience” as another financial benefit when it represents the same avoided cost.

Moonbucks should compare a base case with slower benefits, higher implementation costs and no carbon revenue. It should also distinguish production outcomes from quality and shipment outcomes. A single good harvest would not prove that the landscape intervention caused better delivery performance.

A project can remain worth funding even when its carbon case needs more work. That decision must rest on the operational evidence and the company’s objectives, without unsupported environmental claims.

6. Fund a pilot with a clear expansion decision

Moonbucks’ first approval would fund a bounded pilot, rather than commit the entire sourcing program. Before spending, Moonbucks would agree on participating farms, responsibilities and the evidence needed at review.

Its scorecard could track farmer participation, implementation costs and plant survival, alongside accepted coffee volumes and lot-quality results. Carbon measurements would follow the selected method. Farm-level traceability must connect the intervention to the actual sourcing relationship.

Suppose Moonbucks’ review later finds that storage changes explain most quality improvements, while the land measures need longer observation. Those findings would shape the next decision: expand the proven component, adjust the landscape work or pause further spending. They would not justify crediting all improvements to tree planting.

This gives nature-based carbon investments a practical place in a multi-year strategy. Funding increases as the evidence supports it, and the project can change direction before a larger commitment.

Discuss a sourcing opportunity with CCC

Carbon Credit Capital’s nature-based supply-chain investment service uses its Dual-Value Model to examine supply-chain economics alongside potential sustainability outcomes.

Schedule a consultation to discuss your sourcing exposure and the questions to resolve before allocating capital.

Sources

  1. Intergovernmental Panel on Climate Change (IPCC), Climate Change 2022: Mitigation of Climate Change, Chapter 7, Agriculture, Forestry and Other Land Uses, section 7.4.3.3 (Agroforestry).
  2. World Business Council for Sustainable Development (WBCSD), Nature-based Solutions Blueprint, 5 June 2024.
  3. Science Based Targets initiative (SBTi), Forest, Land and Agriculture Science-Based Target-Setting Guidance, version 1.2, March 2026, section 3.1.4, pp. 37–38.
  4. United Nations Environment Programme (UNEP), State of Finance for Nature 2023, 2023.
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Carbon Footprint

How to buy plastic credits, and what to check before you do

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A plastic credit funds the collection of plastic waste in places where no formal system exists to collect it. Each credit represents a measured, independently audited quantity of plastic taken out of the environment or returned to use, tracked on a public registry.

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Carbon Footprint

EU carbon credit claims after 27 September 2026

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EU carbon credit claims changed on 27 September 2026, the day the Directive (EU) 2024/825 began to apply across the European Union. The change is narrow. It changes how a company can talk about the credits it buys. A product can no longer be called neutral on the strength of compensation alone; however, every specific, evidenced statement about what a company measured, reduced, and funded stays fully available.

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