Carbon markets have been in existence for more than 20 years. Having advised on carbon credit transactions since their inception, we have seen carbon markets experience both significant growth and challenges. The introduction (and subsequent phasing out) of the Clean Development Mechanism (CDM) under the Kyoto Protocol, and the development of voluntary carbon markets, have built a deep and varied pool of experience for participants and stakeholders – both positive and negative.

A new phase for carbon markets is on the horizon as the framework for new markets under the Paris Agreement moves to implementation.

These markets will be based on the overarching rules for Article 6 finalized at COP26 in Glasgow (the Article 6 Rules). Pursuant to the Article 6 Rules, countries may undertake cooperative approaches to pursue higher ambition to achieve Nationally Determined Contribution (NDC) targets and the global temperature goals under the Paris Agreement. The current Article 6 Rules enable countries and the private sector to begin actively engaging with activities under Article 6.2 and prepare for engagement with Article 6.4.