The United Nations Supervisory Body (SB) responsible for implementing carbon markets under the Paris Agreement has approved two pivotal standards at its recent meeting, aiming to enhance the integrity and ambition of climate action through the Paris Agreement Crediting Mechanism (PACM).
The two core standards adopted are the Baseline Standard (A6.4-SBM016-A12: Setting the baseline in mechanism methodologies) and the Leakage Standard (A6.4-SBM016-A13: Addressing leakage in mechanism methodologies).
The Baseline Standard establishes a framework for estimating emissions that would have occurred in the absence of a carbon reduction project. A key design feature requires that, starting from the second year of the crediting period, the baseline for the current year must be reduced by 10% of the emissions reductions achieved that year (calculated using Formula 5). The baseline reduction rate must also accelerate incrementally, with annual increases in the reduction amount equivalent to at least 1% of the baseline emissions in the calendar year of the first crediting period’s start date. This design ensures a continuous lowering of the emissions reduction benchmark, driving ongoing improvements in mitigation projects while preventing the overissuance of carbon credits. Additionally, all methodologies must adhere to a prescribed process for confirming the “crediting baseline,” applicable to both ex-ante preparation of Project Design Documents (PDDs) and ex-post monitoring reports.
The Leakage Standard addresses the risk of unintended emissions increases elsewhere due to project activities. It mandates that methodologies account for all leakage sources when calculating emission reductions or net removals, unless exclusion is conservative (e.g., excluding positive leakage sources). The standard explicitly states that project-level REDD+ activities must align with the host country’s national REDD+ strategy to qualify, ensuring consistency with national climate actions and enhancing the credibility of emissions reductions.
Beyond these core standards, the Supervisory Body made a series of supporting decisions to facilitate implementation. These include initiating consultations on equitable revenue-sharing with host countries, refocusing capacity-building efforts, and clarifying host country roles to help nations establish systems for participating in the mechanism.
SB Chair Martin Hession expressed satisfaction with the meeting’s outcomes, describing the decision as groundbreaking. He emphasized that the move would ensure progressively stringent standards for carbon credit eligibility over time, supporting sustained emissions reductions and advancing global progress toward net-zero targets. The Body will support countries seeking carbon credits by establishing clear processes to ensure equitable sharing of mitigation benefits.
