WB reveals post-COP29 investment prospects for developing countries

The agreement on international carbon markets reached at the 2024 Conference of the Parties to the UN Framework Convention on Climate Change (COP29) in Baku could help expand countries' participation in these markets and has the potential to attract greater investment flows to low-income countries, reads a new World Bank (WB) update entitled "State and Trends of Carbon Pricing 2025," Report informs.

"The recent agreement on international carbon markets at the 2024 Conference of the Parties of the United Nations Framework Convention on Climate Change (COP29) in Baku, Azerbaijan, could help advance market participation and has the potential to stimulate greater investment flows to low-income countries. This agreement provides clarity on the rules for cross-border transfers of carbon credits under Article 6 of the Paris Agreement. With the agreement in place, focus will transition to operationalization, which will require building countries’ capacities - from setting up institutional and regulatory frameworks to deploying market infrastructure, such as registries. The confirmation of UN-administered carbon markets has opened an alternative avenue for market participation, which is significant given the increased scrutiny over the integrity of voluntary carbon markets in recent years."

"On Article 6.2, agreement was reached on technical details - providing greater certainty on operationalizing country-to-country transfers. In particular, agreement was reached on the procedures and requirements for authorization of internationally transferred mitigation outcomes (ITMOs) - that is where host governments agree to domestic mitigation to be transferred to another party.

Further, revisions to six methodologies are ongoing, and the first PACM methodologies are expected in the second half of 2025. In February 2025, the PACM Supervisory Body also approved the procedure for the operation of the mechanism’s registry, including developing an interim registry modeled on the registry used under the Clean Development Mechanism. This interim registry will allow PACM credits (known as A6.4ERs) to be issued and tracked until the full PACM registry is available. User access to the interim registry is pending the development of additional user guidance by the UNFCCC secretariat," the WB noted.