Singapore’s National Climate Change Secretariat (NCCS) is working with two major carbon credit programs, Gold Standard and Verra’s Verified Carbon Standard (VCS). Their goal is to create a new protocol that will help countries meet their climate targets under Article 6.2 of the Paris Agreement. The newly formed Article 6.2 Crediting Protocol will simplify global efforts to cut emissions and promote sustainable growth.

Over the past year, NCCS, Gold Standard, and Verra have worked closely with governments and climate experts to shape initial recommendations. They plan to finalize the Protocol after COP29 and begin implementation in 2025, giving countries a practical tool to reach their climate goals through strong international cooperation.

Benedict Chia, Director-General (Climate Change), NCCS, Singapore, said,

“It is important to have a protocol that facilitates Article 6.2 cooperation between independent crediting programs and governments. This would ensure that Article 6.2 can operate efficiently.”

Article 6.2: A Pathway to Global Climate Cooperation

Broadly speaking, Article 6.2 of the Paris Agreement helps countries achieve their Nationally Determined Contributions (NDCs) and advance sustainable development. It further leverages governments and private sectors to work together through carbon credit markets to reach their climate goals.

With established carbon crediting programs provided by Gold Standard and Verra, governments can certify emission reductions and removals without creating new standards from scratch. This reduces complexity and ensures quantified results.

Subsequently, this collaboration will also serve a similar purpose in reducing climate efforts and allowing countries to focus on impactful actions.

Margaret Kim, CEO of Gold Standard, expressed her opinion in the following statement,

“If a market is to be trusted, it must be built on solid foundations. For Article 6 to be reliable and efficient, governments and standards need to work together. These initial recommendations outline how, by doing so, they can deliver impact for both the climate and sustainable development.”

Mandy Rambharos, CEO of Verra noted, 

“Independent crediting programs offer comprehensive standards and verification mechanisms that are primed and ready for use by governments in their cooperation under Article 6. The positive reactions we are already receiving from government stakeholders demonstrate how independent standards, that have grown up in the voluntary carbon market, have built a robust and credible foundation that can seamlessly integrate into the infrastructure of compliance markets and Article 6. Together, we can enable these new markets to be operational and effective much more quickly than otherwise possible.”

Collaborative Efforts to Shape Initial Recommendations

The NCCS, Gold Standard, and Verra officially announced their partnership at COP28 in December 2023 with a shared ambition, as described above. They have been working with governments and climate experts to develop the initial recommendations for this protocol.

Without this unified approach, countries might take the risk of inconsistent paths, which could slow down or complicate international cooperation under Article 6.2.

The initial recommendations or insights will outline key ideas and steps that will shape the Protocol. However, they expect to release the final version only after COP29, containing the outcomes of the summit.

Furthermore, the three organizations will continue to engage and seek feedback from stakeholders when developing the final Protocol. This is to ensure that it can serve as a “practical enabler” and complement Article 6.2 rules that are adopted within the United Nations Framework Convention on Climate Change (UNFCCC).

Additionally, the report calls on governments to take steps to limit regulatory and market risk associated with Article 6.2 transactions. For example, by adopting tools like robust templates for Letters of Authorization.

The final protocol will be ready for implementation in 2025.

• SEE MORE: Singapore Sets Higher Standards for International Carbon Credits

Key Components and Timelines for the Article 6.2 Playbook

Image: Snapshot of Article 6.2 Crediting Protocol 2024

Source: Verra

COP29 Milestone – November 2024

At COP29, stakeholders will introduce the initial recommendations for the Article 6.2 Crediting Protocol. These guidelines will offer insights on how to harmonize Article 6.2’s implementation across Independent Carbon Programs (ICPs). The focus will be on providing clear guidance for countries, ICPs, and other involved entities to ensure streamlined and effective climate action.

Starting 2025 – Protocol Development and Implementation

From 2025 onward, the development of the full Article 6.2 Crediting Protocol will begin. This will include a specialized data protocol aimed at standardizing how ICPs report to countries. These protocols may also include recommendations for additional reporting to guarantee the full traceability of credit transactions, linking them to corresponding adjustments where required, based on outcomes from COP29.

Ongoing Engagement and Outreach

Regular communication and collaboration with countries, ICPs, and other stakeholders will continue. The goal is to build awareness, secure support, and deepen understanding of the Article 6.2 Crediting Protocol’s implementation, ensuring widespread engagement and effective adoption.

Carbon Credits vs. ITMOs: Clear Lines for Effective Climate Reporting

The Protocol establishes a clear distinction between two elements: carbon credits and Internationally Transferred Mitigation Outcomes (ITMOs). Carbon credits represent the direct mitigation results achieved by projects and are recorded on Independent Carbon Program (ICP) registries.

In contrast, ITMOs reflect the accounting implications of these credits under Article 6.2 which are tracked on national registries. This approach allows private investors to engage in credit transactions. At the same time, it ensures governments track these transactions in their Article 6.2 reports and helps countries meet their Nationally Determined Contributions (NDCs).

We have read in our previous article about COP29 making a breakthrough in global climate action during its opening day. Nearly 200 governments agreed on a framework under Article 6.4 of the Paris Agreement, backed by the UN to create a stronger demand for carbon credits, especially to fund climate projects in developing nations.

For this case, let’s wait and watch how Article 6.2 unfolds at COP29 to meet the unified goal of Singapore’s National Climate Change Secretariat (NCCS), Gold Standard, and Verra.

Source: Singapore, Gold Standard and Verra Release Initial Recommendations Outlining Progress in the Development of a Carbon Crediting Protocol to Implement Article 6.2 – Verra

• FURTHER READING: Bank Of America Flags Liquidity Challenges in Carbon Markets: Will COP29 Usher in a New Era of Climate Finance? 

The post Article 6.2 at COP29: Singapore Partners with Gold Standard and Verra to Advance Climate Action appeared first on Carbon Credits.

GenZero, a decarbonization-focused investment platform owned by Temasek, and global commodities trader Trafigura have committed over $100 million to Brújula Verde, Colombia’s largest nature-based carbon removal project. Located in the Orinoco River Basin, this project aims to restore land degraded by agriculture and wildfires while generating high-integrity carbon removal credits.

Bringing Degraded Lands Back to Life

The planet is losing about 10 million hectares of forest worldwide every single year. The primary reason is to clear land for agriculture and materials like paper. This deforestation, largely concentrated in tropical forests (96%), contributes to 16% of total tree cover loss. 

Notably, deforestation releases nearly 5 billion tons of carbon dioxide annually, accounting for about 10% of global human-made emissions. This is why most nature-based projects are focusing on restoring degraded forests.

In Colombia, 79,256 hectares were deforested in 2023. The South American nation is covered by over 60 million hectares of forests, with 405,000 hectares of planted forests.

The Brújula Verde project focuses on afforestation and reforestation across 30,000 hectares of degraded land, particularly areas previously used for cattle grazing. The initiative will plant 24 million mixed-species trees, with no plans for commercial harvesting. 

• By restoring the land, the project could sequester over 20 million tonnes of carbon throughout its lifetime.

The project uses advanced technologies such as high-resolution sensors for accurate carbon monitoring and eDNA sampling to track biodiversity. It also assesses the health of local ecosystems, including their biodiversity, water systems, and social impacts.

Expanding the Project’s Scope

Trafigura initially invested in Brújula Verde in 2023, funding the first phase, which reforested 10,000 hectares. This latest investment, supported by GenZero, will double the project’s size and help it issue its first carbon credits by 2025.

Matthew Nelson, Head of Carbon Investments at Trafigura, highlighted the project’s potential to attract institutional investors and deliver environmental and social benefits. He stated that:

“GenZero’s partnership will enhance the scope and impact of Brújula Verde, bringing local employment alongside environmental and biodiversity benefits to the region, whilst producing high integrity nature-based carbon removal credits.”

• RELATED: Top Countries for Carbon Credit Investments in 2024: Colombia Ranks 1st

Trafigura Sustainability and Climate Initiatives

Trafigura is a leading global commodity trading firm, specializing in the trading of oil, refined products, metals, and minerals. The company plays a vital role in connecting producers with consumers through efficient supply chains. In 2023, Trafigura reported revenues exceeding $315 billion, underscoring its significance in global markets.

The global commodity trading giant is actively pursuing ambitious carbon reduction initiatives, aiming to align with global net-zero targets. It targets a 50% reduction in Scope 1 and 2 emissions by 2032 and operational carbon neutrality by 2050.

The company’s emissions reduction strategy also includes reducing its Scope 3 emissions intensity. These targets are complemented by investments in renewable energy projects, such as solar and wind. The company also invests in the development of low-carbon fuels, including green hydrogen and ammonia.

In 2023, Trafigura launched a $2 billion fund to support its energy transition projects. The company is also advancing its emissions trading activities, helping clients offset their carbon footprints by sourcing high-quality carbon credits. Trafigura’s climate action plan underscores its commitment to decarbonizing its supply chain and supporting global sustainability goals​.

The $100 million investment in Colombia’s Brújula Verde project for nature-based carbon removals​ is the company’s most recent initiative. 

Building High-Quality Carbon Markets

The project aims to contribute to the development of robust carbon markets by delivering high-quality, verifiable carbon removal credits. According to Hoon Ling Min, Director of Investments at GenZero, the project’s focus on soil restoration and native species reintegration ensures the production of top-tier carbon credits. He further noted that:

“The Brújula Verde project marks an important effort in restoring one of Colombia’s most biologically diverse areas. It is a unique project which adopts a restoration bridge concept by reconditioning soil health through reforestation, which enables the reintegration of native species gradually.”

GenZero, a wholly-owned subsidiary of Temasek, is committed to accelerating global decarbonization. The platform invests across three key areas:

• technology-based solutions,
• nature-based projects, and
• carbon ecosystem enablers.

GenZero has already deployed capital in impactful initiatives, including investments in Carbon Capture, Utilization, and Storage (CCUS) and nature-based solutions like sustainable forestry.

The company’s key achievements include reducing carbon emissions through clean cookstove projects in Southeast Asia and supporting the New Forests Tropical Asia Forest Fund 2. Together, these efforts contribute to advancing decarbonization by 2030, aligning with global net-zero goals. 

The Brújula Verde project represents a significant step toward addressing climate change by restoring ecosystems and generating carbon credits. With GenZero and Trafigura’s combined investment, the project will deliver environmental, social, and economic benefits to the Orinoco River Basin while advancing the global carbon market.

• READ MORE: COP29 Breakthrough: UN-Backed Global Carbon Market Takes Shape

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As reported by Bloomberg, Russia’s largest mining company, Nornickel is negotiating to establish a major copper smelting facility in Fangchenggang, a port city in China’s Guangxi region. The proposed plant will use raw copper concentrate transported from Russia and will have the capacity to refine up to 500,000 tons of copper annually. This project aims to bring the final processing a step closer to China’s vast metal market.

Nornickel’s Push for Joint Ventures in China Amid Western Sanctions

Nornickel is Russia’s leading metals and mining company and the world’s largest high-grade nickel and palladium producer. President, Vladimir Potanin said that the company has been exploring options in copper for joint projects in China since earlier this year.

Strategic ambitions for 2030+ metal production

Source: Nornickel

Lately, Western sanctions on Russian commodities have made global trade more difficult. These restrictions limit where and how Russian goods, like metals (aluminum, copper, and nickel) and energy resources, can be sold. As a result, Nornickel has been seeking joint ventures in China since earlier this year even though it is not directly sanctioned by the West.

The mining giant has not disclosed the name of the Chinese partner they are in talks with but they hint at constructing a greenfield plant at the mentioned location.

The smelter project represents a strategic shift for Nornickel, which previously explored partnerships with established Chinese smelters to process Russian concentrate. However, those plans were abandoned in favor of a new, purpose-built facility.

• READ MORE: Copper Prices Swing as China’s Stimulus Sends Mixed Signals—What’s Next for 2025?

China’s Copper Dominance: Too Much of a Good Thing?

Demand for copper is going high due to renewables, electric vehicles, and grid infrastructure. According to Bloomberg, China’s refined copper output rose by over 5% in 2024 despite certain production curbs. Furthermore, in recent years, the country has rapidly constructed smelters which has led to an increase in its global share for copper.

This burst in capacity is certainly not favorable for the Chinese copper market. Rather it has put tremendous pressure on domestic smelters to slow expansion. This is the outcome of the fierce competition and limited raw materials which have shrunk the profits of the copper industry.

Source: Bloomberg

Grant Sporre, head of metals and mining research at Bloomberg Intelligence had cautioned that China’s excesses threaten the future of copper refining beyond its borders and operations from Chile to Europe and India could be at risk.

The above analysis is based on the fact that ore supply has intensified as new smelters open in India and Indonesia. India is rapidly building plants to cut down on copper imports and strengthen domestic production. Meanwhile, Indonesia has taken steps to keep its ore resources within the country by curbing exports on which many smelters in Asia rely. This shift forces copper smelters in Asia to secure new sources or risk production slowdowns, further straining the already tight market.

However, interestingly some analysts suggested that state-owned Chinese smelters may handle the market downturn better than global competitors. This is simply because of the cost advantages and more modern facilities the country is equipped with.

Is Nornickel’s Entry A Threat to China’s Copper Giants?

Fangchenggang, where the plant would be built, already has a large smelter with a 600,000-ton capacity and is operated by China’s state-owned Jinchuan Group. On top, this project comes at a time when the country is dealing with an oversupply of copper refining capacity.

As a consequence, Nornickel’s project has met substantial resistance from Chinese copper producers, who feel the extra capacity could harm their domestic output.

China’s refined copper imports from Russia have declined by over one-third year-on-year, totaling about 165,000 tons in the first nine months of 2024. The new smelter, if finalized, would help stabilize the flow of Russian copper into China and offer Nornickel an opportunity to circumvent Western trade restrictions while accessing the world’s largest copper market.

Operational performance

Source: Nornickel Sustainability Report

Thus, it’s too early to comment on whether Nornickel’s entry will be a boon or a bane for China’s copper market. The study is speculative and the picture will be clear eventually as the mining company reveals more details of their expansion plans.

Data and Content Sources:

1. Russian Miner Moves Closer to Deal for New Copper Plant in China – Bloomberg
2. China’s Copper Production Boom Threatens to Crowd Out the Rest of The World – Bloomberg

• FURTHER READING: Will AI Drive A Global Copper Shortage? BHP Rings the Alarm 

The post Nornickel’s Big Copper Bet: Will It Disrupt China’s Smelting Power? appeared first on Carbon Credits.

COP29, held in Baku, made a major breakthrough in global climate action during its opening day. Nearly 200 governments agreed on a framework under Article 6.4 of the Paris Agreement. This deal sets up a UN-led global carbon market, allowing countries and companies to trade carbon credits more efficiently. The goal is to create a stronger demand for carbon credits, especially to fund climate projects in developing nations.

COP29 President Mukhtar Babayev called the agreement a “game-changing tool” to support climate action in less wealthy countries. He also urged all nations to continue working together to make more progress during the summit, noting that:

“By matching buyers and sellers efficiently, such markets could reduce the cost of implementing NDCs [Nationally Determined Contributions] by 250 billion dollars a year.”

A New Era for Carbon Trading

Article 6 of the Paris Agreement outlines how countries can work together to reduce greenhouse gas emissions. Article 6.4 introduces a global carbon trading system, managed by a UN body. This system will let countries and companies trade emissions reduction credits generated from projects worldwide.

The new system replaces the older Clean Development Mechanism (CDM) from the Kyoto Protocol. It aims to be more transparent and effective, ensuring that carbon credits are credible and valuable.

In October 2024, Article 6.4 Supervisory Body finalized rules for how projects will work under this system. These include standards for carbon removal projects and emissions reduction methods. The system will let companies in one country earn credits for reducing emissions and sell them to companies in another country, fostering global cooperation.

Challenges and Pushback

Despite the breakthrough, reaching an agreement wasn’t easy. Some countries and groups raised concerns about how decisions were made. The Coalition for Rainforest Nations (CfRN), representing several developing countries, argued that Article 6.4 Supervisory Body bypassed proper procedures.

Kevin Conrad, CfRN’s Executive Director, said the body adopted rules without first getting approval from the Conference of the Parties (CMA), which oversees the Paris Agreement. As a compromise, the final text used softer language, like “take note,” to acknowledge the rules without fully endorsing them. This wording sends a message that future decisions must follow proper processes.

Despite these issues, Babayev assured participants that more discussions on Article 6.4 would continue. Negotiations will also focus on Article 6.2, which deals with how countries trade carbon credits directly.

• RELATED: Top Countries for Carbon Credit Investments in 2024: Colombia Ranks 1st

Strengthening Carbon Markets With New Rules

The new global carbon market aims to solve problems that have plagued carbon trading in the past. Older systems often faced criticism for lacking transparency and effectiveness, which led to low demand and falling prices for carbon credits. 

The chart below shows the quarterly credit retirements, which represent demand, falling and are lower this year than prior years.

With clear rules and a centralized structure, Article 6.4 hopes to restore confidence in carbon markets. Sebastien Cross, Chief Innovation Officer at BeZero Carbon, called the agreement a major win for COP29. “This framework provides the tools we need to make carbon markets work better,” he said.

The carbon finance sector is optimistic that this move will help revitalize trading. 

The agreement also benefits project developers by giving them clear guidelines to follow. Countries can align their climate policies with international standards, making it easier to meet their emission reduction goals. 

Economic and Environmental Benefits

A global carbon market could bring significant economic and environmental gains. For one, it will provide new funding opportunities for climate projects, especially in developing countries that need financial support.

By creating a market-driven system, Article 6.4 encourages businesses to reduce emissions in cost-effective ways. Companies that reduce more emissions than required can sell their extra credits for profit. Meanwhile, those struggling to meet their targets can buy carbon credits to make up the difference.

This system not only helps cut global emissions but also supports sustainable development in poorer regions. It also allows countries struggling to meet their target by purchasing carbon credits.

What’s Next?

The Article 6.4 framework is just the beginning. The next steps include registering project methodologies and establishing operational guidelines, expected to be in place by mid-2025. During this period, the Supervisory Body will focus on finalizing details to ensure the system operates smoothly.

However, significant work remains to address concerns about market integrity and inclusivity. Some stakeholders worry that a centralized system could disadvantage smaller or less-developed markets. Policymakers must ensure the system is fair and accessible to all participants.

While there are still challenges ahead, this agreement sets the stage for stronger international cooperation. By establishing a UN-backed carbon market, the deal promises to boost demand for carbon credits and direct funding to critical climate projects.

As COP29 continues, leaders will work to refine this system and tackle other important climate issues.

• READ MORE: Bank Of America Flags Liquidity Challenges in Carbon Markets: Will COP29 Usher in a New Era of Climate Finance?

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