Can carbon credits under Article 6 of the Paris Agreement overcome the integrity issues associated with voluntary carbon markets?
Author: Michael Spiekermann
The below article is one of a series of blogs based on a Policy Brief shortlisted as a finalist for the 2025 Chronos Sustainability Prizes
Europe is preparing to enter the international carbon trading system – despite mounting concerns about its credibility. This summer, the European Commission proposed that member states be allowed to use carbon credits purchased abroad to meet their climate targets from 2036 onwards, under Article 6 of the Paris Agreement.
The move comes in the wake of widespread criticism. Investigations have revealed serious integrity issues in global carbon markets, including double counting, exaggerated climate claims, carbon leakage and the non-additionality of emission reductions. Whether international carbon markets can be made fit for purpose remains uncertain – but to secure political agreement for its 2040 climate goal update, the EU appears determined to move ahead.
One Step Taken – Many Challenges Ahead
Economists and political scientists usually argue that, if designed well enough, carbon markets can offer two key benefits:
Lower abatement costs: The same money goes further in the Global South – more emissions can be cut.
International leverage: If Europe joins, it gains a seat at the table – and can help push for stronger transparency and accounting rules across the system.
But to make that happen, the EU needs to fix at least the core problems I outlined in my policy brief:
1. Keep control at EU level
The European Commission must retain exclusive authority to issue and approve international credits for all member states. Member states should not be allowed to strike their own deals with third parties. Why? Because it’s cheaper – and – it’s practically impossible to ensure that up to 27 governments, some of them openly hostile to ambitious climate policy, all comply with complex accounting rules.
2. Stop perverse incentives
Countries preparing to sell credits to the EU currently have every incentive to set weak domestic targets. The lower the bar, the easier it is to overachieve – and sell the surplus as supposedly “additional” reductions.
One solution: Europe must only trade with countries that have credible, ambitious climate targets. Emissions trading only works if there’s a legally binding cap. No cap, no trade.
To reinforce this, the EU could either limit the number of credits a country can sell or set a price ceiling per credit – based on the country’s legislated climate neutrality date or other indicators of climate ambition. This way, credits from high-ambition countries would automatically be worth more, creating positive incentives for strong domestic governance.
3. Address carbon leakage
Protecting one forest plot from deforestation often just shifts deforestation elsewhere. If 100 ha of rainforest are saved in northern Peru, the same cattle company might clear land in Colombia instead. We’ll likely never be able to protect 100% of forests interesting for exploitation. Hence, I assume carbon credits from forest preservations are nearly always flawed. There’s likely no practical way of fixing this.
Better is to focus on sectors with low leakage risk and reliable metrics. Certain industries – cement, steel, renewables – are better candidates. The EU could restrict its credit purchases to these “safe” sectors.
4. Wisely use the ‘delta money’
International credits are cheaper than domestic emission reductions in Europe. By purchasing lower-cost credits abroad and reselling them at domestic price levels to member states, the European Commission will generate surplus revenue. That money must be used wisely. I see two interesting options:
Overcompensate: Buy more foreign credits than needed for each domestic tonne. This helps ensure that flawed or overestimated credits don’t erode overall climate ambition.
Reinvest: Channel the savings into a climate transition fund – supporting social fairness or a just transition, both within Europe and in the countries hosting the credit-generating projects.
Europe took part in the Kyoto Protocol’s carbon market – but this is widely seen as a failure. Now, with a second attempt under Article 6 of the Paris Agreement, the EU must put in place strict rules to avoid repeating past mistakes and stop flawed certificates from undermining the system.
In my policy brief, I analysed the lessons we must learn from past failures. Here, I focus on the task that lies ahead – one that involves all of us: policymakers, experts, NGOs, activists. We must push to get the right conditions written into law. If you have time or resources to spare, support the people and organisations working to make it happen. Fixing complex policies doesn't just happen – it takes sustained effort and every bit of help.
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Michael Spiekermann is currently pursuing an MSc in Environmental Policy and Regulation at the London School of Economics. His policy brief titles ‘Can carbon credits under Article 6 of the Paris Agreement overcome the integrity issues associated with voluntary carbon markets?’ was highly commended for the Chronos Sustainability Prize 2024. The full document can be found here.
