The 26th annual UN Climate Change Conference in Glasgow ended on 12 November 2021. In particular, the summit was expected to spur more ambitious national climate goals to keep the Paris Agreement goal of limiting the global temperature rise to 1.5 degrees Celsius within reach.

The conference reached an agreement on a new market mechanism for emissions reductions and carbon sequestration to facilitate international cooperation to meet national mitigation goals. The creation of these novel market rules also strengthens the ability of the private sector to take action against climate change. National climate commitments must be supplemented by corporate action if the 1.5-degree trajectory is to be achieved.

The Conference of the Parties (COP) is the supreme decision-making body of the United Nations Framework Convention on Climate Change. The annual conference met for the 26th time this year in Glasgow. The meetings of the decision-making bodies of the Kyoto Protocol and the Paris Agreement were also held in the same context. New measures to stop climate change and adapt to it were agreed at the negotiations. Furthermore, it was determined that current climate pledges were insufficient to meet the 1.5-degree goal for the temperature rise. Achieving net-zero emissions at the global level by 2050 required significant further action to reduce emissions. Unless the level of ambition was raised, global emissions would keep climbing instead of falling.


Rules for the market mechanism to be specified

One of the goals for the climate summit was to agree the rules of international cooperation through carbon markets in accordance with Article 6 of the Paris Agreement. Article 6 allows for voluntary international cooperation, whereby a country may use emissions reduction or carbon sequestration projects located abroad to reach its Nationally Determined Contribution (NDC). It was intended that the rules for cooperation in the market be approved in 2018, but an agreement could not be reached at the time. Now, countries were finally able to agree on preventing the double counting of all carbon credit units authorised for cooperative use. These units will be known as Internationally Transferred Mitigation Outcomes (ITMO). According to the rules of Article 6, countries may authorise the use of ITMOs for purposes other than reaching their NDC, such as voluntary offsetting. The authorising country undertakes to adapt its emissions balance accordingly so that the emissions reduction or carbon sequestration project in question is not counted towards its own NDC. In addition to the prevention of double counting, the summit produced quality criteria for ITMOs, as well as decisions to establish an international reporting platform and emissions register. More specific rules will be developed in the years to come.

In addition, an international carbon offset mechanism was launched in Glasgow. Its rules will also be specified in the next few years. Units generated through this mechanism are subject to the same adaptation requirements, whether they be authorised for reaching NDCs or for other use.


Voluntary carbon offsetting evolving alongside Article 6

The voluntary carbon offset market has been operating in the private sector for years. The best practices have usually followed the criteria in force in the mandatory market, and the Article 6 rulebook can be expected to act as the touchstone for high-quality voluntary offsetting. The international crediting and authorisation mechanism under Article 6 of the Paris Agreement can be used to perform quality assurance on voluntary carbon offsetting and to prevent double counting. However, the voluntary use of the units or the related claims are not regulated under the Paris Agreement. Companies are still free to employ other crediting standards for voluntary offsetting. Furthermore, it is possible to apply for authorisation under Article 6 for credits granted under these other schemes to avoid double counting.

“The new rules for the market mechanisms are great news for the voluntary carbon offset market. The implementation and reporting of best practices will be clarified. This will make it easier for an individual company to assess the quality of the climate benefits brought by the offsetting project,” says Maija Saijonmaa, Leading Specialist at Nordic Offset.

“Currently, emissions reductions and carbon neutrality efforts by the corporate sector play a crucial role, because national commitments are still falling short. Reducing the company’s emissions in accordance with the 1.5-degree goal of the Paris Agreement and committing to the international Science-Based Targets initiative are great ways to do this.”


If you need advice on managing or offsetting emissions from your business, please don’t hesitate to contact our experts.


For more information on climate negotiations, visit the following pages:

Ministry of the Environment

Finnish Government