Climate finance goals for inclusive carbon market

As the 29th Conference of Parties (COP29) to the United Nations Framework Convention on Climate Change (UNFCCC) nears completion, the global spotlight is once again on the importance of climate finance, particularly in sectors like agriculture, forestry, and other land use (AFOLU) and in emerging economies that bear a disproportionate burden of climate impacts.

- Sayanta Ghosh, Jitendra Vir Sharma

This year, our expectations extend beyond ambitious pledges to concrete actions on operationalising Article 6.4 of the Paris Agreement, which emphasises market mechanisms to support sustainable development and greenhouse gas mitigation. For countries like India, where the livelihoods of small and marginal farmers and forest-dependent communities are intricately tied to natural resources, the outcomes of COP29 could be transformative—especially if mechanisms are developed within the compliance market to empower these groups to benefit directly from climate finance.

The Energy and Resources Institute (TERI)'s work with the international voluntary carbon market, particularly in nature-based solutions (NbS), has highlighted the complexities and inconsistencies that persist in climate finance mechanisms. We have seen the potential of carbon finance to support both conservation and community development. However, the current lack of uniform standards in climate finance is a significant barrier to realising this potential. Clear, accessible standards are essential for bringing transparency and trust to the voluntary carbon market, especially if we are to channel meaningful investments into NbS projects that directly benefit local communities.