After years of negotiation, the architecture of a global carbon market is finally complete. The Article 6 Rulebook, finalised at COP29 in Baku, sets the legal foundation for countries to trade emissions reductions and removals under the Paris Agreement. The challenge now, as detailed in our latest Oxford Institute for Energy Studies (OIES)’s paper ‘From Principles to Practice: Operationalization of a Global Carbon Market under Article 6’ is far more practical – building the infrastructure, finance, and trust to make it work.
The next decade will be decisive. Compliance-grade demand for carbon credits – those backed by regulation rather than voluntary pledges – is projected to grow more than fivefold by 2030. The potential benefits are enormous: faster, cheaper global decarbonisation and new investment opportunities for countries able to supply verified carbon reductions and removals. But the path ahead is also strewn with bottlenecks – from missing registries and inconsistent legal frameworks to sluggish project pipelines.
In the OIES paper, we discuss how the carbon market has moved beyond its “why” phase. The question now is how to operationalise it at scale.
Article 6 has created a standardised mechanism for countries to cooperate on climate goals through trade — the Internationally Transferred Mitigation Outcome (ITMO) — but it’s only as credible as the systems that support it. To avoid double counting, every cross-border trade must be matched by a “corresponding adjustment,” an accounting entry that ensures one tonne of avoided or removed carbon isn’t claimed twice.
This double-entry principle sounds simple but demands robust digital infrastructure, harmonised reporting rules, and trust between governments – all still in varying stages of development. Some 93 countries have already signalled intent to use carbon trading to meet their national targets (NDCs), yet many lack the institutions to manage approvals and monitor results. For carbon removals projects, which often require long-term verification and storage monitoring, that institutional readiness will be the difference between opportunity and paralysis.
The clearest shift since COP29 has been from voluntary to regulatory markets. Countries such as Ghana, Kenya, and Thailand have established export frameworks for ITMOs, authorising private developers to generate and sell credits under Article 6. These frameworks are not academic exercises: Ghana’s system alone has attracted over $1 billion in foreign direct investment in its first two years.
Each host country determines which project types qualify for export, what levies apply, and how revenues are shared. Buyers – from Singapore to Switzerland, initially – are setting their own criteria for which credits count, often preferring removals or high-integrity technology-based projects. The result resembles an emerging commodity market, complete with quality differentiation, price signals, and bilateral trade lanes.
For carbon removals, this differentiation is critical. Technology-based removals such as Direct Air Capture and geological storage often carry higher costs but deliver durable outcomes that importing countries value for long-term targets. Nature-based removals, such as reforestation, soil carbon, mangroves, provide co-benefits like biodiversity and community income, making them attractive to host governments seeking both environmental and social returns. Article 6 allows both types to coexist within transparent accounting systems, turning removals into investable infrastructure.
Meeting the Paris goals requires between 11 and 25 gigatonnes of annual emission reductions or removals by 2030: that is roughly two to four times the volume of today’s global oil market. No pathway to net-zero avoids large-scale carbon removals. Yet under current policies, only a small fraction of that potential is bankable or tradable.
Here, Article 6 can become a catalyst. By embedding removals into compliance systems – whether through national carbon markets, sectoral schemes like aviation’s CORSIA, or the UN’s new Paris Agreement Crediting Mechanism (PACM) – it gives these projects legal recognition and a traceable financial value.
PACM, which already has more than 1,000 projects registered across 100 countries, could be the first truly global platform for scaling verified removals. Credits issued under PACM carry the same sovereign-level integrity as ITMOs but are accessible to private developers, opening the door for carbon removal projects to receive the same financing, risk insurance, and offtake arrangements as renewable energy did a decade ago.
An important frontier is the emerging regime for regulated corporate claims. For years, companies purchased voluntary offsets to meet net-zero goals, often facing criticism for weak oversight. Regulators are now stepping in. The EU’s forthcoming Green Claims Directive and the Voluntary Carbon Market Integrity (VCMI) initiative are setting legal definitions for credible offsetting. This gives corporations a clear framework to buy certified removals without reputational risk – and creates a new layer of predictable demand.
For carbon removals, this evolution is vital. It means that long-term removal projects will be eligible for recognised compliance or semi-regulated use, vastly expanding their potential customer base beyond climate-conscious corporates to regulated entities and sovereigns.
Even with these advances, the outlook is tight. The paper estimates that global credit demand (regulatory + voluntary) will exceed 700 million tonnes per year by 2030, yet current project pipelines fall short – especially for removals that require years of development. On average, it takes 24 months from project inception to first issuance. Delays in host-country approvals or corresponding adjustments could widen the gap, driving up prices and slowing progress.
We see the landscape of a genuine global carbon market emerging – one that treats carbon as a tradeable, transparent commodity and integrates removals as a core pillar of climate action. But the coming years will decide whether this potential is realised.
In particular, success will depend on five elements:
- Transparent, interoperable registries;
- Clear legal and accounting frameworks;
- High-integrity measurement and verification;
- Scalable finance and risk-sharing instruments; and
- Focused capacity building in host countries.
If these align, Article 6 could become the missing link between global ambition and local action – and carbon removals, long considered the ‘future’ of climate policy, could finally move into the present.
Hannah Hauman (Global Head of Carbon Trading Trafigura); Bassam Fattouh (Director, Oxford Institute for Energy Studies); Hasan Muslemani (Head of Carbon Management Research, Oxford Institute for Energy Studies)
