By Nick Marshall, Co-Founder of TASC and Director of the Project Developer Forum
As EU countries edge closer to net zero deadlines, many of which are enshrined in national law, the Paris Agreement Crediting Mechanism (PACM) finds itself at a crossroads. At its heart, the PACM was created to supplant the Clean Development Mechanism (CDM) of the Kyoto Protocol and at the heart of the CDM was a commitment to the transfer of climate finance, technology and capacity building from the developed to the developing world.
At recent conferences across Europe, one topic has dominated conversation, how to allocate finite climate finance. Should carbon credits support domestic, infrastructure-heavy carbon offset projects that come with a long lead time and a hefty price tag, or should they continue to prioritise projects in the developing world?
This is no longer a theoretical debate. A growing number of European governments and private actors are exploring the use of carbon credits to support large-scale domestic initiatives like BECCS (bioenergy with carbon capture and storage), DAC (direct air capture), and engineered removals. While these projects have the potential to deliver meaningful emissions removals in the long term, many are still uncertain in their efficacy and years away from scale. Furthermore, once delivered, the credits they may eventually generate will come at a far higher cost than proven nature-based and community projects already operating across the Global South.
At the heart of this debate lies a key question: should the limited capital flowing through carbon markets be redirected towards supporting developed countries’ domestic climate ambitions? Or should it be committed to financing mitigation, adaptation, and just transition efforts in countries that are most vulnerable to the climate crisis and most dependent on international support?
How we answer this question will have real implications in the medium to long term for the PACM. While Europe’s carbon removal ambitions are important, I believe that they should be funded by additional finance from national governments, not by cannibalising finance allocated for developing countries. The Voluntary Carbon Market was never intended to plug the gap in national decarbonisation budgets. It was designed to unlock climate finance at speed and scale in areas where it is most urgently needed, and where it can generate co-benefits through the likes of biodiversity protection, sustainable land management, and support for Indigenous and local communities.
Article 6 of the Paris Agreement, operationalised at COP29, was meant to formalise this flow of support from high emitting to low-income countries, helping to achieve global emissions reductions while supporting the delivery of Nationally Determined Contributions (NDCs). If carbon markets are pulled too far toward domestic projects in the Global North, the risk is not just financial but existential. Article 6 becomes a promise left unfulfilled.
The current trajectory is troubling. As we approach COP30, the EU is still struggling to articulate a coherent stance on the use of Article 6 credits and how to balance its own internal emissions targets with its global climate responsibilities. In the absence of strong commitment from developed world countries, we’re beginning to see the Global South being left with fewer financial tools to drive the progress we so urgently need to aid in societal development and the fight against climate change.
Let’s be clear, infrastructure-based solutions like BECCS, DAC, and engineered removals absolutely have a role to play and we need all these solutions in the fight against climate change. But that role in the developed world should be supported by additional finance from national governments not by reshaping the international carbon markets to serve domestic agendas and diverting finance from the PACM. If we allow that to happen, we will undermine the very mechanisms designed to deliver emissions reductions in the parts of the world that need it most.
This is not just about finance. It’s about fairness. Developing countries are often told they must deliver mitigation outcomes while facing the economic realities of poverty, food insecurity, and ecosystem degradation. Many of them are already building high-integrity projects with robust methodologies and community ownership. What they lack is access to consistent and fair flows of finance to scale those solutions.
That is where national governments, by committing to the PACM, must focus energy and investment. Not because it’s charitable but because it is the most effective, immediate way to drive down global emissions and build resilience where it matters most.
Governments face a choice. They can continue to lead on climate action by supporting both ambitious domestic decarbonisation and global equity, or it can allow short-term national interests to erode the integrity and impact of a system designed to benefit those people and communities most impacted by climate change.
It’s not an either/or debate: we need Governments to commit to the PACM and support national decarbonisation initiatives. Let governments fund their own infrastructure. Let’s use the PACM as it was intended; as a vehicle for international cooperation, speed, and scalable climate progress.
1. Carbon Markets Institute: https://carbonmarketinstitute.org/app/uploads/2025/04/Carbon-Market-Report-2025-FINAL.pdf
2. ICVCM: https://icvcm.org/supporting-sustainable-development-through-high-integrity-carbon-markets/
Read more: Verra Gets ICVCM Approval For Afforestation, Reforestation, And Revegetation Methodology
