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Carbon Market Watch criticizes the draft rules for carbon removals at COP28, stating the text is not ready for adoption due to vague definitions of carbon removals, the absence of a reversal risk assessment tool, and a lack of explicit human rights references.

The document provides a detailed overview of Article 6 of the Paris Agreement, distinguishing between the bilateral/multilateral trading of Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6.2 and the UN-supervised global carbon market under Article 6.4. It highlights critical concerns regarding double counting, the lack of oversight in Article 6.2, the risks associated with transitioning legacy Clean Development Mechanism (CDM) projects, and the potential for 'emissions avoidance' to undermine environmental integrity. The guide outlines key priorities for COP28, including the need for stricter reporting rules, a code of conduct for confidentiality, and the establishment of independent grievance processes.

Carbon Market Watch is calling for the European Commission to establish a dedicated carbon removals framework separate from emission reduction efforts. The organization argues that the current EU approach, which uses a net emissions reduction target, misleadingly suggests that emissions and removals are equivalent and may delay necessary deep emissions cuts. To address this, Carbon Market Watch is building a coalition to co-create an alternative policy architecture featuring separate, explicit targets for emissions reductions, land-sector carbon sequestration, and permanent removals.

The document defines REDD+ and traces its evolution from a UNFCCC results-based finance mechanism to the use of private standards like the Voluntary Carbon Standard (VCS) for generating tradable carbon credits. It asserts that REDD+ projects, primarily located in the Global South, frequently overestimate their climate impact due to methodological flexibility in baseline setting, leakage, and permanence. The author argues that biological carbon storage cannot fully offset fossil fuel emissions and calls for more stringent, science-aligned standards and alternative financial avenues for forest conservation.

Carbon Market Watch criticises the GFANZ's proposed Expected Emission Reductions (EER) methodology, arguing that its reliance on subjective 'business-as-usual' baselines creates risks of manipulation and may encourage continued investment in high-emission industries without sufficient engagement strategies.

The report finds that comprehensive requirements for benefit sharing arrangements are not common practice across major carbon crediting programmes. While some projects, particularly those under Plan Vivo, demonstrate best practices by providing detailed monitoring reports on monetary and non-monetary benefits, many others provide only procedural information or limited evidence of actual implementation. Major carbon crediting programmes like Verra (VCS), CAR, and ACR have largely resisted mandatory disclosure of benefit sharing terms, citing commercial confidentiality and a lack of institutional expertise to monitor downstream financial flows.

The briefing reveals a systemic lack of rules and enforcement regarding benefit sharing arrangements (BSAs) in the voluntary carbon market. An analysis by Öko-Institut found that only two of five assessed carbon standards referenced BSAs, and only four of 47 reviewed projects provided clear evidence of benefit sharing with stakeholders beyond project implementers. The document argues that payments for results (such as payments for ecosystem services) are often incorrectly conflated with benefit sharing, which should instead be a distribution of revenues. It further notes that major standards like CAR, ACR, and VCS have opposed mandatory BSA rules from the ICVCM, citing confidentiality and capacity constraints.

The document examines the prevalence and quality of benefit-sharing agreements in the voluntary carbon market (VCM). Based on an Öko-Institut study, it finds that most carbon standards and projects lack clear, enforceable mechanisms to distribute financial and non-financial benefits to local communities. It highlights a critical confusion between 'benefit-sharing' and 'payment for results' (such as salaries or payments for ecosystem services), arguing that the former should be a separate share of profits. The brief concludes that the absence of uniform definitions and the opposition of major standards to mandatory rules hinder the equitable distribution of carbon credit revenues.

The document analyzes the lack of standardized rules for benefit-sharing agreements (BSAs) in the voluntary carbon market, finding that most carbon standards and projects fail to provide evidence of equitable benefit distribution to indigenous peoples and local communities (IPLCs).

The document reports on a study by the Öko-Institut commissioned by Carbon Market Watch, which found that benefit-sharing arrangements (BSAs) in the voluntary carbon market are largely insufficient and lack transparency. Analysis of five carbon standards and 47 projects revealed that most standards do not require BSAs, and very few projects provide evidence of distributing benefits beyond simple performance-based payments. The brief argues that performance payments (like salaries) should not be conflated with benefit-sharing and calls for the Integrity Council for Voluntary Carbon Markets (ICVCM) to mandate standardized, transparent BSA rules.

The report identifies 30 companies, termed the "emissions aristocracy," that were responsible for over 50% of total EU ETS emissions in 2022. While the power sector has seen significant emission reductions since 2013 due to the absence of free allowances, heavy industries like steel, cement, and petrochemicals have experienced stagnant progress. The author argues that free allowances create windfall profits and remove the financial incentive to innovate, calling for a transition to full auctioning by 2030 to ensure the polluter pays principle is upheld.

The report argues that current carbon dioxide removal (CDR) governance systems are flawed because they often treat carbon removal as equivalent to emission reductions, leading to 'mitigation deterrence'. It examines regulatory tools like emissions trading systems (ETS), tax credits, and public auctions, as well as voluntary carbon markets (VCMs). The authors conclude that CDR must be a complementary tool, not a substitute for decarbonization. They propose a policy framework based on three principles: precaution, 'do no significant harm' (DNSH), and the primacy of emission reductions. Key recommendations include separating emission reduction targets from CDR and land-based sequestration targets, implementing rigorous measurement, reporting, and verification (MRV) systems, and shifting from offsetting models to 'contributive approaches' or public procurement like reverse auctions.

The document argues that current carbon dioxide removal (CDR) policies often encourage 'mitigation deterrence' by treating removals as equivalent to emission reductions. It reviews various mechanisms—including emissions trading systems, tax credits, and voluntary markets—and concludes that most fail to ensure environmental integrity or permanence. The authors propose a 'blueprint' for sensible policy that strictly separates emission reduction targets from removal targets, mandates robust monitoring, reporting, and verification (MRV), and prioritizes the 'Do No Significant Harm' principle. It suggests that funding for CDR should come from carbon pricing revenues or dedicated procurement schemes rather than offsetting mechanisms.

Carbon Market Watch argues that the UNFCCC's Recognition and Accountability Framework must prevent greenwashing by prohibiting the use of carbon offsets for within-value chain mitigation. The submission proposes strict criteria for net-zero pledges, including coverage of scopes 1-3 and transparency in reporting absolute emissions. It further suggests that non-compliance should lead to the revocation of UNFCCC privileges, such as observer status, for high-emitting non-state actors.

Carbon Market Watch argues for stricter transparency, monitoring, and liability frameworks for carbon removal activities under the Article 6.4 mechanism. The organization proposes that all removal-based credits be publicly tagged, monitoring periods be extended to a minimum of 100 years, and a clear distinction be made between 'avoidable' and 'unavoidable' reversals to ensure project proponents bear appropriate financial liability. It further suggests the implementation of a minimum default risk rating for buffer pool contributions and the ability to permanently ban proponents who violate human rights or cause repeated avoidable reversals.

The document proposes detailed amendments to version 8.0 of the draft recommendation on methodological requirements for the Article 6.4 mechanism. Carbon Market Watch advocates for stronger, mandatory language (changing 'should' to 'shall'), the reintroduction of safeguards to prevent the locking-in of carbon-intensive practices, and more rigorous additionality and baseline-setting standards to ensure the mechanism encourages genuine climate ambition.

The European Union is expanding its Emissions Trading System (ETS2) to cover buildings and road transport, starting in 2027 or 2028. While intended to accelerate decarbonisation by applying the 'polluter pays' principle, the system risks disproportionately impacting low-income households. To mitigate this, the EU has established the Social Climate Fund (SCF) to support vulnerable groups and finance energy retrofitting. Carbon Market Watch advocates for increasing the SCF cap, strengthening energy performance standards, banning internal combustion engines by 2035, and ensuring that carbon pricing is complemented by binding national targets under the Effort Sharing Regulation.

The author contends that carbon markets are unsuitable for incentivising high-quality carbon removals because they favour the cheapest offsetting options over expensive technological solutions. The document criticises the EU's Carbon Removals Certification Framework (CRCF) for being too vague, lacking safeguards against mitigation deterrence, and potentially enabling greenwashing by allowing certified credits to be sold on the voluntary carbon market. It proposes that the EU's 2040 target should be split into three distinct targets—emission reductions, land-based sinks, and technical removals—to prevent the conflation of reductions and removals into a single net target.

The document asserts that REDD+ forestry credits are not equivalent to emission reductions due to systematic failures in five key areas: overestimated baselines, underestimated permanence risks, underestimated leakage, exaggerated carbon accounting, and weak safeguards. It concludes that current offsetting is unfit for purpose and recommends rigorous scrutiny, independent data verification, and a ban on using forest carbon storage to offset fossil fuel emissions.

The statement warns that fossil fuel companies are leveraging taxpayer-funded DACCS technology to offset emissions and maintain their social license to operate. It highlights Occidental Petroleum's Stratos project as a primary example of how carbon capture can be linked to enhanced oil recovery (EOR), which may actually increase net CO2 emissions. The author urges EU policymakers to ensure the Carbon Removal Certification Framework (CRCF) bans the use of removals for offsetting to prevent similar corporate greenwashing in Europe.