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Carbon Market Watch (CMW) responds to a South Pole consultation on a new corporate claim, "Funding Climate Action - with Verified Climate Contributions." CMW supports moving away from "carbon neutral" claims but criticizes the continued use of a "tonne-for-tonne" approach, which it argues incentivizes low-quality, cheap credits. CMW proposes a "dollar for tonne" model and demands full financial transparency regarding the flow of funds from buyers to projects. The response also outlines six fundamental criteria for firms, including the requirement to demonstrate that emissions are truly "unabatable" and to account for all scope 1, 2, and 3 emissions before utilizing carbon credits.

The author contends that the steel industry's exemption from the EU ETS benchmark reform, secured through lobbying—particularly by Germany—shields polluting installations from necessary price signals. While the sector faces high costs for transitioning to Direct Reduced Iron (DRI) technology, the document argues that free allowances do not bridge the investment gap and instead reduce the pressure to modernise. The author suggests that the ETS should make polluting more expensive to incentivise the shift to low-carbon steel, rather than serving as a protectionist tool.

Carbon Market Watch critiques the European cement association's (Cembureau) claims that cement production and use can provide carbon removals. The author argues that proposed methods—including the use of sustainable biomass with CCS, enhanced carbonation, and natural carbonation—fail to meet the criteria for permanent and additional removals when full life-cycle assessments are considered. The document urges the EU to focus on proven removal techniques and industrial decarbonization strategies, such as reducing clinker-to-cement ratios and phasing out free pollution permits under the Emissions Trading System.

Carbon Market Watch argues that Article 6.4 methodologies must shift from incremental benefits to transformational activities to avoid eroding climate ambition. The organization advocates for the use of dynamic baseline contraction factors (BCFs) that trend toward zero by 2050, the implementation of 'negative lists' to exclude non-additional or fossil-fuel-linked projects, and the rejection of short-term sequestration activities as offsets due to non-permanence risks.

The report finds that all 15 assessed products in Belgian supermarkets make misleading carbon neutrality claims because they rely on carbon credits that do not provide climate benefits equivalent to the emissions generated. The analysis highlights systemic issues with carbon offsets, including a lack of additionality in renewable energy projects and a lack of permanence in forest-based sinks. Furthermore, the report notes a lack of transparency in company-level climate strategies and a conflict of interest within the third-party certification industry.

Carbon Market Watch urges Verra to move away from the 'tonne-for-tonne' offsetting model, particularly for AFOLU projects, due to permanence risks and the potential for corporate greenwashing. The submission recommends adopting a 'contribution model' where finance supports climate action without claiming neutrality. It also calls for greater financial transparency regarding intermediaries, a more accessible and independent grievance mechanism for indigenous peoples and local communities, and the banning of methodologies that support fossil fuel infrastructure.

The author contends that 'carbon farming' activities are unsuitable for carbon removal certification because they provide temporary, volatile storage that risks enabling greenwashing and delaying actual emission reductions. Instead of market-based carbon credits, the document proposes 'activity-based finance' to support farmers and foresters in adopting nature-based practices, funded by public resources or polluter-pays instruments.

Carbon Market Watch (CMW) argues that the Article 6.4 Supervisory Body must establish a robust, independent grievance mechanism before registering any carbon crediting projects to protect indigenous peoples and local communities. Drawing on a review by Perspectives Climate Research, CMW finds that most voluntary carbon market (VCM) standards—including Verra, American Carbon Registry, and Climate Action Reserve—have inadequate mechanisms, while the Global Carbon Council lacks one entirely. Only the Gold Standard and the Green Climate Fund's Independent Redress Mechanism are identified as high-quality models. CMW recommends that the Article 6.4 mechanism be fully independent, transparent, and accessible, featuring a public grievance repository and the power to overturn Supervisory Body decisions.

Carbon Market Watch opposes the inclusion of emission avoidance in Article 6.4 and 6.2, warning that inconsistently defined avoidance activities could lead to the issuance of 'hot air' credits and potentially increase overall emissions.

Carbon Market Watch (CMW) urges the Article 6.4 Supervisory Body to avoid shortcuts in developing recommendations for removal activities, emphasizing that temporary carbon storage should not be equated with permanent emission reductions. CMW argues that current forestry and land-use credits lack permanence, and that buffer pools are insufficient to manage reversal risks. The organization specifically opposes the inclusion of tonne-year accounting, claiming it creates a false equivalence between temporary storage and permanent removals, and criticizes the proposed definition of removals for including 'products' and 'processes' rather than focusing solely on outcomes.

The report evaluates grievance mechanisms across various carbon market standards and funds, using UN Guiding Principles on Business and Human Rights as a benchmark. It finds that most voluntary carbon market (VCM) standards have opaque or insufficient mechanisms, while the Green Climate Fund (GCF) and Gold Standard provide more robust models. The authors recommend that the Article 6.4 mechanism prioritize accessibility, transparency through public repositories, independence, and the ability to provide binding remedies, including the power to overturn Supervisory Body decisions.

The Industrial Emissions Directive (IED) regulates approximately 50,000 large industrial installations in Europe, which account for 736 million tonnes of CO2 or about 40% of the EU's total carbon footprint. However, the IED currently does not address greenhouse gas emissions, as these are managed by the EU Emissions Trading System (EU ETS). The author contends that the EU ETS has failed to significantly reduce industrial emissions due to exemptions and free pollution subsidies. The European Commission's April 2022 proposal for reforming the IED failed to include GHG emission limits, with the Commission suggesting a delay until 2028 to avoid negatively impacting the EU ETS's efficiency. The document argues that this delay is unacceptable given the urgency of the climate crisis and that the EU ETS already possesses mechanisms, such as the Market Stability Reserve, to handle any oversupply of permits resulting from IED-mandated limits. The author urges the European Parliament and Council of the European Union to amend the proposal to regulate carbon emissions, particularly from the most polluting plants, noting that due to the IED's lengthy permit update processes, a delay until 2028 would mean no stringent GHG regulations would be in place until 2038 or later.

A review of voluntary carbon market standards found that most have inadequate or non-existent grievance mechanisms, leaving local and indigenous communities vulnerable. Only Gold Standard and the Green Climate Fund's Independent Redress Mechanism were rated as having good mechanisms. The report details failures in accessibility, transparency, and independence for standards like Verra, CAR, and ACR, and notes that the Global Carbon Council lacks a mechanism entirely. It provides a framework of good practices and specific recommendations for these standards and the Paris Agreement's Article 6.4 Supervisory Body.

The report analyzes the voluntary carbon market (VCM), focusing on the opaque role of intermediaries and the lifecycle of carbon credits from creation to retirement. It identifies a lack of transparency in transaction data and pricing, noting that while project creation and end-user claims are somewhat documented, the movements of credits between issuance and retirement remain largely hidden. The analysis details the costs associated with different project types—renewable energy, household devices, and forestry—and the various fees charged by registries and intermediaries. It concludes with recommendations for registries and corporations to increase disclosure of account holders and retirement details to improve market trust.

This briefing by Carbon Market Watch highlights a critical transparency gap in the voluntary carbon market (VCM), where intermediaries—including brokers, exchanges, and resellers—often hide their fees and mark-ups. The report argues that aggregate market value figures are misleading because they do not distinguish between funds reaching project owners and profits captured by financial go-betweens. Based on research by AlliedOffsets, the document reveals that 90% of intermediaries do not disclose exact fees, and some brokers may resell credits for at least three times the purchase price. It concludes with recommendations for buyers, industry standards, and registry managers to mandate the disclosure of pricing and account holdings to ensure climate finance effectively supports mitigation action.

Carbon Market Watch argues that the EU's proposed Carbon Removal Certification Framework (CRCF) must be strictly limited to permanent carbon removals to avoid 'mitigation deterrence'. The organization recommends prohibiting the use of certified removals for offsetting emissions in the EU ETS or ESR, excluding carbon farming and carbon storage in products due to their lack of permanence, and implementing stricter quality criteria for quantification and liability. It suggests that nature-based solutions should be funded via activity-based finance for biodiversity and soil health rather than through carbon removal metrics.

The document analyzes the 2023 Corporate Climate Responsibility Monitor (CCRM) findings for 24 global corporations, concluding that their net-zero targets are largely exaggerated and misleading. It highlights systemic issues such as over-reliance on low-quality carbon offsets, the exclusion of indirect emissions from carbon neutrality claims, and a lack of short-term ambition. To protect consumers, the brief recommends a complete prohibition of 'neutrality' claims in the EU, proactive enforcement by public regulators, and a shift toward a 'contribution claim' model for financing climate projects.

The 2023 Corporate Climate Responsibility Monitor evaluates 24 multinational companies, finding that 15 of them have climate strategies of low or very low integrity. Key issues include ambiguous net-zero pledges, insufficient 2030 targets that fall short of 1.5°C pathways, and a heavy reliance on non-permanent biological carbon offsets. While emission disclosure transparency is moderate, the report highlights a critical '2030 blind spot' where corporate commitments do not match the required global reductions of 43-48% by 2030. The authors advocate for a shift from offsetting to a 'climate contribution' approach and call for tighter regulatory oversight to ensure corporate accountability.

Carbon Market Watch calls for more ambitious climate action at COP27, arguing that carbon markets under Article 6 should complement, not replace, massive emissions reductions and the phase-out of fossil fuels.

Carbon Market Watch argues that the draft EU Carbon Removal Certification Framework (CRCF) is fundamentally flawed due to poor definitions of carbon removals and a failure to specify their role in climate policy. The author contends that the proposal risks promoting 'mitigation deterrence' by allowing removals to substitute for deep emission reductions and by permitting the use of temporary storage for offsetting permanent emissions. Furthermore, the document criticizes the CRCF for conflating emissions reduction with removals, utilizing vague quantification baselines, and failing to implement social protections against land grabbing.