Prioritising The Paris Agreement Crediting Mechanism For The Global South – Carbon Herald

Report on the Paris Agreement Crediting Mechanism (PACM) and Sustainable Development Goals (SDGs)

Introduction

As European Union (EU) countries approach their legally enshrined net zero deadlines, the Paris Agreement Crediting Mechanism (PACM) stands at a critical juncture. Established to replace the Clean Development Mechanism (CDM) of the Kyoto Protocol, PACM aims to facilitate the transfer of climate finance, technology, and capacity building from developed to developing countries, aligning closely with several Sustainable Development Goals (SDGs), including SDG 13 (Climate Action), SDG 7 (Affordable and Clean Energy), and SDG 17 (Partnerships for the Goals).

Current Debate on Climate Finance Allocation

Recent discussions across Europe have focused on the allocation of limited climate finance resources. The debate centers on whether carbon credits should support:

1. Domestic, infrastructure-heavy carbon offset projects such as BECCS (Bioenergy with Carbon Capture and Storage), DAC (Direct Air Capture), and engineered removals, which have long lead times and high costs.
2. Projects in developing countries that are proven, nature-based, community-led, and deliver co-benefits including biodiversity protection and sustainable land management.

This debate is crucial for achieving SDG 13 (Climate Action), SDG 15 (Life on Land), and SDG 1 (No Poverty), as it influences how climate finance supports vulnerable populations and ecosystems.

Implications for Sustainable Development and Climate Equity

• Support for Developing Countries: The PACM was designed to channel finance towards mitigation, adaptation, and just transition efforts in countries most vulnerable to climate change, supporting SDG 10 (Reduced Inequalities) and SDG 2 (Zero Hunger).
• Risks of Redirecting Finance: Prioritizing domestic projects in developed countries risks diverting essential funds from the Global South, undermining international cooperation (SDG 17) and the integrity of Article 6 of the Paris Agreement.
• Role of National Governments: Developed countries should fund their own domestic decarbonization initiatives through additional finance rather than reallocating PACM resources, ensuring equitable progress towards SDG 13 and SDG 9 (Industry, Innovation, and Infrastructure).

Challenges and Opportunities Ahead

As COP30 approaches, the EU faces challenges in balancing internal emissions targets with global climate responsibilities. Without strong commitments from developed nations, financial tools for the Global South risk being diminished, threatening progress on multiple SDGs.

Infrastructure-based solutions like BECCS and DAC are important but should be financed separately from international carbon markets to preserve the PACM’s original purpose of supporting vulnerable countries and communities.

Fairness and Equity in Climate Finance

• Developing countries confront economic challenges such as poverty, food insecurity, and ecosystem degradation while striving to implement high-integrity climate projects.
• Access to consistent and fair climate finance is essential to scale these solutions, advancing SDG 1 (No Poverty), SDG 2 (Zero Hunger), and SDG 15 (Life on Land).
• National governments must prioritize commitments to the PACM as a strategic investment rather than charity, maximizing global emissions reductions and resilience.

Recommendations

1. Governments should simultaneously support ambitious domestic decarbonization and global equity initiatives.
2. National infrastructure projects must be funded through dedicated national budgets, not by diverting international carbon market finance.
3. The PACM should be utilized as originally intended: a mechanism for international cooperation, rapid climate finance mobilization, and scalable climate progress.
4. Strengthen commitments to Article 6 of the Paris Agreement to ensure equitable climate action and support for vulnerable countries.

Conclusion

The future of the PACM and its alignment with the Sustainable Development Goals depends on maintaining its focus on supporting developing countries through fair and effective climate finance. Developed countries must avoid undermining this mechanism by redirecting funds towards domestic projects, ensuring that climate action remains inclusive, equitable, and impactful globally.

References

• Carbon Markets Institute: Carbon Market Report 2025
• ICVCM: Supporting Sustainable Development Through High-Integrity Carbon Markets

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 13: Climate Action
   • The article focuses on climate finance, carbon markets, and emissions reductions, which are central to SDG 13.
2. SDG 7: Affordable and Clean Energy
   • References to bioenergy with carbon capture and storage (BECCS) and direct air capture (DAC) relate to clean energy technologies.
3. SDG 15: Life on Land
   • Nature-based projects, biodiversity protection, sustainable land management, and afforestation/reforestation are linked to SDG 15.
4. SDG 1: No Poverty
   • Discussion on economic realities of poverty in developing countries and the need for climate finance to support vulnerable communities.
5. SDG 10: Reduced Inequalities
   • Emphasis on fairness, equity, and supporting developing countries through international cooperation.

2. Specific Targets Under Those SDGs Identified

1. SDG 13: Climate Action
   • Target 13.2: Integrate climate change measures into national policies, strategies, and planning (e.g., Nationally Determined Contributions – NDCs).
   • Target 13.a: Implement the commitment undertaken by developed-country parties to the UNFCCC to mobilize climate finance.
2. SDG 7: Affordable and Clean Energy
   • Target 7.2: Increase substantially the share of renewable energy in the global energy mix.
3. SDG 15: Life on Land
   • Target 15.1: Ensure the conservation, restoration, and sustainable use of terrestrial and inland freshwater ecosystems.
   • Target 15.2: Promote sustainable management of forests, halt deforestation, and increase afforestation and reforestation.
4. SDG 1: No Poverty
   • Target 1.5: Build resilience of the poor and vulnerable to climate-related extreme events and other economic, social and environmental shocks.
5. SDG 10: Reduced Inequalities
   • Target 10.b: Encourage official development assistance and financial flows to states where the need is greatest.

3. Indicators Mentioned or Implied to Measure Progress

1. SDG 13 Indicators
   • Indicator 13.2.2: Total greenhouse gas emissions per year (implied through discussion of emissions reductions and carbon credits).
   • Indicator 13.a.1: Amount of financial support mobilized for developing countries (implied through climate finance flows and carbon market finance allocation).
2. SDG 7 Indicators
   • Indicator 7.2.1: Renewable energy share in the total final energy consumption (implied through references to BECCS and DAC technologies).
3. SDG 15 Indicators
   • Indicator 15.1.1: Forest area as a proportion of total land area (implied via afforestation, reforestation, and sustainable land management projects).
4. SDG 1 and 10 Indicators
   • Indicators related to poverty levels and financial flows to vulnerable countries (implied through discussion on fairness, poverty, and international support).

4. Table of SDGs, Targets, and Indicators

Source: carbonherald.com