On May 16, 2025, a United Nations body responsible for establishing a carbon market under the Paris Agreement approved significant new standards for measuring the impact of emission-reducing projects.
This initiative, known as the Paris Agreement Crediting Mechanism (PACM), aims to foster collaboration among countries and other entities in reducing greenhouse gas emissions by generating high-quality carbon credits that contribute to global climate change efforts.
Two essential standards were established to assess a project’s actual emission reduction impact within this mechanism.
The first standard emphasizes the estimation of emissions that would have occurred in the absence of the project, referred to as the ‘baseline.’ This historical standard ensures that the crediting process aligns with the goals of the Paris Agreement. It mandates an initial downward adjustment, such as establishing historical or current baselines at least 10% below typical emissions, along with a minimum 1% downward adjustment over time across all baseline methods. These measures aim to promote continuous improvement and prevent over-crediting by gradually lowering the benchmark for measuring emission reductions.
The second standard addresses any unintended increases in emissions that may occur elsewhere as a result of the project, commonly referred to as This leakage standard will assist those developing methodologies in identifying all potential emission sources. It stipulates that project-level REDD+ activities must be integrated into the host country’s national REDD+ strategy to qualify, ensuring alignment with national climate initiatives and enhancing the credibility of emission reductions.
The established standards reflect extensive input from experts and stakeholders and are essential for ensuring that carbon credits issued under the PACM are ambitious, genuine, additional, and verifiable. In addition to adopting the baseline and leakage standards, the Supervisory Body made several related decisions to facilitate implementation. These decisions include a consultation process on the equitable sharing of project benefits with host countries and a renewed emphasis on capacity building to assist countries in developing the necessary systems to participate in the mechanism, with clearly defined roles for host nations.
They are essential for ensuring that carbon credits issued under the PACM are ambitious, real, additional, and verifiable. In addition to adopting the baseline and leakage standards, the Supervisory Body has made several related decisions to support implementation. These include a consultation on how project benefits can be shared equitably with countries, as well as an emphasis on capacity building to assist in developing the necessary participation in the mechanism, through clearer roles for host countries.
Beyond adopting the baseline and leakage standards, the Supervisory Body also made several related decisions to support implementation. These decisions include a consultation process on how project benefits can be shared equitably with host countries, as well as a renewed emphasis on capacity building to assist countries in developing the necessary systems to participate in the mechanism. This includes establishing clearer roles for host countries.
The Supervisory Body also adopted a decision concerning the transition of cook stove activities, aligning previous projects with the latest data and available guidance.
“This was a highly significant meeting. We have finally adopted a groundbreaking decision to ensure that crediting levels are established consistently with a pathway to net neutrality, through a process of gradual downward adjustment of crediting levels over time”, said Martin Hession, Chair of the Supervisory Body.
He added that they will support host countries by facilitating crediting through improved communication, establishing a dedicated channel to secure their fair share of mitigation benefits, initiating a dialogue on the roles and responsibilities of host countries, and exploring options for enhanced and targeted capacity building.
Emphasis has also been placed on the quality of specific transition projects by mandating the use of the most recent applicable data.
The Vice Chair of the Supervisory Body, Maria AlJishi, expressed her gratitude for the ongoing engagement and feedback from stakeholders throughout this process, as well as for the efforts of the Methodology Panel in drafting these standards. These standards offer the clarity that developers require to initiate the design of activities under the Paris Agreement Crediting Mechanism and are essential for its complete operationalization.
While this represents significant progress, fewer project transitions from the Clean Development Mechanism than anticipated are expected to result in a short-term funding gap until a pipeline of new projects utilizing PACM methodologies begins to develop from 2026 onward. The Supervisory Body will continue to monitor the funding situation closely and will report to the Parties to the Paris Agreement on this matter.
With the foundational elements established, the Supervisory Body will continue to develop other key components of the mechanism, including additional tools, guidelines, and the mechanism registry. The first PACM methodologies are expected to receive approval from the Supervisory Body by the end of the year.
