An Updated Version of the VCMI Toolkit to Bridge the Climate Finance Gap

In 2023, the Voluntary Carbon Markets Integrity Initiative (VCMI) in partnership with the United Nations Development Programme and Climate Focus, developed a Carbon Markets Access Toolkit as guidance for governments and policymakers to decide whether, why, when and how to integrate high-integrity carbon markets into their climate and sustainable development agendas.

On 19 August 2024, an updated version of the Carbon Markets Access Toolkit was published. The Toolkit now supports governments to consider different types of credit-based international carbon markets holistically, including Article 6 mechanisms.

Why the Toolkit is Needed

Although carbon markets have the potential to significantly lower the cost of climate action and provide substantial funding to developing nations, these countries currently receive only a small share of global climate finance. Many also lack the technical expertise and infrastructure required to effectively participate in and benefit from these markets. In 2022, for instance, emerging markets and developing economies (excluding China) received just 15% of global climate finance.

By 2030, developing countries will need an estimated $2.7 trillion annually to meet their climate and nature-related goals, including $1.3 trillion in international support. The new toolkit is designed to help emerging markets and developing economies determine how best to generate and sell carbon credits, thereby accessing climate finance, accelerating innovation, and narrowing the $1.3 trillion climate finance gap.

How the Toolkit Helps

The Carbon Markets Access Toolkit serves as a practical guide for governments as well as other stakeholders such as NGOs and project developers, outlining five key considerations for developing robust, effective, and high-integrity carbon market participation. The Toolkit provides a step-by-step guide for governments to address critical decision points such as:

• Decide if, and when, to engage with carbon markets
  • Assess potential reasons to engage with carbon markets 
  • Develop a strategy for carbon market engagement
  • Determine which roles the government should play
  • Map existing carbon market activities

• Finance Nationally Determined Contributions (NDCs)
  • Determine finance needs and instruments for implementing the NDC 
  • Identify financing instruments available for implementing the NDC 
  • Facilitate finance for mitigation through independent carbon markets

• Determine an Article 6 strategy
  • Understand Article 6 
  • Consider corresponding adjustments 
  • Develop policies to guide Article 6 implementation

• Consider legal and institutional matters
  • Clarify carbon rights 
  • Develop institutional and regulatory capacity 
  • Consider the impacts of taxes and fees on carbon projects 
  • Safeguard against risks related to carbon market engagement

• Ensure high-integrity carbon market activities
  • Align with international integrity initiatives
  • Create an enabling policy environment
  • Establish national carbon accounting rules

Conclusion

In essence, the updated Carbon Markets Access Toolkit provides actionable guidance, and helps to dismantle the barriers that have long prevented developing nations from fully participating in carbon markets.