The Challenge of Making Carbon Credits Fungible

Fungibility refers to the property of a good or asset where individual units are interchangeable and indistinguishable.  In other words, each unit of a fungible asset is considered identical and can be exchanged or replaced with another unit of the same asset without any loss of value or change in quality.  Examples of fungible assets include money, commodities, and certain financial instruments.  In the case of money, a specific unit of currency, such as a dollar bill or a digital currency unit, is fungible because any unit of the same denomination is equal in value and can be used interchangeably.  Similarly, commodities like gold or oil are often considered fungible because each unit of the same type and grade is interchangeable with any other unit of the same type and grade. 

Fungibility is a key concept in economics and finance, as it simplifies transactions and facilitates the liquidity and trade of assets in markets.  Non-fungible assets, on the other hand, are unique and not interchangeable with other units.  Real estate, collectibles, and certain types of intellectual property are examples of non-fungible assets.  Fungibility is lacking in the carbon markets, even across compliance exchanges.  For the carbon market to move to next level, and be a distinct commodity to be traded and consumed, this is a necessity.  Just like in the commodities market, for it to function, the market must have confidence that all producers are working within the same regulatory framework, to the same standard, such that the market can reliably value all carbon credits of the same category to the same value, regardless of geographic origin.  There must also be enough of the market for there to be liquidity. 

The basis of the market is a carbon offset credit, or simply a carbon credit.  A carbon offset credit is a tradable certificate representing the reduction, the removal, or the avoidance of production, of one metric ton of carbon dioxide (CO₂) or its equivalent in other greenhouse gas emissions.  It is called CO₂e.  The intent is to mitigate climate change by incentivising and by financing projects that reduce or offset greenhouse gas emissions.  There are, broadly, two kinds of markets: the voluntary and the compliance.  Voluntary carbon credits do not meet the verification and validation requirements to be considered a financial instrument.  The key to the commodification of carbon credits is found in the compliance market. 

While I may refer to carbon credits as a commodity and a financial instrument, a financial instrument and a commodity are distinct concepts, but there can be overlap in certain situations.  A financial instrument is a broad term that refers to various contracts or assets whose value is derived from an underlying asset, index, rate, or instrument.  It represents a tradable asset that has monetary value.  Examples of financial instruments include stocks, bonds, derivatives such as options and futures contracts, currencies, and various investment funds. 

A commodity, on the other hand, is a raw material or primary agricultural product that is traded on an exchange.  Commodities are typically standardised and interchangeable with other goods of the same type.  Examples of commodities include gold, silver, oil, natural gas, agricultural products, and base metals. 

Financial instruments can be linked to commodities in certain cases. For instance, financial instruments like futures and options contracts can be based on the value of commodities.  Traders and investors use these derivatives to speculate on or hedge against price movements in commodities.  Some financial instruments are specifically designed to track the performance of a commodity or a basket of commodities.  Exchange-traded funds (ETFs) and commodity-linked notes are examples of such instruments. 

A financial instrument is a broader category that encompasses various tradable assets, while a commodity specifically refers to raw materials or primary agricultural products.  However, financial instruments can be created based on the value of commodities, allowing investors to gain exposure to commodity price movements or manage related risks.  In the case of carbon credits, it can become a commodity, and because of the nature of the contracts, and the possible derivatives, it can become a financial instrument. 

At the moment, however, there are key differences between the commodities markets and the carbon markets.  For example, commodities have defined rules on standards and regulations that must be adhered to.  The carbon markets lack that.  The standards are evolving, and there are different levels of credibility in the different markets.  This explains why the EU ETS alone takes up more than 90% of all the compliance carbon markets, despite there being around 30 such markets. 

Commodities are abundant enough that while changes in supply and demand will influence price, there is still liquidity in the market.  That is not the reality with carbon credits.  In fact, as we push towards a more stringent compliance regime, to pave the way for rated carbon credits, we will face an initial shortage oof such carbon credits because there are not enough compliance credits to meet the expected exponential rise in demand due to the implementation of the carbon tax globally. 

While we may refer to carbon credits a commodity, commodities are generally raw materials that may be consumed to produce finished products.  The commodity itself is a physical product.  That product may be tested, assessed, and validated, which creates confidence in its fungibility.  Carbon credits are smart contracts, sometimes on a blockchain.  They are intangible products based on a physical asset, the carbon sink.  It is because of this intangibility that the market confidence for carbon credits can only be based on the stringent compliance standards and regulatory framework.  It is this point that precludes voluntary credits from being considered either a viable commodity or a financial instrument. 

The intangibility of carbon credits is what feeds the inherent uncertainty of the product.  This is what needs to be addressed.  Analysts, experts, and market observers have advanced the idea that carbon credits are like bonds.  This is a conceptual comparison, an analogy used to highlight certain financial characteristics that carbon credits and bonds may share, such as tradability, market value, and the potential for generating returns. 

Like bonds, carbon credits can be bought and sold in markets, and their value can be influenced by supply and demand dynamics.  Both financial instruments have the potential to provide financial benefits, although the mechanisms through which they do so differ.  This leads to the debate whether carbon credits should be treated more like bonds.  This implies that market underpinnings such as ratings, compliance standards, regulatory audits, and insurance drive pricing and risk scoring.  They differ in significant areas.  Bonds represent debt issued by governments, municipalities, or corporations.  When an investor buys a bond, they are essentially lending money to the issuer in exchange for periodic interest payments and the return of the principal amount at maturity. 

Investors in bonds receive periodic interest payments as income, and they are typically repaid the principal amount at maturity.  Carbon credits do not generate periodic income.  Their value is associated with their ability to offset or reduce greenhouse gas emissions.  Bonds are issued by governments, municipalities, or corporations to raise capital.  The issuer has an obligation to repay the principal amount and make interest payments according to the bond’s terms.  Carbon credits are generated by projects that reduce or offset emissions.  The entities undertaking these projects may sell the credits to generate revenue, but there is not a direct obligation to repay a principal amount as with bonds. 

In any case, whether we consider carbon credits a commodity or financial instrument or both, a key contention is the lack of trust in the quality of the carbon credits, and the associated reputational risk for buyers and investors.  Buyers and investors are forced to conduct extensive amounts of due diligence prior to executing any carbon credit transaction, which adds to cost.  Because of this variance in due diligence in the absence o framework, there is no fungibility.  There is also the challenge for buyers to align their due diligence requirements to wider message on net zero strategies, and Sustainable Development Goals (SDGs).  In the course of this, there is a lack of understanding, in many quarters, on the differences between reduction carbon credits, avoidance carbon credits and removal carbon credits. 

There are specific areas that need to be addressed, as we work towards fungibility in the carbon market.  We cannot achieve fungibility for all compliance carbon offset credits, but we can have fungibility within classes.  That means we have to class them according to type of project.  These include cookstove offsets, renewables, afforestation, reforestation, biochar, peatland, direct air capture, and green and blue sequestration, among others.  Some of these types are not suitable for the compliance market.  For example, cookstove offset projects are responsible for millions of junk credits. 

As part of the verification and validation process, we need to consider location, because that has a direct correlation to credibility.  From location, we can consider political risk, regulatory risk, local community engagement, benefit-sharing, relevance to buyer’s business; geological risk such as natural disaster, corruption, and even project viability.  This is especially important when we see this in light of the SSGs. 

In summary, we need to identify the types of carbon credits for the compliance market before we create a regulatory framework that encompasses the points of contention to be addressed.  We need to identify, qualify and quantify the risks.  We need a wide variety of strategic partners from regulators to central banks to project owners to buyers before traction can be achieved.  From this, we need to work towards a rating system for carbon credits, so that they can be rated, and eventually made investment-grade.  When we have that, we can apply for carbon credits to be recognised as financial instruments by elect central banks, and made fungible.

The Next Step for Carbon Credits

The following is the original draft of the article written for the Business Times, by Ng Kin Foong, Chief Executive Officer of Red Sycamore and I.  The article was polished by Gwen Wanda Ling Poon Wah, Communications Director of ADK Connect Singapore Pte. Ltd.  She was invaluable in getting the article to print. 

Twenty-six years after the Kyoto Protocol, efforts to end global climate change have been slow, because it is expensive, and politically unpopular.  Bloomberg’s green-energy research team estimated, in July 2023, that the cost of achieving a net-zero world would cost US$196 trillion in investments by 2050.  Governments have prioritised immediate concerns such as rising food costs and combating inflation over combating the climate crisis and meeting net zero targets.  As a result, climate commitments have not been kept, and we are experiencing the tragedy of the commons while facing an existential crisis. 

How then should the world move towards halting the climate crisis?  Enter carbon credits.  The clean development mechanism framework designed carbon credits to incentivise developing nations to protect the environment while pursuing economic growth.  The intent is to create a win-win model for saving the environment without short changing developing countries.  The premise of carbon credits is conceptually sound, but many feel that the implementation of carbon credits has been beset with problems. 

In recent months, the media has been awash with bad news on voluntary carbon credits, with hundreds of millions of dollars’ worth of credits generated from environmental projects being invalidated.  Detractors say that projects set up for creating carbon credits are often based on vague predictions, can cause community conflicts, and do not create additional climate benefits.  Yet, this does not recognise the reversed Greenhouse Gas (GHG) effect of such projects on the climate and its benefits.  The world still needs carbon credits, and proponents of carbon credits are still pushing for it.  After all, carbon credits are a vital part of the strategy to mitigate the growth in GHG that comes from economic development, incentivising businesses to adopt environmentally sustainable practices that save the environment.  Governments implement a carbon tax for companies that are heavy polluters, forcing them either to purchase carbon credits, reduce their GHG emissions, or pay hefty fines.  This compels companies to reduce their carbon footprint and helps those with greener processes become more competitive. 

Then why are governments not implementing carbon credit systems globally?  According to the National Climate Change Secretariat Singapore, only 47 countries have national jurisdictions with carbon pricing, or compliance markets. Countries are reluctant to implement carbon taxes amidst the current global economic climate of inflation, as the cost of business passes on to consumers.  As the world grapples with the more urgent concerns of keeping food affordable and keeping inflation manageable, implementing a carbon regime has taken a back foot, slowing down the investments in carbon initiatives and delaying legislation. 

To make things more complicated, countries worldwide do not have a unified carbon system.  This creates uncertainty, especially amongst companies which operate across national jurisdictions.  How can they partake in the carbon credit system if they do not have clarity?  To illustrate this point, shipping companies prefer to buy blue carbon credits locally as their business impacts the ocean where they sail.  Yet, if they sail between Europe and Singapore, where should their blue credits come from?  The lack of good projects with strict regulatory oversight across the jurisdictions where these companies operate definitely hinders the development of the private market for carbon credits. 

If governments are moving slowly, why does the private sector not step up?  With the lack of information, consensus, and clarity of the international community on the processes that create carbon credits, voluntary market development has been hampered by bad quality credits, poor regulatory oversight, and a lack of credit fungibility across jurisdictions.  For example, Verra, the world’s largest carbon credit certification company certifying 75% of all carbon offset credits in the market, was forced to invalidate billions of dollars’ worth of credits after an investigation by the Guardian and other agencies in January earlier this year.  Until these challenges are addressed, investment will not pour into carbon projects from the private sector. 

Yet, this does not mean carbon credits do not work.  These challenges faced by the carbon credits market are neither new nor unforeseen.  New financial mechanisms are often introduced voluntarily to gauge market reaction and its effects before legislation comes in to protect investors.  These legislated products then become the new standard from which the market develops.  Likewise, the development of the carbon framework is currently underway, and is far more important than many realise.  If we do not implement the carbon regimes properly, the entire carbon credit system will be discredited before it even has a chance to mature. 

New Carbon Exchange Mechanism Needed

What can we expect moving forward?  With more illuminating information gleaned from scientific research and best practices in ESG projects, regulations are expected to tighten while carbon credits evolve into financial instruments.  Carbon credits generated from such projects will be rated based on the project’s impact on both the planet and the people within the communities residing near the project, and those with the highest ratings will command the highest prices.  When we have investment-grade carbon credits, we will see the development of a secondary market to trade those carbon credits.  That means we will have investment-grade credits on a blockchain, futures, options, even ETFs.  A carbon credit, as an asset class, will generate the sort of revenue to fund the actions to fight climate change.  They will be the new standard, as voluntary credits become niche. 

For this to work, we need to see a new carbon exchange mechanism.  Currently, carbon credits are not fungible across the different jurisdictions due to a lack of consensus within the international community on the regulatory framework.  This discussion requires partners from the private sector, and private funders.  What we need right now is a deeper discussion on this, and a framework in place to move towards these investment-grade carbon credits.  Fortunately, finance is one of the themes that will be discussed at COP28 in Dubai in December.  We will expect to see a tightening of regulatory requirements, a single or unified verification and validation authority, and one unified international standard to lay the groundwork for this mechanism.  Moving in this direction also addresses accusations of greenwashing that plague many voluntary carbon projects, as the tighter regulations prevent a false declaration of value for each project.  At any rate, the certainty that investment-grade credits provide will incentivise the creation of good offset projects that benefit the environment, which is better than not having any offset projects at all. This will also create certainty for investors and catalyse the private sector to finance good projects, moving us closer to reaching our net-zero targets. 

As the market matures, the other argument that abatement is better than offsets will be resolved as different asset classes are created for different types of credits, with the pricing mechanism determining the value of different types of credits generated.  Credits are currently priced based on reliability, impact and cost, which can be made fungible across carbon credit classes.  To curb speculation, governments can give tax rebates to smaller firms in key affected industries, and regulate access to the market, slowing down price inflation caused by carbon taxation and protecting smaller firms. 

The inflationary impact of carbon taxes on the economy is inevitable, but this pales when compared to the cost of climate change.  According to Deloitte, inaction on climate change will cost the world US$178 trillion by 2070.  This must have spurred the European Union to launch the pilot phase of the Carbon Border Adjustment Mechanism, a scheme that will tax carbon-intensive goods imported from outside the bloc, on from 01^st October 2023. 

Implementing carbon taxes and the carbon credit system acts as an insurance policy for the future, because not having it costs way more.  The world is already losing arable land for food production from the USA to Australia, biodiversity in oceans and forests, and natural disasters are becoming more severe from Libya to Canada.  If we do not go green, the world will burn.  The only way we can stop this climate crisis is to have conversations, collaboration, and commitment to international climate goals. 

If handled properly, carbon credits might just be the catalyst for the 5^th industrial revolution: the carbon credit revolution.  

This article is contributed by Terence Nunis, Chief Executive Officer of Equinox GEMTZ, a strategic consultancy, and Kin Ng, Chief Executive Officer of Red Sycamore, which establishes carbon sinks for the creation of investment-grade blue carbon credits.  Both Terence Nunis and Kin Ng will be speaking at the upcoming COP28 in Dubai. 

Note: Essentially, carbon credits are certificates allowing the holder to emit a certain amount of carbon dioxide or other greenhouse gases.  One credit permits the emission of a mass equal to one ton of carbon dioxide.  With the market mechanisms on carbon credits agreed through the Marrakesh Accords, the goal was to limit the increase of carbon dioxide emission by incentivising companies and nations to curb their emissions.  Total annual emissions are capped, and the market allocates a monetary value to any shortfall through trading via an exchange, or through private placement or auctions. 

The original article may be found here: https://www.businesstimes.com.sg/opinion-features/next-step-carbon-credits.

COP28 Warm-Up: Taking Sustainability to the Next Level — Three Conferences Later

On Tuesday, 31^st October 2023, Red Sycamore, in collaboration with Think & Grow, held an exclusive panel discussion at the Mandala Club.  The panel title was “Taking Sustainability to the Next Level.”

Why the Panel was Convened

The carbon market is evolving rapidly.  Genuine contention persists over the direction the market should take, in line with the UN Framework Convention on Climate Change and its various protocols and treaties.  The regulatory framework was, and remains, playing catch-up to realities on the ground.  This creates a considerable grey market of opportunity for startups.  The panel set out to explore these opportunities in depth, drawing on the panellists’ collective experience.  Fighting the climate crisis and generating a genuine return are not mutually exclusive.  This summary reflects the framing given by Ng Kin Foong, Chief Executive Officer of Red Sycamore.

The Panellists

De’Angelo Harris, Partner at Think & Grow, moderated.  Eric Tanoto, Chief Executive Officer of USP Group; Tali Goldman, Founder and Managing Director of Market for Good; and Terence Kenneth John Nunis, then President of Red Sycamore, joined the panel.

The Loss and Damage Fund, Then and Now

The Loss and Damage Fund was the defining financial promise to emerge from COP28, held weeks after this panel convened.  It was intended to compensate vulnerable countries for climate-driven disasters exceeding their own capacity to adapt.  COP28 closed with pledges totalling just over US$600 million.  The initial pledge was smaller than the cost of building the Dubai Expo City venue hosting the conference itself, a comparison that still stings.

COP29, held in Baku in November 2024, set a new global climate finance goal of US$300 billion annually by 2035, widely criticised as inadequate against developing countries’ own request for US$1.3 trillion.  The Loss and Damage Fund reached full operational status at that conference.  COP28’s own commitment to “transition away from fossil fuels” simply disappeared from COP29’s final text, a genuine reversal of the previous year’s hard-won language.

COP30, held in Belém, Brazil, in November 2025, called for mobilising at least US$1.3 trillion annually by 2035, and confirmed operationalisation and replenishment cycles for the Loss and Damage Fund itself.  Adaptation finance commitments were softened to “calling for efforts” to triple by 2035, five years later than earlier drafts had proposed.  More than eighty countries backed Brazil’s proposal for an explicit fossil fuel phase-out roadmap.  It did not survive the final hours of negotiation, and the adopted text still refers only to COP28’s own two-year-old language.

One Structural Win

Article 6’s rulebook, governing international carbon markets, was finalised at COP29.  The Paris Agreement Crediting Mechanism became fully funded and operational at COP30, a full year later.  Carbon markets, the actual commercial mechanism behind blue carbon credits and every conversation this panel explored in 2023, are now credible, scalable infrastructure rather than a negotiating chapter still under construction.  Two years after this panel discussed a market playing catch-up to reality, reality has finally caught up to the market.

The grey market of opportunity this panel identified in October 2023 has, since then, been given genuine regulatory scaffolding, slowly, and only partially.  Finance pledges have grown from a sum smaller than a conference venue’s construction cost to a headline target of US$1.3 trillion a year.  Fossil fuel commitments have moved backwards, then failed to move forward again.  Carbon markets, the mechanism this panel’s own participants were building businesses around, are the one area where three years of negotiation have delivered something concrete.  The opportunity was real in 2023.  It remains real now, and considerably better funded than the sceptics in that room might have expected.

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Terence Nunis | Executive Chairman, Equinox Zenith & Red Sycamore | Author, The 1% Playbook: The Billionaire Cheat Code

Introducing the Panel Session - ESG & Startups

On the 07^th December 2023, Ng Kin Foong, our Chief Executive Officer for Red Sycamore, will chair a panel discussion for the Institute of Electrical & Electronic Engineers GreenTech, Sustainability, & Net Zero Policies & Practices Symposium.  This is a programme in alignment with the United Nations Climate Change 28^th Conference of Partners (COP28), in the Green Zone, at Expo City, Dubai, United Arab Emirates.  The title of the session is “ESG & Startups.” 

The panellists for the session are as follows:

David Chen C. Y.; Chief Executive Officer; AgriG8

De’Angello Harris; Partner; Think & Gro

Dr. Victor Tay; Group Chief Executive Officer; RHT Consulting Asia 

The climate crisis is real, and several government and large multinational corporations worldwide have declared that they will be unable to meet their pledges.  Given that the top-down approach to solving climate crisis is not working as intended, we need to democratize the process by encouraging and enabling more people to be active stakeholders in solving the climate crisis, and explore this blue ocean of opportunity.  Many great ideas and solutions die undiscovered for several reasons.  These reasons include lack of funding, the lack of public acceptance because it runs contrary to common convention, or simply being too far ahead or behind the curve due to the rapid rate of technological advancement.  We need new perspectives from all stakeholders, not just those with access to resources. 

Yet, in the push towards renewables and saving the environment, we often fall short on the social aspect. Lithium batteries are championed for their role in EVs, but the outcomes on the people impacted by lithium mining have been discounted. If such climate initiatives negatively impact peoples’ livelihoods and health, we will lose support from people in the conversation to avert the climate crisis, especially from people on the ground. 

Our goal for this session to for us to have a discussion to arrive at more perspectives for all stakeholders to address problems of climate crisis by democratising the process of looking for solutions.  People need to be sufficiently excited by the opportunity to change the world for the better.  What we should address includes the uncertain international regulatory environment, political interference, and siloed economic agendas hampering funding efforts, as well as the social aspect of environmental initiatives.

Introducing the Panel Session - Carbon Credits: The Next Financial Instrument

On the 08^th December 2023, I will chair a panel discussion for the Institute of Electrical & Electronic Engineers GreenTech, Sustainability, & Net Zero Policies & Practices Symposium.  This is a programme in alignment with the United Nations Clmate Change 28^th Conference of Partners (COP28), in the Green Zone, at Expo City, Dubai, United Arab Emirates.  The title of the session is “Carbon Credits: The Next Financial Instrument.” 

The panellists for the session are as follows:

1.      David Chen C. Y.; Chief Executive Officer; AgriG8

2.      Dr. Vincent Lim Boon Heng; Chief Financial Officer, Asia-Pacific; DataLogic

3.      Dr. Victor Tay; Group Chief Executive Officer; RHT Consulting Asia 

According to the OECD Environmental Outlook to 2050: The Consequences of Inaction - Key Facts and Figures, climate crisis is expected to cost the global economy 5.5% of GDP by 2050.  The number varies according to sources, but as of COP21 according to the World Bank, US$23 trillion will be lost in lost GDP output.  At this point, emission reductions are not enough, and the world is looking for alternative solutions.  We need to find a way as a united world to make this work.  For carbon credits to work, we need to consider expanding the compliance market to include high-quality investment-grade carbon offset credits.  Given the recent greenwashing scandals, coupled with the existing rating agencies that are not uniform in their processes, established global financial rating standards need to be set up for carbon credits in both the compliance and voluntary markets. 

All stakeholders should work towards a sustainable framework to create investment-grade, rated carbon credits, so that we can support a secondary market as a source of revenue.  Carbon credit derivatives would generate interest in the trade, create a new class of financial instruments, and attract a new influx of funding.  The capital injection could be the start of the 5^th industrial revolution: a post climate change world.  We need the buy in of the private sector through an appeal to self-interest, not altruism, as we move away from traditional sources of energy into renewables.  One of the fastest ways to achieve this is through a mature carbon trading market. 

Our goal for this session is to provoke a deeper conversation with stakeholders on the need for investment-grade carbon credits, a unified global rating system, and pivoting carbon trading towards high-quality investment-grade offsets.

COP28 to COP30: What Actually Happened After the Promises

From 30^th November 2023 to 12^th December 2023, the United Nations Climate Change 28^th Conference of Parties convened in Dubai.  Red Sycamore attended.  As then President of the Board and Chief Executive Officer of Equinox GEMTZ, I chaired a panel on “Carbon Credits: The Next Financial Instrument.”  Ng Kin Foong, Chief Executive Officer of Red Sycamore, chaired the panel on “ESG & Startups.”  Both panels ran in the Green Zone, under IEEE.  Two further conferences have taken place since.  The record of what those promises became is worth reading against what was said at the time.

We were past the point of climate change then, and should have called it what it is: a climate crisis.  We were not meeting our climate goals, and Red Sycamore’s position remained that investing in blue carbon credits addresses biodiversity, food security, and water table salination simultaneously.  Blue carbon refers to the carbon stored in coastal and marine ecosystems.

The Kunming-Montreal Framework, and What Followed It

COP28’s conversations built on the Kunming-Montreal Global Biodiversity Framework, adopted by almost 200 countries at the 15^th Conference of Parties to the UN Convention on Biological Diversity in December 2022, a plan to protect and restore nature by 2050.  The framework set targets for reducing threats to biodiversity, ensuring ecosystem resilience, and mainstreaming biodiversity across government and society, alongside the need for finance, capacity-building, and technology transfer.

COP28 hosted the first Global Stocktake under the Paris Agreement, a two-year process, beginning at COP26, assessing where the world stood on climate action.  The findings were blunt.  The world needed a peak in global greenhouse gas emissions by 2025, a 43% reduction by 2030, and a 60% reduction by 2035, against 2019 levels, to hold warming to 1.5°C.  Parties agreed at COP28 to submit updated climate plans by COP30, aligned with that same 1.5°C limit.  Parties also agreed to transition away from fossil fuels in the energy sector, and to triple renewable energy capacity by 2030, an outcome later branded the UAE Consensus.

COP29, Baku: The Year the Language Changed

COP29 convened in Baku in November 2024.  It set a new climate finance goal of US$300 billion annually by 2035, widely criticised as inadequate against developing countries’ own request for US$1.3 trillion.  Multilateral development banks separately pledged US$120 billion annually by 2030 for low- and middle-income countries.  The Loss and Damage Fund reached full operational status.  Article 6’s rulebook, governing international carbon markets, was finalised, a genuine structural milestone for the compliance carbon market Red Sycamore was built around.

The damage sat elsewhere.  COP28’s own commitment to “transition away from fossil fuels” simply vanished from COP29’s final text.  No mention.  Sustainable Energy for All called it plainly: a reversal of the hard-won progress made the year before.

COP30, Belém: Some Ground Recovered, Some Deliberately Softened

COP30 convened in Belém, Brazil, in November 2025.  The final text called for mobilising at least US$1.3 trillion annually by 2035 for climate action, alongside operationalising and confirming replenishment cycles for the Loss and Damage Fund.  Adaptation finance commitments were softened to “calling for efforts” to triple by 2035, five years later than earlier drafts had proposed.  More than 80 countries backed Brazil’s proposal for an explicit fossil fuel phase-out roadmap.  It did not survive the final hours of negotiation.  The adopted text refers only back to the UAE Consensus from COP28, two years stale.  Brazilian scientist Dr. Carlos Afonso Nobre warned, before the final plenary, that fossil fuel use must reach zero by 2040 to 2045 to avoid warming of up to 2.5°C, a trajectory he said would mean the near-total loss of coral reefs and the collapse of the Amazon rainforest.

One structural win emerged from COP30.  The Paris Agreement Crediting Mechanism became fully funded and operational, a full year after Article 6’s rulebook was finalised at COP29.  Carbon markets, the actual commercial mechanism blue carbon credits depend on, are now credible, scalable infrastructure, not merely a negotiating chapter.

The Money, Set Against the Actual Cost

COP28 pledges to the Loss and Damage Fund totalled just over US$600 million by the conference’s close, against a cost the Swiss Re Institute projects could wipe out up to 18% of global GDP by 2050 if temperatures rise 3.2°C.  Asian economies face the sharpest exposure, a 5.5% GDP hit in the best case, 26.5% in a severe one.  At the time that the initial pledge was smaller than the cost of building the Dubai Expo City venue hosting the conference itself, a damning comparison that still holds after two further COPs of incremental progress.

Why Blue Carbon Still Matters More Than Ever

Seagrasses, mangroves, and salt marshes remain among the most effective blue carbon reservoirs available, sequestering carbon dioxide in biomass and sediment, with below-ground rhizomes and roots trapping organic carbon for extended periods.  Seagrass meadows cover a small share of the ocean floor yet account for a disproportionately large share of coastal carbon sequestration, while also stabilising sediment against erosion and sustaining biodiversity for the marine organisms living within them.  These ecosystems remain under sustained threat from coastal development, pollution, and climate change itself, and their degradation releases the very carbon they had locked away.

Article 6 regulates voluntary cooperation among countries pursuing their Nationally Determined Contributions, incorporating both market mechanisms and non-market approaches across finance, technology transfer, and capacity building.  With PACM now operational following COP30, the pathway toward fungible, compliance-grade blue carbon credits has moved from theoretical to structurally real.  Red Sycamore’s own position, built on measurable, verifiable coastal carbon projects, sits directly inside the infrastructure two additional years of negotiation have finally activated.

There is still much work to be done.  COP28 promised a transition away from fossil fuels.  COP29 dropped the phrase entirely.  COP30 recovered some of the finance ambition while failing, again, to secure an explicit phase-out roadmap.  To address this crisis, to advocate for real sustainability, saving the oceans remains the key to continued quality of life, and it remains the one commitment across three consecutive conferences that nobody has yet found a way to quietly delete from the final text.

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Terence Nunis | Executive Chairman, Equinox Zenith & Red Sycamore | Author, The 1% Playbook: The Billionaire Cheat Code