Carbon Pricing

Carbon Monetization Pathway for Large-Scale Forest Restoration: A Case Study
Abstract:
This abstract presents evidence from the Upscaling Green Pakistan Programme (UGPP) — a USD 438.5 million national forest restoration initiative that has restored 200,000+ hectares, generated 2.2 million green jobs, and exceeded Bonn Challenge commitments. Assisted Natural Regeneration (ANR) constitutes 60% of the restoration portfolio.

Independent monitoring by the Third-Party Monitoring Consortium (IUCN — Lead, FAO, WWF-Pakistan) has validated success rates of 75–95%. The Carbon Sequestration Assessment Report confirmed 46.66 MtCO₂e sequestered, projecting 96.52 MtCO₂e by 2030 — equivalent to removing 20 million cars annually.

Despite this impact, the programme remains 100% dependent on government budgets. Lack of internal carbon accounting expertise prevents monetization through Verra ARR carbon markets or accessing GCF Readiness Grants.

This submission presents a replicable model to operationalize climate finance — transitioning from government funding to a diversified portfolio of carbon credits, blended finance, and multilateral grants. It integrates GEDSI principles through women-led nurseries, Village Conservation Committees, and benefit-sharing for landless and disabled households.

Findings demonstrate that ecological restoration requires parallel investment in institutional capacity, M&E alignment, and social inclusion to transform verified carbon stocks into sustainable climate action and meet NDC commitments. Assessment supported by BMZ — German Ministry of Economic Cooperation and Development.

Authors:
Muhammad Waqas Khan — Regional Incharge (Punjab), Ministry of Climate Change & Environmental Coordination, Government of Pakistan
Contributions based on institutional reports and independent monitoring data from IUCN, FAO, WWF-Pakistan

Developing the Carbon Market: Operational and Methodological Guidelines/Mongolia’s domestic carbon market scheme for carbon sequestration in rangeland
Two comprehensive guidelines—the Operational Guideline (OG) and General Methodology Guideline (MG) for Rangeland Carbon Sequestration—have been developed under the UNDP SCALA programme to support the establishment of Mongolia's Carbon Market (MCM).
The OG establishes rules and procedures for project registration, approval, and financial management. The MG defines standardized approaches for monitoring, reporting and verifying soil organic carbon (SOC) sequestration and associated greenhouse gas (GHG) emission reductions. Together, they provide the technical and institutional foundation for a credible domestic carbon market, serving as a reference for policymakers and practitioners in designing appropriate governance structures.
The ultimate goal of the MCM is to reduce rangeland degradation, enhance SOC sequestration, and improve herders' livelihoods through sustainable land management practices.
By aligning with international standards, exploring opportunities under Article 6 of the Paris Agreement, and strengthening institutional frameworks, Mongolia can establish a transparent, credible, and reliable system for carbon credit generation and trading that advances both climate mitigation and adaptation goals.
SANAA Enkhtaivan, Research Fellow, UNDP
SARUUL Dolgorsuren, UNDP Mongolia

Are all COPs busted? The role of climate policy events for carbon pricing in compliance and voluntary markets
Patrick Behr¹, Riccardo Cosenza¹, Eric Nowak¹,²,³, Papa Orgen⁴
¹Università della Svizzera italiana Lugano, Switzerland; ²Imperial College London, UK; ³Swiss Finance Institute (SFI), Zurich, Switzerland; ⁴University College London (UCL), UK

We study how four major climate policy events—COP 21 in Paris (2015), the Paris Agreement (2016), COP 26 in Glasgow (2021), and COP 28 in Dubai—affect carbon pricing in compliance and voluntary carbon markets. Using event study methodology, we show that carbon market participants significantly price COP outcomes. Co-integration tests further demonstrate that pricing relationships between compliance and voluntary carbon markets are stable when markets perceive policy outcomes as ambitious and credible, but weaken otherwise. Our results suggest that COPs function as policy-signalling events for carbon markets, with price responses reflecting market assessments of ambition, credibility, and implementation risk.

Systematic assessment of the achieved emission reductions of carbon crediting projects
Carbon markets play an important role in firms’ and governments’ climate
strategies. Carbon crediting mechanisms allow project developers to earn
carbon credits through mitigation projects. Several studies have raised concerns about environmental integrity, though a systematic evaluation is missing. We synthesized studies relying on experimental or rigorous observational
methods, covering 14 studies on 2346 carbon mitigation projects and 51 studies investigating similar field interventions implemented without issuing
carbon credits. The analysis covers one-fifth of the credit volume issued to
date, almost 1 billion tons of CO2e. We estimate that less than 16% of the carbon credits issued to the investigated projects constitute real emission reductions, with 11% for cookstoves, 16% for SF6 destruction, 25% for avoided deforestation, 68% for HFC-23 abatement, and no statistically significant emission reductions from wind power and improved forest management projects.
Carbon crediting mechanisms need to be reformed fundamentally to meaningfully contribute to climate change mitigation.
• Benedict S. Probst (Max Planck Institute for Innovation and Competition; University of Cambridge)
• Malte Toetzke (Max Planck Institute for Innovation and Competition; Technical University of Munich)
• Andreas Kontoleon (University of Cambridge)
• Laura Díaz Anadón, (University of Cambridge; Harvard University)
• Jan C. Minx (Mercator Research Institute on Global Commons and Climate Change; Priestley International Centre for Climate)
• Barbara K. Haya (University of California, Berkeley)
• Lambert Schneider (Öko-Institut)
• Philipp A. Trotter (University of Wuppertal; University of Oxford)
• Thales A. P. West (University of Cambridge; Vrije Universiteit Amsterdam).
• Annelise Gill-Wiehl (University of California)
• Volker H. Hoffmann (ETH Zurich)