UNFCCC Secretariat officials engage in consultations at the podium while as plenary is suspended. (Photo: IISD/ENB – Kiara Worth)
The Bonn Climate Conference (SB62), regarded as a key preparatory meeting ahead of the United Nations Climate Change Conference (COP30) in November, concluded on June 26. Nearly 200 countries agreed to increase the UN climate budget by 10% over the next two years.
However, on Article 6.4 of the Paris Agreement, the overseeing body decided that carbon credits under this mechanism cannot be used for offsetting emissions, potentially discouraging corporate participation in carbon credit development.
UN climate budget to increase by 10%, U.S. covers the largest share
Under the United Nations Framework Convention on Climate Change (UNFCCC), the Bonn technical meeting is held in June to build consensus ahead of the main climate summit. Despite the absence of the U.S. government, due to former President Donald Trump’s refusal to acknowledge climate change, most countries continued to send delegates for discussions.
One of the key outcomes of the meeting was the agreement to raise the UNFCCC’s core budget. Governments agreed to increase the budget to €81.5 million (about US$95.3 million) for 2026–2027, up roughly 10% from the 2024–2025 period.
The United States remains the largest contributor, responsible for 22% of the funding. Bloomberg Philanthropies has pledged to cover the U.S. share to ensure UNFCCC operations continue. China, the world’s second-largest economy, will increase its contribution share from 15% to 20% to reflect its economic growth.
The Bonn Climate Conference (SB62) reach a consensus to increase the UNFCCC’s core budget by 10%. (Photo: UN Climate Change – Lara Murillo)
UN carbon market mechanism under scrutiny
The Article 6.4 mechanism under the Paris Agreement, approved at COP29, aims to establish a global carbon market overseen by the UN. The Bonn meeting discussed further details, and the UNFCCC reaffirmed that carbon credits generated under this mechanism can only be used to fulfill countries’ Nationally Determined Contributions (NDCs), not for corporate offsetting.
In contrast to Article 6.2—where countries can transfer mitigation outcomes through bilateral or multilateral agreements—Article 6.4 seeks a high-quality, transparent carbon market accessible to both businesses and individuals. The resulting credits, known as “mitigation contribution units” (provisionally referred to as A6.4ERs), are tied exclusively to national climate goals.
Because A6.4ERs cannot be used for corporate offsetting, companies may instead focus on reducing their own emissions or pressuring supply chains to decarbonize, removing a major driver for carbon markets. As A6.4ERs provide a new pathway for NDC compliance, future national policies and incentives for corporate carbon credit development remain a critical area to watch.
Overall, nonprofit watchdog Carbon Market Watch criticized the conference for failing to address carbon credit quality concerns, despite the optimistic tone of the negotiations. Other independent think tanks, including the World Resources Institute (WRI) and the Center for International Environmental Law (CIEL), echoed this sentiment and called on nations to adopt a more ambitious stance at COP30 to keep climate goals within reach.
Source: Reuters, Carbon Market Watch, CIEL, WRI
