Are Country-To-Country Deals The Future Of Climate Finance?

Forbes

29-06-2025

This aerial view shows a degraded area of the Amazon rainforest, near the Koatinemo indigenous land, ... More in Para state, Brazil, on June 12, 2025. (Photo by Carlos FABAL / AFP) (Photo by CARLOS FABAL/AFP via Getty Images)
The path to COP30 in Brazil has begun with preparatory talks in Bonn, Germany, where climate finance remains the central issue. Negotiators are working to find financing mechanisms that will help developing nations adapt to climate change and transition to cleaner energy sources.
To draw new monies, climate discussions must evolve—from offsetting emissions elsewhere to reducing carbon pollution at its source.
The U.S.'s absence from these mid-year talks might hint at how tough the road ahead will be. At COP29 in Baku, wealthy nations pledged to provide vulnerable countries with $300 billion annually to help them recover from climate-related damage. But they haven't even met their $100 billion yearly goal at COP21. And the Trump Administration, which withdrew from the talks altogether, has already made it clear that it has no intention of honoring those commitments.
In a conversation, Rachel Rose Jackson of Corporate Accountability didn't mince words: 'The Global North has absolutely no intention of delivering this debt. There is little evidence that carbon markets have led to proven and lasting emissions reductions. They are a dangerous distraction from real solutions. Corporations must be legally required to reduce emissions at source—they can't self-regulate their way to climate responsibility.'
The need for money is staggering. The UNFCCC concludes that developing countries must raise $6 trillion by 2030 to fulfill their promises under the Paris Agreement. Yet many wealthy nations continue to lean on a patchwork of carbon markets—tools that allow them to finance rainforest preservation while continuing to emit greenhouse gases at home. Former U.S. climate envoy John Kerry put it bluntly: 138 countries, responsible for less than 1% of annual CO2 emissions, are at the mercy of just 20 nations that account for 80% of the total.
The voluntary carbon market (VCM) has long been a go-to option for the developed world—a cheaper, politically safer path than direct contributions to emerging economies. While the industry is working hard to revamp its procedures, the model faces mounting scrutiny. A review by Corporate Accountability found that 39 of 50 VCM projects lacked environmental integrity; the remainder were problematic or unverifiable. In short, buying offsets is easier and cheaper than making emissions cuts.
I've served as the Coalition for Rainforest Nations editor, concentrating on sovereign carbon credits issued by countries, not private interests.
Erosion Of Faith
TOPSHOT - An Indian man takes a shower as water leaks from a pipeline in New Delhi on June 6, 2017. ... More - Temperatures are hovering around 45 degrees Celsius (113 degrees Fahrenheit) in the Indian capital, with the cooler monsoon season still weeks away. (Photo by MONEY SHARMA / AFP) (Photo by MONEY SHARMA/AFP via Getty Images)
As faith has eroded, so has value. Nature-based offset prices have plummeted from $10–15 per ton just a few years ago to $3–$6 in 2024–2025. Major buyers like Nestlé, Gucci, and Shell have exited the market, citing concerns over reputational risk and questionable methodologies.
The Global South feels hopeless. Will these nations ever be compensated for protecting tropical forests that absorb carbon emissions— produced mainly by the Global North?
Reform efforts are underway. The Integrity Council for the Voluntary Carbon Market has introduced a two-phase vetting system focused on governance and scientific rigor. The goal is to rebuild trust and distinguish high-integrity credits that could attract renewed investment.
'No one can guarantee it will be perfect,' Nat Keohane, a senior adviser to the council, told me. 'But we can help the market and build confidence.'
If successful, the council believes the VCM could scale to $20 billion–$50 billion annually by 2030; carbon credit prices could be $25 to $30 a ton. Used wisely, these funds could help preserve rainforests, support green transitions, and provide new revenue streams to developing nations committed to protecting carbon sinks.
Carbon credits are not a silver bullet—but they can provide near-term capital as countries and companies decarbonize. Their role is inherently transitional, especially in hard-to-abate sectors like heavy industry or cloud computing. I reported on Microsoft, which holds a majority stake in OpenAI and relies on extensive server farms. To offset those emissions, it is investing in reforestation projects in Panama.
However, this gaping void presents a new opportunity for both the developed and developing worlds to devise new techniques for attracting carbon finance. A more promising approach is for the wealthier nations to engage in bilateral pacts. These country-to-country deals are carried out under Article 6.2 of the Paris Agreement. This provision allows nations to fund climate projects abroad and count the resulting emissions reductions toward their climate goals, provided that strict rules are followed to prevent double-counting of the same carbon credit.
The Clock Is Ticking
The Scarlet Macaw, Ara macao, is a large, colorful parrot found from Mexico to Brazil. This flock ... More was photographed in Costa Rica. (Photo by: Jon G. Fuller/VW Pics/Universal Images Group via Getty Images)
Switzerland has signed carbon credit cooperation agreements with Ghana, Peru, Thailand, Morocco, and Vietnam. Sweden is working on the entire African continent through its Energy Agency and in partnership with the UN Development Program. Specifically, it is funding a $28.2 million initiative to help Kenya meet its climate goals.
'Kenya pursues progressive environmental policies and has set ambitious climate goals, but needs financial support to accelerate its climate transition,' says Sweden's Ambassador to Kenya, Caroline Vicini, in a release.
Other countries are exploring alternative paths. Ecuador, Belize, and Gabon are restructuring national debt in exchange for conservation. Norway and Germany, meanwhile, are bypassing carbon markets altogether and making direct payments for forest protection. Norway alone has pledged $1 billion to Brazil's Amazon Fund and to Indonesia, with payments tied to verifiable emissions reductions.
Still, the question remains: can these new financing mechanisms scale fast enough? For poorer nations, this is not a matter of convenience but survival. Carbon markets, bilateral agreements, and direct aid offer potential pathways; however, the urgency demands that they be ratcheted up now.
Panama's Minister of the Environment, Juan Carlos Navarro, told me that climate change presents the ultimate accountability dilemma: it's everyone's responsibility, which means no one is truly accountable — not even the United States, the world's second-largest CO2 polluter.
The stakes could not be higher. Climate change is already reshaping our world from supercharged hurricanes to sweeping wildfires and historic floods. For the poorest nations, climate finance is not a luxury—it is a lifeline. These countries did not create the crisis. But they are counting on the rest of us to help solve it, requiring innovative tools to lure carbon finance.