A new analysis by the Project Developer Forum (PD Forum) has raised serious questions about the long-term viability of climate projects in developing economies under the emerging Paris Agreement Crediting Mechanism (PACM). Conducted in collaboration with the International Emissions Trading Association (IETA), the study examines how PACM’s stringent baseline rules, intended to ensure scientific accuracy and environmental integrity, could unintentionally suppress carbon credit generation, discouraging investment in crucial emission-reduction projects across Africa.
The research centers on an improved cookstove project, one of the most widespread carbon-financed interventions on the continent. Using detailed modelling, PD Forum found that while newer methodologies under major standards such as Gold Standard, Verra, and the Clean Cookstove Alliance (CLEAR) already incorporate highly conservative parameters, the additional baseline adjustments mandated by PACM would further reduce carbon credit issuance by an average of 27 percent. Combined with existing conservative market practices, the total reduction compared to older Clean Development Mechanism (CDM) methods could reach 76 percent.
This outcome reveals a deep structural challenge for the carbon market’s future in Africa. The improved cookstove sector, vital for both climate mitigation and public health, relies heavily on carbon finance to sustain production, distribution, and long-term maintenance. In Kenya, Tanzania, and Ghana, such projects have enabled millions of households to shift from charcoal and firewood to cleaner cooking technologies. The Clean Cooking Alliance estimates that nearly 900 million Africans still rely on biomass fuels, with exposure to indoor air pollution contributing to more than 500,000 premature deaths annually. Carbon revenue has been instrumental in scaling solutions that governments alone cannot fund.
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However, as PD Forum’s analysis demonstrates, an excessive tightening of crediting rules could strip these projects of financial feasibility. For small enterprises operating in low-income markets, a 27 percent reduction in credit volumes can mean the difference between continuity and collapse. The Forum warns that such outcomes would limit participation from local developers and micro-businesses, the very actors the Paris Agreement encourages to engage in climate mitigation under Article 6.4.
The issue is not opposition to rigorous accounting. On the contrary, PD Forum and IETA both endorse PACM’s commitment to environmental integrity. Their concern lies in the uniform application of conservatism across all project types, regardless of whether those methodologies have already self-corrected. In the cookstove test case, for example, parameters such as the fraction of non-renewable biomass (fNRB) and baseline stove efficiency had already been recalibrated downward by 60–70 percent in recent years to reflect real-world data. When PACM’s structural deductions were layered on top, the resulting emission reductions no longer matched practical project performance, producing a model that was environmentally sound on paper but economically unworkable in practice.
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This tension carries broader implications for Africa’s sustainability agenda. The continent accounts for less than 4 percent of global emissions yet faces some of the harshest climate impacts. Mobilizing finance for adaptation and low-carbon development remains a central challenge. According to the African Development Bank, the continent needs at least $250 billion annually by 2030 to meet its climate goals but receives less than one-eighth of that amount. Carbon markets, if effectively structured, could fill part of this financing gap by channeling private investment into renewable energy, clean cooking, reforestation, and climate-smart agriculture.
The PD Forum’s findings suggest that poorly calibrated rules could instead narrow these opportunities. If conservative crediting limits make small projects uneconomical, market participation could consolidate around a few large industrial players, defeating the purpose of equitable climate finance. Such concentration would also undermine co-benefits such as job creation, local enterprise growth, and women’s empowerment that smaller community-based projects typically deliver.
In response, PD Forum and IETA have urged the Article 6.4 Supervisory Body to adopt a more balanced and context-specific approach. Their recommendations include conducting over-correction risk assessments, prioritizing accuracy over blanket conservatism, and introducing proportionate flexibility for projects in Least Developed Countries (LDCs) and Small Island Developing States (SIDS). They also propose establishing a technical dialogue platform where policymakers and practitioners can jointly refine methodologies based on real project data.
Such reforms would not dilute environmental integrity; rather, they would align it with practical implementation. As PD Forum’s letter to the Supervisory Body notes, “Feasibility and broad participation must be part of the equation if PACM is to deliver at scale.” The call is not for leniency, but for precision, ensuring that climate finance mechanisms remain accessible to those delivering tangible benefits on the ground.
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The findings arrive at a critical moment for Africa’s carbon landscape. Countries such as Ghana, Kenya, and Rwanda are finalizing frameworks to operationalize Article 6 trading, while private developers are piloting digital measurement systems to enhance transparency. The promise of these markets lies in their ability to link local innovation to global capital. But without regulatory flexibility, the emerging system risks pricing out the very projects that embody sustainability in its most human form: affordable clean energy, restored ecosystems, and climate-resilient livelihoods.
Ultimately, the PACM debate reflects a defining question for global climate governance: can the pursuit of absolute integrity coexist with the realities of development finance? For Africa, the answer must be yes, but only if the rules of engagement recognize that integrity without inclusivity is a hollow victory.
