Voluntary Credits Spark Integrity Clash at Paraguay-Taiwan COP31 Session

At a COP31 side event on Nov. 10, 2026, the sharpest debate was over which carbon credits deserve to count, not whether Paris Agreement carbon markets are growing. Paraguay and Taiwan's Industrial Technology Research Institute (ITRI) used the session to present a Chaco forest restoration pilot. Meanwhile, the keynote expert warned governments against automatically accepting voluntary credits, and a project developer and a journalist pushed back. No formal decisions were taken.

• Credit integrity split: Keynote expert says voluntary credits shouldn't automatically qualify; developers push back
• 113 Article 6.2 agreements, but only about 150,000 credits formally issued
• Chaco restoration pilot will test a Taiwan-Paraguay carbon transfer pathway
• Paraguay lacks a monitoring system and seeks partners to meet its 2035 climate target
• Taiwan's carbon fee near $10 called too low to drive demand for overseas credits

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Integrity vs. Speed: The Voluntary Credit Fight

The basics: Article 6 of the Paris Agreement lets countries trade emissions reductions. Under Article 6.2, countries strike bilateral deals to transfer internationally transferred mitigation outcomes (ITMOs). The Paris Agreement Crediting Mechanism (PACM) is the UN-supervised alternative. Voluntary credits are issued by private standards such as Verra and Gold Standard.

Why it matters: The standard governments accept affects the reputation, price and availability of nature-based credits. That puts land-use projects at stake, which Paraguay identifies as its largest mitigation opportunity.

Where things stand: Dr. Axel Michaelowa of Perspectives Climate Group said PACM has five approved methodologies and 30 pending. Its registry has been delayed to the first quarter of 2027. He also said that the required downward adjustment of baselines is being applied unevenly.

Citing past scandals in the voluntary market, Michaelowa drew a firm line. "I hold that voluntary credit should not automatically qualify," said Michaelowa.

He also flagged a deeper problem: the difficulty of proving that buying credits actually pushes buyer countries to cut more. "I think this is probably the Achilles heel of Article 6, how to make the proof that it contributes to ambition increase," said Michaelowa.

The other side: Vinicius, a journalist with Quantum Commodity Intelligence, asked whether PACM is enough for Latin American countries to proceed with Article 6. He noted it has few approved methodologies and none for nature-based solutions.

Nick O'Brien, a project developer with Quadris, argued that the voluntary market's scandals were overstated. He also said buyer commitments for REDD+ projects, which aim to reduce emissions from deforestation and forest degradation, are scarce. "What's the path forward for project-focused REDD+ in your mind?" asked O'Brien.

Audience members broadly argued that REDD+ and other nature-based solutions are the lowest-hanging opportunity, and that PACM is moving too slowly to meet that demand. The panel committed to follow up on the PACM questions rather than settle the debate on the spot.

Decisions and stakeholder impacts: No vote was taken. REDD+ and nature-based developers face continued uncertainty over whether their credits will count. Host governments such as Paraguay must decide between authorizing voluntary-standard credits now or waiting for PACM's slower pipeline. Buyers are left weighing integrity risk against scarce supply.

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Article 6 by the Numbers: Big Count, Thin Delivery

Why it matters: Few buyers, limited registries and critical review findings could slow credible carbon trading. That directly affects sellers like Paraguay.

Where things stand: Michaelowa's keynote showed how market activity is outpacing the systems needed to support it:
- Agreements: 113 Article 6.2 agreements have been signed, involving 58 selling countries but only 10 buying countries.
- Buyers: The European Union intends to rejoin the market as a buyer. Japan's Joint Crediting Mechanism counts 147 projects.
- Credits issued: Only about 150,000 ITMOs have been formally issued.

The paperwork is lagging further. UN technical expert reviews found inconsistencies in every report examined. Only a third of countries have authorization arrangements in place, and just 15% have systems to track ITMOs.

Decisions and stakeholder impacts: With 58 sellers chasing 10 buyers, selling countries face a buyer's market. Countries without authorization and tracking systems risk being shut out of deals entirely, which raises the stakes for Paraguay's monitoring push.

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Chaco Pilot: A Test Case for Taiwan-Paraguay Credits

Why it matters: The pilot could define the evidence and procedures needed for future carbon credit transfers between Taiwan and Paraguay.

Where things stand: Tanchi Yang of ITRI presented a native forest restoration pilot in Paraguay's Chaco region with Paraguayan firm Adenio. The two parties signed a memorandum of understanding in October 2025.

The pilot uses VM0047, a methodology for afforestation, reforestation and revegetation projects. It combines field and satellite data. Researchers are examining four questions:
- Baseline: what would happen without the project
- Net removals: how much carbon the restored forest actually absorbs
- Financial additionality: whether the project depends on carbon revenue to happen
- Social safeguards: protections for affected communities

The pilot is designed to test three steps:
- whether the methodology is recognized
- how the host country reviews the project
- the full Article 6.2 pathway

It is also working alongside Paraguay's carbon strategy and its Article 6 manuals on eligibility, accounting and authorization.

Paraguay's side: Officials led by Ethel Estigarribia, National Director of Climate Change at the Ministry of Environment and Sustainable Development, outlined Paraguay's national climate plan, known as NDC 3.0. It targets a 20% emissions cut by 2035, conditional on international support. Belén Acosta and Luisa Cáceres of the Ministry of Environment described the plan's details:
- Measures: 27 mitigation measures in total.
- Top sector: Agriculture, forestry and other land use holds the highest potential.
- Law: Law 7190 governs carbon markets.

Acosta said Paraguay does not yet have a system for measurement, reporting and verification (MRV) of emissions. She said the country is open to cooperation. Its priorities with ITRI include digital MRV, energy, industry and agriculture.

Decisions and stakeholder impacts: This was an informational presentation with no formal decisions. Reliable MRV is the foundation for registering credits under Article 6, so Paraguay's monitoring gap is the key bottleneck for the Chaco pilot and any credits that follow.

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Taiwan's Bilateral Workaround Meets a Weak Price

Why it matters: Taiwan's domestic price signals and rules will determine whether Taiwanese buyers can, or want to, use Paraguayan credits.

Where things stand: Taiwan is not a party to the UN climate convention, so it relies on bilateral Article 6.2 arrangements. Speakers said Taiwan's Ministry of Environment has sought public opinion on rules for recognizing overseas credits. They described the government's approach as cautious.

The weak link is price. Speakers called Taiwan's carbon fee, near $10, insufficient to drive companies to buy credits. Michaelowa urged officials to "consider raising the carbon fee if you want to use Article 6 at least as a compliance tool for the private companies."

Decisions and stakeholder impacts: Professor Fan, the panel moderator, pointed to corporate buyers such as tech firms as a market force in their own right. That suggests voluntary corporate demand could move faster than government policy. Without a stronger price, Taiwanese demand for Paraguayan credits may depend on those companies' own climate commitments.

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Looking Ahead

• PACM registry: Expected to launch in the first quarter of 2027.
• Panel follow-ups: Panelists committed to follow up on adaptation and PACM questions.
• Chaco pilot: Watch whether the pilot's findings shape Paraguay's authorization process and Taiwan's rules for recognizing overseas credits.