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The Paris Agreement is referenced in almost every conversation about climate, but it is rarely explained well. It is not a list of fines, a ban on fossil fuels, or a single global emissions target. It is an operating framework. If you work anywhere near sustainability, carbon markets, or climate policy, it is the system you are working inside, whether you know it or not.

What is the Paris Agreement?

The Paris Agreement is the international legal framework, adopted by 195 parties at COP21 in Paris on 12 December 2015, that commits the world to limiting global warming to well below 2°C above pre-industrial levels, while pursuing efforts to stay within 1.5°C. It entered into force on 4 November 2016 and was, for the first time, a binding agreement that brought all nations together to combat climate change and adapt to its effects. 

Why does 1.5°C matter and are we on track?

The agreement's headline ambition is to limit the global temperature rise to 1.5°C above pre-industrial levels. This is not an arbitrary figure. The IPCC's Special Report on 1.5°C concluded that the difference between 1.5°C and 2°C of warming would be measured in substantially more poverty, extreme heat, sea level rise, habitat loss, and drought. 

To limit global warming to 1.5°C, greenhouse gas emissions must peak before 2025 at the latest and decline 43% by 2030. 

We are not on track. The 2025 State of Climate Action report found that not one of the 45 indicators assessed is on track to achieve its 2030 target. That's not a reason to walk away from the framework, it's a reason to understand it well enough to use it. 

What is an NDC and how does it work?

An NDC, Nationally Determined Contribution, is each country's published plan: what emissions it will cut, by when, and by how much, submitted to the UN and updated every five years.

Each round of commitments must be stronger than the last. This is the "ratchet mechanism", the built-in expectation that ambition increases with every cycle. 

The most recent round exposed the gap between design and delivery. The deadline to update NDCs was February 2025, with targets to be achieved by 2035 and most countries missed that deadline. Of those that did submit, only 24 countries had filed 2035 NDC targets as of mid-2025, and only one was 1.5°C-aligned.

The ambition gap is significant. NDCs submitted to date would reduce 2035 global emissions by around 15%, whereas a reduction of 55%, followed by climate neutrality would be needed to reach 1.5°C. 

COP30, held in Belém, Brazil in November 2025, was billed as the moment to turn a decade of promises into delivery. The results were mixed. Over 122 countries submitted new or updated NDCs, and countries agreed to mobilize $1.3 trillion annually by 2035 for climate action, alongside the Global Implementation Accelerator and the Belém Mission to 1.5°C to help countries deliver on their commitments. But hopes that countries would commit to roadmaps to end fossil fuel use were dashed after opposition from petrostates, with the final decision including only voluntary initiatives. The pressure now shifts to COP31, hosted by Turkey later in 2026. 

What are the other pillars of the Paris Agreement?

Carbon mitigation is the headline, but Paris rests on three additional commitments:

- Climate finance, developed countries committed to mobilizing $100bn per year for developing nations. That target was met (late) in 2022, with a larger successor commitment under active negotiation

- Adaptation, the agreement commits all parties to building resilience against climate impacts already locked in, from infrastructure to food systems

- Loss and damage, agreed at COP27, this is a dedicated fund for countries most severely affected by climate impacts beyond what adaptation can address. It is now operational 


 

Frequently asked questions

What is the difference between the Paris Agreement and the Kyoto Protocol? The Kyoto Protocol imposed binding emissions targets on developed countries only and produced limited results. The Paris Agreement replaced it with a universal, bottom-up model in which every country defines and submits its own commitment, covering all parties for the first time.

What does NDC stand for? NDC stands for Nationally Determined Contribution. It is each country's formal climate action plan, submitted to the UN and updated every five years under the Paris Agreement.

What is an ITMO under Article 6? An ITMO, Internationally Transferred Mitigation Outcome, is a carbon credit traded between countries under Article 6.2 of the Paris Agreement. It must be accompanied by a corresponding adjustment, which ensures the underlying emission reduction is only counted once.

Is the Paris Agreement legally binding? The framework and procedural obligations (submitting NDCs, reporting progress) are binding. The emissions targets themselves are nationally determined and self-set, there is no external penalty for missing them, but the transparency and accountability structure creates significant political pressure.

What is the Global Stocktake? The Global Stocktake is a five-yearly assessment under the Paris Agreement of whether the world is collectively on track to meet its climate goals. The first, published in 2023, concluded it is not. The next is due in 2028, making the current NDC round and COP31 the critical near-term tests. 


 

New report coming - The Article 6 Market: Scale, Value and Pipeline

Our upcoming Article 6 Market Report covers the scale, value and pipeline of the market as it currently stands, from the host party authorization gap and CORSIA supply and demand, to CDM transition progress, host government revenue potential, and the developer landscape. Practical insights for buyers, investors, governments and market participants. Out next week, find it here. 


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