The Nordics can lead the way in innovative carbon markets

17.06.2025 | Insight

What if the Nordic countries could help shape the future of global carbon markets? Pasi Rinne from NICA explains how Article 6 of the Paris Agreement can help turn ambitious climate goals into real results.

The Nordic countries are collaborating on the operationalisation of carbon markets in line with Article 6 of the Paris Agreement. Developing suitable market mechanisms could enable achievement of the ambitious climate targets, generate significant sustainability impacts and offer new business opportunities.

The Nordic region is characterised by some of the closest international cooperation anywhere in the world. In response to the threats of climate change, the Nordics have also ambitious climate goals. The Nordic Initiative for Cooperative Approaches (NICA) is a collaboration platform that strives to accelerate the implementation of the Paris Agreement, and particularly, the international rule-based market mechanism.

“NICA facilitates knowledge sharing, coordination and collaboration, allowing other entities to get involved and enjoy the benefits.”

“The Nordics have long-standing commitment to advancing sustainable development and climate action globally, and we have played a significant role in establishing the Paris Agreement”, says Pasi Rinne, Senior Strategy Advisor at Nefco and Chair of NICA.

“Article 6 of the Paris Agreement serves as a key mechanism for international collaboration. It enables countries, municipalities and corporations to work together to elevate global climate ambitions and finance impactful climate initiatives that combat global warming. The Nordics are expected to play a pivotal role in operationalising Article 6”.

Market-based mechanisms can make a major impact

Article 6 of the Paris Agreement allows countries to voluntarily cooperate to achieve emissions reduction targets set out in their Nationally Determined Contributions (NDCs). “Carbon market mechanism could offer cost-effectiveness and lead to significantly reduced costs in implementing the NDCs. On the other hand, carbon market can only be a trusted market mechanism if it adheres to the demanding standards being put in place and excels transparency”, Rinne says.

Late in 2024, agreements struck at the UN climate conference COP29 in Baku, Azerbaijan helped set carbon trading standards, laying the foundations for operational global carbon markets. NICA is working to use these new standards to support the scale-up of market mechanisms under the Paris Agreement and attract the private sector to participate in these new opportunities in various capacities.

“The Nordics have a long-standing commitment to advancing sustainable development and climate action globally.”

“My hope is that NICA can help boost the confidence of Nordic governments and other actors to participate in developing carbon markets,” Rinne says, noting that Sweden and Norway as sovereigns are forerunners, and already engaged in the Paris Agreement market mechanisms. “NICA facilitates knowledge sharing, coordination and collaboration, allowing other entities to get involved and enjoy the benefits.”

The Nordics can be the first to take advantage of new standards

The experts at NICA are organising workshops and events, as well as building capacity for Article 6 transactions. Rinne explains that there is a base of knowledge and expertise for this in the Nordics, but that actors need to be made aware of the opportunities that the Paris Agreement includes, and NICA is actively looking for partners with which to collaborate.

“Article 6 of the Paris Agreement enables countries, municipalities and corporations to work together to elevate global climate ambitions and finance impactful climate initiatives.”

“The Nordic region could lead the way in the development of the new carbon market cooperation,” Rinne concludes. “The public sector has the will and the private sector has the technology and knowledge; this is a great opportunity for Nordic businesses and society.”