Two developments this week point to a carbon border landscape that is gaining both regulatory depth and global reach. In Brussels, a draft regulation proposes recognising Article 6 carbon credits under the EU's Carbon Border Adjustment Mechanism (CBAM). In Seoul, a government agency is mobilising domestic companies to get compliance-ready.
Business leaders from the EU and South Korea are meeting over a newly planted forest, symbolising cooperation amid evolving carbon regulations. AI generated picture.
A compromise text circulated by Cyprus, which currently holds the EU's rotating presidency, proposes that carbon credits issued under the Paris Agreement's Article 6 mechanisms be counted as an effective carbon price paid in exporting countries. Under the current CBAM framework, EU importers of carbon-intensive goods must surrender CBAM allowances for the emissions embedded in their products—unless they can demonstrate that a carbon price has already been paid at the point of production. Article 6 credits do not presently qualify for this deduction.
The draft, dated 24 March, would empower the European Commission to set the conditions under which such credits are recognised. Crucially, voluntary purchases would not qualify: 'The definition of carbon price in the CBAM Regulation essentially covers compliance schemes, in form of carbon taxes explicitly levied on the carbon content and binding emission trading systems (ETSs).'
Should governments and the European Parliament back the proposal, exporters operating under domestic emissions trading systems—such as China's ETS—could potentially use Article 6 credits to meet part of their carbon costs, with those costs then deducted from CBAM obligations. Any deduction would be calculated in monetary terms, based on certified evidence of the price paid, rather than on emissions volumes.
The draft also specifies that Article 6 credits used this way would not count towards the EU's own Paris Agreement targets, drawing a clear line between CBAM compliance flexibility and the EU's internal emissions accounting. An emergency suspension clause for goods facing sharp price spikes or supply chain disruptions is also retained in the text, applicable for up to two years.
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In parallel, South Korea's Korea Environment Corporation (K-eco), operating under the Ministry of Environment, has launched a government-backed consulting programme to help domestic companies navigate CBAM requirements. Up to 100 companies will receive free on-site support, including data assistance and one-on-one training to calculate emissions across full production cycles—from raw materials through to final export.
The programme targets small, medium, and mid-sized companies exporting CBAM-covered goods to the EU, as well as producers of intermediate materials used in those products. Applications are open from 30 March to 26 April, with selected companies announced in early May. The programme runs through to December.
The stakes are significant: the EU accounts for roughly 10% of South Korea's total exports, making it the country's third-largest market. Future expansion of CBAM coverage to sectors such as semiconductors could deepen those implications further.
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At Green Earth, we develop and manage nature-based carbon projects that generate verified carbon credits traceable to real environmental outcomes. As regulatory frameworks evolve—including compliance-linked demand signals such as those emerging from CBAM—the integrity and verifiability of carbon credits becomes a defining factor.
