As governments grapple with the practicalities of turning international carbon market commitments into workable national systems, Ecosecurities chief executive officer Pablo Fernandez highlights the need for stronger demand commitments from buyers, localised regulatory frameworks, and blended finance solutions to drive climate action and market maturity.

Environmental Finance: What is the current state of the overall market and how is it shaping your priorities?

Pablo Fernandez: The market is still lagging behind earlier expectations, particularly in terms of government readiness, participant maturity, and progress on Article 6. This has pushed us to rebalance our focus toward market-enabling elements - supporting regulatory and policy development, helping countries understand implications, and connecting local frameworks with Article 6 requirements.

According to the World Bank, there are now 75 carbon pricing instruments globally, covering about a quarter of emissions and raising over $100 billion annually. More than 50 projects are claiming to use Article 6 mechanisms to increase ambition and implementation, but overall readiness remains below where we expected it would be right now.

EF: The market has seen many obstacles to maturity. How can they be overcome?

PF: We're seeing a shift from a voluntary carbon market largely decoupled from national government decarbonisation priorities and oversight, toward an Article 6-linked compliance market where every transaction must be reviewed, authorised, and aligned with national contributions. But many governments are still not ready – lacking national authorisation frameworks, clear rules for mitigation outcome approvals, or capacity for monitoring and integrity.

From a demand perspective, the carbon market remains highly fragmented: most credits are avoidance-based; removal credits are scarce; and standards and pricing vary widely across countries, with very limited fungibility between the markets. This complicates capital flows and deters long-term project investment.

In addition, more recently, we have seen many actors, from supply and demand sides, aligning their demand with the five-year cycles of the Paris Agreement – in terms of Nationally Determined Contributions (NDC) updates, etc. That is often too short a timeline for projects – especially removal or nature-based projects – that require longer-term finance, planning, and stable policy signals.

EF: How do you reconcile and align your internal discussions with the external realities?

PF: The external environment is undeniably complex, with many factors influencing the global discourse. While there are still debates around climate science in some countries, the overall momentum toward sustainable action continues to grow.

Around the world, many regions are increasingly taking proactive climate action, though approaches are often fragmented. Africa, through the African Union and the recent Africa Climate Summit, is driving investment in locally led initiatives. Singapore has raised its carbon tax to encourage low-carbon technologies, while South Korea's Emissions Trading Scheme has been gradually opening the market for a wider range of participants. In Latin America, countries such as Chile, Colombia, and Mexico that have implemented carbon pricing in the past and are now upgrading from a carbon tax to more comprehensive Emissions Trading Schemes.

EF: Which projects have you worked on that reflect these changes?

PF: In the early stages of the carbon market, under mechanisms like the Clean Development Mechanism (CDM), the focus was primarily on large-scale industrial projects, such as hydroelectric plants, where emission reductions were relatively straightforward to measure and implement. These projects represented the "low-hanging fruit" of carbon offsetting.

As the carbon market has matured, there has been a significant shift towards more diverse and localised initiatives, particularly those that integrate nature-based solutions. One example is our Carbono Rural initiative in the Paraguayan Chaco. This project promotes sustainable cattle ranching practices, including rotational grazing and the restoration of degraded pastures, to enhance soil carbon sequestration. By improving soil health and implementing climate-resilient agricultural techniques, Carbono Rural not only contributes to carbon removal but also supports biodiversity conservation and strengthens community livelihoods.

This evolution reflects a broader trend in the carbon market, where the emphasis is shifting from large-scale industrial emissions to more localised, small-scale solutions that offer co-benefits for communities and ecosystems and bring together the agendas of mitigation, adaptation & resilience.

EF: Where do the best future opportunities lie in terms of country profile?

PF: There is a trade-off between country risk and willingness to provide corresponding adjustments to international carbon markets. Lower-income countries have a greater need for investment and are more willing to use climate finance, but they also have higher risk perceptions, making it difficult for them to access capital and foreign direct investment (FDI) at scale on the international market. Higher-income countries have lower risk but are less willing to provide corresponding adjustments due to their ambitious NDCs.

Tailored solutions and blended finance help mobilise capital, so public-private partnerships offer a clear path for smaller countries. Low- and Middle-Income Countries (LMICs) and Least Developed Countries (LDCs) are increasingly leading the way in climate ambition and mobilising catalytic carbon finance.

EF: How can we more effectively mobilise investors and governments to further develop the regulatory landscape?

PF: The public sector cannot finance the climate transition alone- we need to use public capital more smartly to attract private investment. By deploying ODA in innovative, catalytic ways -through guarantees, blended finance, and first-loss structures - we can de-risk markets and unlock multiples of private capital. The scale is huge: meeting NDCs and a 1.5°C pathway will require trillions annually in climate finance, with developing countries alone needing up to $6.8 trillion by 2030. Public finance must send clear signals and act as the spark that mobilises the private sector at scale.

EF: How do you see the carbon markets developing in the coming years?

PF: While a single international carbon price isn't imminent, we are seeing blocs of countries establish their own pricing systems- laying the foundation for a more robust, integrated, and dynamic global market. The potential is enormous. Global carbon markets are projected to grow from around $300 billion today to over $1 trillion by 2030, unlocking vast potential to reduce emissions and drive low-carbon innovation.

For more information, see: ecosecurities.com