Maldives, vulnerable nations tap carbon markets to close $490 billion climate gap

Nothing brings home the urgency of climate change more than living 1.5 metres (5ft) above the rising seas as my country, the Maldives, does. Yet, to cope with climate change, developing nations – like the Maldives and other members of the 74-nation Climate Vulnerable Forum (CVF) – face a major hurdle: money.

The most vulnerable countries need an estimated $490bn a year by 2030 to fund climate strategies covering mitigation, adaptation, and the cost of loss and damage. But climate finance from major emitters remains woefully inadequate, according to Al Jazeera.

“It is an indictment of an outdated global financial architecture that turns a blind eye to those on the climate front lines. What good is a global financial system if it denies the world’s most vulnerable the opportunity to build resilience against climate devastation while others pump out the carbon pollution driving rising temperatures?”

In this context, carbon markets are emerging as a vital tool to mobilise urgent climate finance. The CVF and Vulnerable 20 Finance Ministers (CVF-V20) see carbon markets as a lever that could unlock an additional $20bn annually by 2030 for V20 countries, boosting resilience, reducing economic losses, and supporting sustainable development.

High-integrity, standardised carbon projects could halve the cost of implementing national climate plans (NDCs) while generating revenue for mitigation, resilience, and nature-based solutions. Many V20 countries, rich in forests and other carbon-sequestration opportunities, are well placed to host such projects – yet lack the specialised knowledge, policies, and market infrastructure to fully benefit.

“To minimise the risk of carbon markets exploiting developing economies and maximise potential climate impact and development benefits, climate-vulnerable countries must be empowered to make informed and sovereign decisions about carbon market engagement and management.”

To meet this need, the CVF-V20 is partnering with the Voluntary Carbon Markets Integrity Initiative (VCMI) to help members integrate carbon market access into their climate prosperity plans – multiphase strategies designed to transform climate risks into bankable opportunities.

Using VCMI’s updated carbon markets access toolkit, countries can navigate voluntary schemes and markets under Article 6 of the Paris Agreement, with step-by-step guidance on legal, institutional, and project hosting decisions.

Since 2021, VCMI’s Access Strategies Programme has helped countries generate high-integrity carbon credits tailored to local needs. Initiatives include best-practice guidance for Mexico’s Yucatan region and an $11.3bn climate investment gap assessment for Benin.

While advocating for reforms in global finance, these nations are strengthening domestic capacity to unlock climate investment. Partnering with VCMI, they are finding solutions to the scale and urgency of the challenges they face.

“V20 nations can access this support to make strategic use of carbon markets to build resilience – both nationally and globally. Our very survival depends on it.”

By Aghakazim Guliyev