Paris Agreement, Article 6 and Carbon Markets

Article 6 of the Paris Agreement is the part of the world's climate treaty that lets countries work together to cut greenhouse gas emissions, including by buying and selling emission cuts. If one country cuts more pollution than it promised, it can sell that extra cut to another country, which then counts it towards its own target. Article 6 sets the rules for this trade so that the same cut is not counted twice and the planet really benefits.

Why does Article 6 exist?

Cutting one tonne of carbon dioxide costs very different amounts in different places. In one country, it may be cheap to replace an old coal boiler; in another, every cheap option is already used. If countries can trade, the world can get more total emission cuts for the same money. Supporters also say this sends money and clean technology to developing countries. But trade only helps if the cuts are real, so strict rules are needed.

Where did it come from?

• 1997, Kyoto Protocol: The first climate treaty with binding targets for rich countries created three "flexibility mechanisms": the Clean Development Mechanism (CDM), Joint Implementation (JI) and International Emissions Trading. Article 6 of the Paris Agreement is their successor.
• 2015, Paris Agreement (COP21): All countries, rich and poor, agreed to make their own climate pledges, called Nationally Determined Contributions (NDCs). Article 6 was included, but its detailed rules were left for later.
• 2021, COP26 Glasgow: After six years of failed talks, countries adopted the main rulebook for Article 6.
• 2024, COP29 Baku, Azerbaijan: Countries finalised the remaining technical rules, such as how credits are authorised and tracked in registries. This made Article 6 fully working.

The three parts of Article 6

1. Article 6.2: Cooperative approaches (country to country). Two or more countries make their own deal. The emission cuts they trade are called ITMOs (Internationally Transferred Mitigation Outcomes). The countries design the project and the checks themselves, but must report to the UN. Example: Switzerland bought ITMOs from Thailand's Bangkok E-Bus Programme; the first transfer was completed in December 2023, the first ever under Article 6.2. Ghana followed with a cookstove project sold to Switzerland in July 2025, the first such transfer from Africa.
2. Article 6.4: A UN-run carbon market, the Paris Agreement Crediting Mechanism (PACM). This is the successor of the Kyoto Protocol's CDM. Projects anywhere can apply. A UN body checks them and issues credits called A6.4ERs (Article 6.4 Emission Reductions).
3. Article 6.8: Non-market approaches. Countries cooperate without trading credits, for example, through sharing technology, capacity building or joint finance.

How does the PACM (Article 6.4) work?

1. A project developer designs a project, such as a solar plant or a cookstove programme, using a method approved by the UN.
2. The host country (where the project is) approves it.
3. An independent auditor checks the design (validation). The project is then registered.
4. The project runs, and its emission cuts are measured (monitoring) and checked again (verification).
5. The Supervisory Body approves the issuance of credits. Each credit = one tonne of carbon dioxide equivalent cut.
6. If the host country authorises the credits for use by another country, it must make a "corresponding adjustment".

The Supervisory Body has 12 members: two from each of the five UN regional groups, one from the Least Developed Countries and one from the Small Island Developing States. It meets several times a year, mostly in Bonn, Germany, where the UN climate secretariat (UNFCCC) is based.

Two special rules that help the planet

• Share of proceeds for adaptation: 5% of A6.4ERs issued go to the Adaptation Fund, which pays for projects that help poor countries cope with climate impacts (plus a share of fees).
• Overall mitigation in global emissions (OMGE): At least 2% of credits are cancelled automatically and can never be used. This means every trade leads to a small net cut for the planet, not just a shift of emissions from one place to another.

The idea of a corresponding adjustment

This is the most important rule against cheating. Suppose a project in Myanmar cuts 100 tonnes and sells those credits to South Korea. South Korea counts 100 tonnes less in its emissions. If Myanmar also counts the same 100 tonnes in its own target, the cut is counted twice: this is double counting. To stop it, Myanmar must add back 100 tonnes to its own accounts.

This "adding back" is the corresponding adjustment. It is like a bank transfer: money leaving one account must be subtracted there when it is added to another.

The move from CDM to PACM

Old CDM projects can move into the PACM if they meet the new rules. Project owners had to apply by 31 December 2023, and host countries had to approve the move; at COP30 in Belém, Brazil (2025) this approval deadline was extended to 30 June 2026. Old CDM credits (CERs) from projects registered on or after 1 January 2013 may be used only towards a country's first NDC. The Myanmar cookstove project is one such transitioned project, and it received the first A6.4ER issuance approval on 26 February 2026.

India's position and Indian examples

• India was one of the biggest CDM players and supports Article 6, but stresses that it must not slow down rich countries' own emission cuts and must protect developing countries' interests.
• In 2025, India set up a National Designated Authority (NDA) for Article 6 under the Ministry of Environment, Forest and Climate Change (MoEFCC), a committee chaired by the Environment Secretary. It recommends which activities can sell credits abroad and authorises the use of credits.
• India has published a list of activities allowed under Article 6.2 (focused on advanced clean technologies such as green hydrogen, compressed biogas, carbon capture and energy storage) and a list for Article 6.4. The idea is to keep cheap emission cuts at home for India's own NDC and sell only harder, costlier ones.
• In August 2025, India and Japan signed a Memorandum of Cooperation on the Joint Crediting Mechanism (JCM), India's first bilateral cooperation under Article 6.2. India became Japan's 31st JCM partner.
• At home, India runs its own carbon market, the Carbon Credit Trading Scheme (CCTS), which is separate from Article 6 but may later connect with it.

Commonly confused concepts

• Article 6.2 vs Article 6.4: 6.2 is a country-to-country deal with country-designed checks (units called ITMOs). 6.4 is a UN-run mechanism with one central body (units called A6.4ERs). Both can produce credits used in another country's NDC.
• Article 6.4 vs CDM: The CDM (Kyoto Protocol, Article 12) let rich countries with targets buy credits from projects in developing countries. The PACM is open to all countries, since all now have NDCs, and adds the corresponding adjustment and 2% OMGE rules.
• Compliance market vs voluntary market: In a compliance market, companies or countries must meet legal targets (EU ETS, India's CCTS, Article 6 for NDCs). In a voluntary market, companies buy credits by choice to support their own "net zero" claims (Verra, Gold Standard).
• Carbon credit vs carbon tax: A credit is a tradeable permit or proof of one tonne cut; its price is set by the market. A carbon tax is a fixed charge per tonne set by the government.
• Article 6 vs Article 14: Article 14 of the Paris Agreement is the Global Stocktake, a five-yearly review of world progress. It is not a market.

Issues, criticism and the way forward

• Over-crediting: If a project's starting assumptions are too generous, it gets credits for cuts that never happened. Cookstove projects are a known weak spot: a 2024 University of California, Berkeley study in Nature Sustainability found a sample of cookstove projects was over-credited about 9 times.
• Weak verification: Remote checks in conflict zones, as in the Myanmar case, make it hard to know if stoves are really used.
• Human rights and governance: Critics say credits should not flow from projects where military or illegitimate authorities may benefit, and that there is no clear complaint system for affected people. The PACM does have an appeal and grievance process, but civil society says it is untested.
• Delay in real action: Some experts worry rich countries will buy cheap credits instead of cutting their own emissions.
• Way forward: Experts suggest conservative baselines, on-site checks, public data on who gets the money, strong safeguards for women and local communities, and quick suspension powers when problems appear. The Supervisory Body's handling of this first case is seen as a test of the whole system's credibility.

Concepts to Know

• Carbon credit: A certificate that proves one tonne of carbon dioxide (or an equal amount of another greenhouse gas) was cut or removed. It can be sold to someone who needs to meet a target.
• Nationally Determined Contribution (NDC): A country's own climate pledge under the Paris Agreement, saying how much it will cut emissions and by when. NDCs are updated every five years.
• Carbon dioxide equivalent (CO2e): A common unit that converts all greenhouse gases into the amount of carbon dioxide that would cause the same warming.
• Double counting: When the same emission cut is claimed by two countries or companies, so the world appears to cut more than it really did.
• Adaptation Fund: A fund created under the Kyoto Protocol, now also serving the Paris Agreement, that pays for projects helping developing countries adjust to climate change, such as flood defences or drought-proof farming.
• UNFCCC: The United Nations Framework Convention on Climate Change (1992), the parent treaty for both the Kyoto Protocol and the Paris Agreement. Its secretariat is in Bonn, Germany.