Overview
Article 6 of the Paris Agreement establishes the rules for voluntary cooperation between countries on climate action, including the use of internationally traded carbon credits toward Nationally Determined Contributions (NDCs). In plain terms: it answers the question of whether Country A can pay for an emissions reduction in Country B and count it against Country A’s own climate target, and if so, how.
This sounds technical, but the stakes are enormous. A well-designed Article 6 system could dramatically lower the cost of meeting global climate targets by directing emissions reductions to wherever they are cheapest. A poorly designed one risks double-counting, perverse incentives, and undermining the ambition of countries that rely on it as an excuse not to cut domestic emissions. The debate over Article 6 has been one of the most contested in international climate negotiations since 2015.
The rules for Article 6 were finally agreed, after years of deadlock, at COP29 in Baku in November 2024. The resolution of the Article 6.4 mechanism in particular was widely seen as a historic moment, though scrutiny of the details continues.
Article 6.2: Bilateral Carbon Trading
Article 6.2 covers bilateral or plurilateral cooperative approaches, agreements between two or more countries to transfer carbon credits directly. The credits involved are called Internationally Transferred Mitigation Outcomes (ITMOs). An ITMO represents a unit of greenhouse gas reduction or removal that one country achieves and transfers to another for use in meeting its NDC.
The key safeguard is the Corresponding Adjustment: when an ITMO is transferred, the selling country must subtract the credit from its own NDC accounting, and the buying country adds it. This prevents the same emission reduction being counted twice, once in the seller’s NDC and once in the buyer’s. Double-counting was a serious problem under the Kyoto Protocol‘s Clean Development Mechanism and was a central concern in Article 6 negotiations.
Article 6.2 is relatively flexible, it allows countries to design their own bilateral frameworks as long as they meet certain transparency and reporting requirements. Switzerland, for example, has signed Article 6.2 agreements with several countries including Ghana, Vanuatu, and Senegal to fund mitigation projects and use resulting ITMOs toward Swiss NDC compliance.
Article 6.4: The UN-Supervised Mechanism
Article 6.4 creates a centralised, UN-supervised carbon crediting mechanism, the direct successor to the Kyoto Protocol‘s Clean Development Mechanism (CDM). It is governed by a Supervisory Body under the UNFCCC and is intended to create a more rigorous, standardised market than the bilateral Article 6.2 approach.
Under Article 6.4, project developers apply to register emissions reduction activities. An approved methodology must be used. Reductions are verified independently and issued as “Article 6.4 Emission Reductions” (A6.4ERs). Countries and private entities can purchase these credits, though a share is automatically cancelled to deliver “overall mitigation in global emissions” (OMGE), meaning the total effect must exceed what is needed to compensate the buyer.
The Article 6.4 mechanism is designed to address the quality problems that plagued the CDM, which was criticised for approving dubious projects, inflating baseline emissions, and generating credits that did not represent real reductions. The new mechanism includes stricter additionality standards, mandatory suppression of baselines over time, and the OMGE requirement. However, many of the same technical challenges remain, additionality is inherently difficult to establish, and project monitoring is resource-intensive.
At COP29, the rules for Article 6.4 were finalised, including the methodology framework and the procedures for the Supervisory Body. This unlocked the mechanism for practical use, though the first credits are not expected to flow until 2025 or 2026.
The Bigger Picture: Carbon Markets and Climate Ambition
Article 6 sits at the intersection of several critical debates in Climate Finance. First, there is the question of whether international Carbon Offsets can be used by companies (not just countries) for corporate net-zero claims, the link between Article 6 and voluntary carbon markets is indirect but important for credibility. The Science Based Targets Initiative and other frameworks are watching closely how Article 6 develops, since it affects what kind of carbon credits can legitimately be claimed as “Paris-aligned.”
Second, there is a broader ambition concern: if countries can meet their NDCs by purchasing cheap credits elsewhere, they face less pressure to make deep domestic cuts. Critics argue that Article 6 should not become an escape hatch for wealthy nations. Proponents argue that global emission reductions are what matter, and that efficient carbon markets direct capital to where it does the most good, particularly in developing countries that need climate finance.
Third, Article 6 connects to the Just Transition debate: the mechanism must ensure that host countries, often lower-income nations, benefit fairly from carbon projects on their soil, and that projects do not displace communities or damage local environments.