Article 6 of the Paris Agreement: A Top-Level Guide for Carbon-Market Developers

Article 6 creates the rulebook for international cooperation under the Paris Agreement. It defines how countries—and private actors—can trade, finance, and claim emission reductions while safeguarding environmental integrity and avoiding double counting of carbon credits. Understanding Article 6 is essential for any project developer seeking to tap into the high-premia market for Article 6 credits.

1 The Three Pillars of Article 6

Article 6 is structured around three mechanisms:

• Article 6.2 – Cooperative Approaches: Bilateral or multilateral transfers of Internationally Transferred Mitigation Outcomes (ITMOs) with corresponding adjustments.
  “Article 6 enables international cooperation to tackle climate change and unlock financial support for developing countries,” explains UN Climate Change :contentReference[oaicite:0]{index=0}.
• Article 6.4 – Sustainable Development Mechanism: A UN-supervised crediting framework succeeding the CDM, issuing high-integrity emission reductions (A6.4ERs).
• Article 6.8 – Non-Market Approaches: Capacity building, policy exchanges, and other cooperative climate actions that don’t involve tradable credits.

2 Article 6.2: ITMOs & Corresponding Adjustments

Under 6.2, countries agree to exchange carbon credits—measured in tCO₂e or renewable-energy units—and subtract each tonne sold from their national inventory (a corresponding adjustment), thus preventing double counting. Early movers like Switzerland and Japan have already reported ITMO trades with Ghana, Thailand and Vanuatu :contentReference[oaicite:1]{index=1}.

3 Article 6.4: The New UN Carbon Market

The 6.4 mechanism creates a “Sustainable Development Mechanism” , governed by a Supervisory Body under the UNFCCC. Projects must meet stringent additionality, baseline, and MRV standards before issuing credits. Jonathan Crook of Carbon Market Watch notes, “Article 6.4 will replace CDM and raise the bar for high-quality credits,” including a share of proceeds funding adaptation :contentReference[oaicite:2]{index=2}.

4 Why Developers Must Get Article 6 Right

• Price Premium: Certified Article 6 credits trade at USD 3–7/tCO₂e above standard VCM units.
• Buyer Confidence: Corporates and compliance markets demand corresponding adjustments to claim neutrality.
• Market Access: Article 6 compliance unlocks ITMO demand from countries and private buyers.

5 Key Steps to Article 6 Compliance

1. Host-Country Letter of Authorisation (LoA): Secure written consent from the relevant ministry to export credits. Typical timeline: 4–8 weeks.
2. Baseline & Additionality Analysis: Update methodologies (VCS, Gold Standard) to align with current IPCC factors and local regulations.
3. Design Corresponding Adjustment Schedule: Agree timing of CA—at issuance or first registry retirement.
4. MRV Protocol & Verification: Integrate remote sensing and on-site audits per ISO 14064-3 and Article 6 Standards.
5. Registry Onboarding: Choose between Art 6.4 Supervisory Body, ART-TREE or compliant voluntary registries; ensure ITMO tagging.

6 Implementation Timeline (Example)

7 Expert Quotes

Dr. Sultan Al Jaber, COP28 President: “Better-functioning voluntary carbon markets can also channel additional financing to developing countries and support local economies.” :contentReference[oaicite:3]{index=3}

Gilles Dufrasne, Carbon Market Watch: “The absence of robust Article 6 rules would risk reproducing the mistakes of voluntary markets; strong guardrails are essential.” :contentReference[oaicite:4]{index=4}

8 Top Article 6 FAQs

• What is a Letter of Authorisation?
  A government’s permission for a project to export carbon credits and trigger corresponding adjustments.
• How long to get an LoA?
  Typically 4–8 weeks if dossier is complete; up to 12 weeks if back-and-forth is required.
• When is CA applied?
  Most buyers require CA at credit issuance; some host countries allow post-NDC-inventory application.
• Which standards are compliant?
  Verra VCS v4, Gold Standard 3.2, ACR methodologies with updated CA fields.