Article 6 of the Paris Agreement & Carbon Markets
Detailed Guide for 2025
Carbon markets are no longer just a policy discussion — they are becoming the backbone of how countries and businesses plan to reach net zero emissions. The Paris Agreement, signed in 2015, set the stage for global climate cooperation. At its core, Article 6 provides the framework that allows countries to trade carbon credits, cooperate across borders, and even work together without markets to achieve their climate goals.
Understanding Article 6 is critical for policymakers, businesses, and sustainability leaders. It defines how carbon markets will work, how credits will be traded, and what safeguards exist to protect environmental integrity. For countries like India, it also opens major opportunities for climate finance and green investment.
What is Article 6 of the Paris Agreement?
Article 6 enables countries to cooperate voluntarily in implementing their Nationally Determined Contributions (NDCs) — their official climate pledges. Cooperation can take the form of:
- Trading emission reductions through markets
- Launching projects that generate international credits
- Working together without markets, through finance, technology, or capacity-building
In simple terms, if it's cheaper for Country A to fund emission reductions in Country B, then Article 6 allows that — as long as the reduction is real, transparent, and not counted twice.
Article 6.2 – Cooperative Approaches Explained
Article 6.2 sets the rules for bilateral or multilateral trading of carbon credits. These credits are called Internationally Transferred Mitigation Outcomes (ITMOs).
Example:
Japan invests in a solar project in Vietnam. Vietnam reduces emissions beyond its NDC target. Japan can purchase those reductions as ITMOs and use them towards its own NDC.
Key Condition:
Both countries must make a "corresponding adjustment" — meaning Vietnam subtracts the reductions from its own count so that they aren't double counted.
Why it matters:
- Flexible and cost-efficient for countries with high abatement costs.
- Encourages cross-border cooperation and technology transfer.
- Builds trust through transparent accounting.
Article 6.4 – The UN-Crediting Mechanism
Article 6.4 establishes a global carbon market mechanism overseen by the UN. It is often compared to the Clean Development Mechanism (CDM) from the Kyoto Protocol but with stronger rules.
How it works:
- • Projects (renewable energy, reforestation, methane capture, etc.) can apply to be registered.
- • Verified emission reductions generate Article 6.4 carbon credits.
- • These credits can be bought by countries, companies, or even used in voluntary markets.
Safeguards built in:
- • Stronger MRV (Monitoring, Reporting, Verification) standards.
- • Protections for communities and ecosystems.
- • A share of proceeds goes to help vulnerable countries adapt to climate change.
Why it matters:
- Provides a transparent, UN-backed supply of credits.
- Increases private sector confidence in carbon projects.
- Ensures global consistency in crediting rules.
Article 6.8 – Non-Market Approaches
Not everything needs trading. Article 6.8 encourages non-market cooperation such as:
Technology Transfer
Renewable energy know-how
Climate Finance
Investment support
Capacity Building
Adaptation & resilience
This pathway is especially important for countries that may not yet have the infrastructure for full carbon market participation.
Key Features That Make Article 6 Different
Corresponding Adjustments
Ensures emission reductions are only counted once.
Transparency Framework
Countries must report transfers in detail to the UN.
Global Oversight
Especially for Article 6.4 projects.
Adaptation Funding
A portion of revenues supports climate adaptation in developing nations.
Sustainable Development Goals (SDGs)
Projects must show social and environmental benefits.
Opportunities: Why Article 6 is a Game-Changer
Cheaper Emission Reductions
Countries can meet their NDCs more cost-effectively by purchasing credits where mitigation is cheaper.
Boost to Green Investments
Companies can invest in renewable, forestry, or waste management projects that now generate internationally recognized credits.
Global Integration of Carbon Markets
Article 6 helps connect different national and voluntary carbon markets, creating a larger and more liquid system.
Finance for Developing Nations
Nations like India, Brazil, or Kenya can attract climate finance by hosting projects.
Private Sector Confidence
Clearer rules reduce the risk of "junk credits," encouraging corporations to use markets to reach net zero.
Latest Updates on Article 6 (COP26–COP28)
COP26 (Glasgow, 2021):
Finalized the Article 6 Rulebook, ending years of negotiation.
COP27 (Sharm El-Sheikh, 2022):
Developed technical standards for authorizations, tracking, and registries.
COP28 (Dubai, 2023):
Focused on operationalizing Article 6.4 and enhancing transparency frameworks.
Looking Ahead:
Future COPs will refine methodologies, approve registries, and expand participation.
What Article 6 Means for India
India stands at a strategic advantage:
Opportunities:
- • Large potential to generate credits through renewable energy, forestry, waste management, and industrial efficiency projects.
- • Can attract billions in climate finance and foreign investment.
Challenges:
- • Needs to strengthen domestic MRV and governance systems.
- • Must balance between using credits for India's own climate targets vs selling them abroad.
- • Ensuring community safeguards so that local populations benefit.
Policy Steps:
India has introduced the Carbon Credit Trading Scheme (CCTS) to build a national framework aligned with Article 6.
More clarity is expected on how voluntary markets and compliance markets will interact.
Global Outlook for Carbon Markets under Article 6
Conclusion
Article 6 is one of the most important parts of the Paris Agreement. It provides a clear pathway for countries to trade carbon credits, cooperate internationally, and mobilize finance for climate action. If implemented strongly, it could unlock billions of dollars in green investment and significantly speed up global decarbonization.
For India, Article 6 offers both a challenge and an opportunity: to establish itself as a leader in the global carbon market while ensuring transparency, equity, and sustainability.
The world will be watching closely — because how we use Article 6 will decide whether carbon markets become a real climate solution or just another missed opportunity.
Disclaimer: Above content does not constitute any legal advice and is only provided for educational purpose.