Article 6 of the Paris Agreement
The Next Generation of Carbon Markets
Article 6 of the Paris Agreement establishes a new era in international carbon cooperation — enabling countries and private entities to trade emission reductions in a way that is transparent, accountable, and fully aligned with national climate targets. It builds on the legacy of the Kyoto Protocol but introduces greater rigor, host country oversight, and global alignment with Nationally Determined Contributions (NDCs).
At Climate Balanced, we help clients navigate and participate in this new carbon architecture: from developing Article 6-compliant projects, to supporting the transition of CDM assets, to buying and selling authorized credits — including Internationally Transferred Mitigation Outcomes (ITMOs).
From the Kyoto Protocol to the Paris Agreement
Under the Kyoto Protocol (1997), market mechanisms like the Clean Development Mechanism (CDM), Joint Implementation (JI), and International Emissions Trading (IET) allowed countries with binding targets to offset emissions via project-based or allowance trading schemes.
While CDM catalyzed over 7,800 projects and over 2 billion CERs issued (UNFCCC), it faced criticisms around environmental integrity, transparency, and limited host country participation in credit use.
The Paris Agreement (2015) replaced Kyoto’s top-down framework with a bottom-up system where every country has a climate target (NDC) — and where cooperation must avoid double counting, enhance ambition, and promote sustainable development. Article 6 of the Agreement is the legal and operational foundation for this.
The Article 6 mechanisms — key drivers of both today’s and tomorrow’s carbon market architecture — are outlined below for your reference.
Article 6 Mechanisms Explained
Article 6.2 – Bilateral Cooperation Through ITMOs
- Allows countries (or authorized entities) to transfer emissions reductions across borders for use toward NDCs or voluntary commitments, under bilateral agreements.
- Credits are known as ITMOs (Internationally Transferred Mitigation Outcomes)
- Must be authorized by host and acquiring countries
- Requires Corresponding Adjustments (CAs) to prevent double counting
- Ideal for bespoke country-to-country deals or private-sector compliance buyers
Article 6.4 – Centralized Mechanism Under UN Oversight
- This is the successor to the CDM, governed by a Supervisory Body under the UNFCCC.
- Open to public and private sector project developers
- Operates like the voluntary market but with official government participation
- Includes authorization and approval processes, CAs, and a share of proceeds for adaptation
- Offers global recognition and higher buyer confidence
- Now operational through the Paris Agreement Crediting Mechanism (PACM)
Article 6.8 – Non-Market Approaches
- Facilitates cooperative climate action that doesn't involve direct crediting or trading (e.g., policy alignment, capacity building, tech transfer).
- Not credit-based, but critical for enabling NDC achievement in LDCs and high-ambition sectors
Key Concepts
Corresponding Adjustments (CAs)
Host countries must adjust their emissions balance to account for any credits transferred abroad. This ensures that reductions are not counted by both the buyer and the seller, preserving environmental integrity.
Internationally Transferred Mitigation Outcomes (ITMOs)
ITMOs refer to authorized emission reductions that can be mobilized for different purposes. ITMOs can be used for:
- NDC compliance
- Other international mitigation purpose such as CORSIA Corporate net-zero claims, where allowed
ITMOs can be structured as emission reductions or removals, denominated in tCO₂e, and must be tracked through national registries and reporting systems (World Bank, ICAP).
First Transfer
The “first transfer” refers to the moment when a mitigation outcome becomes an ITMO — i.e., when it's authorized and leaves the host country’s NDC accounting boundary. This is a crucial legal and technical step, triggering the corresponding adjustment.
How We Support You Under Article 6
Develop Article 6.2 and 6.4-Compliant Projects
Whether through bilateral ITMO pathways or via the centralized UN mechanism, we: Assess eligibility and host country readiness
- Prepare documentation and structure authorization requests
- Navigate PACM registration for 6.4 projects
- Integrate CA, MRV, and reporting systems
- Manage stakeholder consultation and sustainable development assessments
- Position your project for access to the next generation of high-integrity carbon finance.
Transition CDM Projects to Article 6.4 (via PACM)
If you have a CDM project with unused CERs or ongoing emissions reduction potential, we can: Evaluate eligibility for transition under Article 6.4
- Align project design with updated PACM methodologies and safeguards
- Re-register and integrate the project into Article 6 crediting frameworks
- Secure host country endorsement and necessary authorizations
- Don’t let legacy assets go unused — bring them into the Article 6 future.
Sell Authorized Credits to Us
We are actively sourcing ITMOs and Article 6-authorized carbon credits for international buyers.
Secure buyer engagement
- Structure ERPAs and forward purchase agreements
- Facilitate registry transfers and compliance tracking
- If your credits are authorized, we can help you monetize them.
Buy Authorized Credits From Us
We provide corporates, airlines, and institutional buyers access to authorized credits for:
- NDC-aligned climate finance
- CORSIA compliance
- Article 6-aligned offsetting strategies
- Our credits are:
- Authorized by host governments
- Tracked in accordance with UNFCCC rules and national registries
- Aligned with ICVCM and buyer integrity initiatives
Who Should Work With Us?
- CDM project developers transitioning to Article 6
- New project developers targeting bilateral or centralized pathways
- Host governments and focal points seeking program design support
- Credit sellers with authorized ITMOs or 6.4ERs
- Corporates and countries seeking to buy authorized credits for compliance or safer claims
Ready to Navigate Article 6?
Whether you're building a new project, transitioning from CDM, or exploring credit trading under the Paris Agreement — we’re your expert partner.
Contact our Article 6 Team: trading@climatebalanced.com
Or submit your project or inquiry here:
