Article 6 of the Paris Agreement consists of nine Sections providing principles for how countries cooperate to reach climate targets. 194 countries are developing detailed rules on how to implement Article 6.
Following several years of inconclusive negotiations, in 2021 at COP26 in Glasgow, countries agreed on regulations to govern and implement international carbon market mechanisms under United Nations Climate Change governance.
Article 6.2 allows countries to trade emission reductions and removals with one another through bilateral or multilateral agreements. These traded credits are called Internationally Transferred Mitigation Outcomes (ITMOs). They are measured in carbon dioxide equivalent (CO2e).
Article 6.4 creates a global carbon market overseen by a United Nations Climate Change entity, currently referred to only as the “Supervisory Body”. Project developers like CADA register their projects with the Supervisory Body. A project must be approved by both the country where it is implemented, and the Supervisory Body, before it can start issuing UN-recognized carbon credits. These credits can be bought by countries, companies, or even individuals.
The Clean Development Mechanism (CDM) which was established under the Kyoto Protocol, will continue for a transitional period under Article 6. The Article 6 deal allows CDM projects to transition to the 6.4 mechanism if it is approved by the country where the project is located and if the project meets the new rules, except for rules on CDM methodologies. Projects can continue to use CDM methodologies until 31 December 2025.