Article 6 credits trade at a premium to voluntary ones, and that premium is really payment for one thing: a credit that a government has authorized for use toward a climate target. Most of the risk in Article 6 is the risk that this authorization does not arrive, or does not hold. Our explainer on what Article 6 is and how it actually works covers the mechanics.
The risks are now well understood, and they fall into a clear sequence. A credit has to be authorized, the transaction has to be approved, and the credits have to be delivered. Each stage carries its own risk, and each has a way of being managed.
Authorization is the risk that matters most
A credit only becomes an ITMO when the host country authorizes it for international use and applies a Corresponding Adjustment, subtracting that reduction from its own national accounts. That step is what lets a buyer count the credit toward a compliance target. Without it, the credit is an ordinary voluntary one.
The risk is that host countries are not obliged to apply the adjustment. It is optional for them, which makes authorized supply scarce and also exposes the buyer: a credit can be issued and still never become compliance-grade.
The market's response has been insurance. Registries including Verra and Gold Standard now allow a credit to be labeled eligible when it is backed by a Letter of Authorization, or by a mechanism that replaces it if the host country does not follow through. The practical step is to secure and protect authorization in the deal structure, rather than assume it will arrive.
Host country approval can stall
A bilateral agreement is a framework, not a guarantee. It sets the terms for cooperation between two countries, but each individual transaction still needs its own authorization, and that can be slow.
The CDM transition shows the lag. Only around 13 percent of credits requesting transition to the new mechanism have been approved, with the rest waiting on host country sign-off. Following COP30, the approval deadline was extended to June 2026 and the documentation deadline to December 2026.
This is largely managed through jurisdiction choice. A country with published fees and a working authorization process is a stronger prospect than one still drafting its rules.
Delivery takes years, not months
Authorization does not mean immediate supply. Article 6 is still in pipeline mode. Around 106 bilateral arrangements have been formalized across 53 host countries, but as of early 2026 only seven host countries had issued the Letters of Authorization that unlock supply. Completed transfers remain rare.
For anyone planning around Article 6, that means treating it as a multi-year process. Forward contracts and milestone-based structures spread the timing risk rather than relying on near-term delivery.
Project quality sits alongside all of this
These are structural risks. They determine whether a credit can be transferred and used, not how good the underlying project is. Project-level quality, such as additionality and permanence, is a separate matter that applies to any credit. A strong project can still carry transfer risk, and a fully authorized credit can still be weak at the project level. We looked at how Article 6 credits compare with voluntary ones on quality in are Article 6 credits better than voluntary credits?.
The bottom line
The risks in Article 6 come down to two questions: whether a credit is authorized, and how long it takes to deliver. Neither is left to chance. Both are managed through contract structure, insurance, and the choice of where to operate, which is the difference between a credit that exists on paper and one a buyer can actually use.
AlliedOffsets' Article 6 Report covers the authorization landscape, the CDM transition pipeline, and where credits are actually moving.