For nearly a decade after the Paris Agreement was signed in 2015, Article 6 was mostly theoretical. The text was there, but the rules weren't. Countries argued, negotiations stalled, and the carbon market kept running on parallel, voluntary tracks.
That has changed. The architecture of Article 6 is now largely settled. The first official credit transfers between governments have happened and in March 2026, the first credit was issued under a brand-new UN crediting system designed to replace the old Clean Development Mechanism.
In other words: Article 6 has moved from policy to practice and it is shaping the next decade of climate finance.
This blog explains what Article 6 is, how its two main mechanisms work, and why the difference between an "Article 6 credit" and a regular voluntary credit matters more than you might think.
What is Article 6?
Article 6 is the part of the Paris Agreement that lets countries cooperate on hitting their climate targets, including by trading carbon credits with each other.
The logic is simple. Every country has a Nationally Determined Contribution (NDC), its own emissions-reduction pledge. Some countries can cut emissions cheaply (often because they have abundant land, sun, or low-cost mitigation opportunities). Others face much higher costs at home. Article 6 creates a framework for the second group to fund emissions reductions in the first group, and to count those reductions toward their own NDC.
Done well, this lowers the global cost of meeting Paris targets and channels finance to where it can do the most good. Done poorly, the same ton of carbon gets counted twice.
Avoiding that double-counting outcome is why Article 6 has been so painstakingly negotiated.
The two market based mechanisms: Article 6.2 and Article 6.4
Article 6 doesn't establish a single unified market. It creates two distinct market-based mechanisms, each operating differently and serving different purposes.
Article 6.2, bilateral government trading
Article 6.2 is a framework for direct, government-to-government deals. Two countries negotiate the terms between themselves: which project types qualify, what fees apply, and how credits are tracked and reported. The unit being traded is called an ITMO, an Internationally Transferred Mitigation Outcome.
Switzerland has been among the most active buyers, having signed bilateral agreements with 13 countries including Peru, Ghana, Thailand, Morocco, and Chile. Japan, through its Joint Crediting Mechanism, accounts for 133 of the 169 projects currently being implemented under Article 6.2. As of March 2026, 106 bilateral arrangements had been formalized in total, spanning 53 host countries.
Actual credit transfers, though, have been harder to come by. The most significant example to date is the Bangkok E-Bus Program, a project converting Bangkok's private diesel bus fleet to electric vehicles, financed by Switzerland's KliK Foundation through the purchase of ITMOs. Thailand and Switzerland completed their first ITMO transfer in December 2023, making it the first-ever completed transaction under Article 6.2 of the Paris Agreement. A second batch covering 2023-2024 emissions was approved in April 2026. It remains the most advanced project of its kind anywhere in the world, and most bilateral programs are still in early development stages.
Article 6.4, the centralized UN mechanism (PACM)
Article 6.4 is the centralized market-based mechanism: a single, UN-administered crediting system open to project developers anywhere in the world. It's formally called the Paris Agreement Crediting Mechanism, or PACM, and it's the designated successor to the Clean Development Mechanism (CDM), which operated under the Kyoto Protocol from 2001.
PACM follows the same general model as the CDM, projects reduce or remove emissions, credits are issued, and those credits can be traded internationally, but with stricter additionality requirements, more conservative baselines, and tighter monitoring standards.
The first credit issued under PACM came in February 2026, from a cookstove project in Myanmar coordinated with South Korea. The project generated 58,428 mtCO2e credits, approximately 40% fewer than the CDM provisional figure for the same activity. That reduction reflects the more conservative methodological standards PACM is applying from the outset, not a one-off anomaly.
Where ITMOs come from and why authorization matters
Not every carbon credit automatically becomes an ITMO. To qualify, a credit must be formally authorized by the host country for international use. The host country issues a Letter of Authorization for a specific project, agrees to apply what's called a Corresponding Adjustment in its national emissions accounting, and accepts that the reductions will count toward the buyer's NDC rather than its own.
This is the most important concept in Article 6. Without a Corresponding Adjustment, both the buyer and seller country could claim the same emission reduction. With one, the reduction can only be counted once towards the Paris Agreement's goals.
That integrity premium is reflected in prices. Switzerland's bilateral credits trade at around $36 per ton. Comparable voluntary carbon market credits trade at $5-$8 per ton. That spread is driven almost entirely by the Corresponding Adjustment.
Where the market stands today
A few things are worth knowing about Article 6 in 2026.
The market is in pipeline mode, not delivery mode. A significant number of bilateral agreements have been signed and projects are being developed, but actual credit flows remain small and concentrated. The Bangkok E-Bus Program stands out precisely because so few projects have made it to the transfer stage.
The quality bar has moved up. The first PACM issuance came in 41.5% below CDM levels for the same project, largely due to the project's re-evaluation of non-renewable biomass values using updated methodology required by the Article 6.4 Supervisory Body. Developers working from CDM-era assumptions will need to recalibrate.
The CDM transition window has been extended but remains tight. Following COP 30 discussions, the host party approval deadline for CDM projects transitioning to PACM was pushed back to June 2026, with the documentation deadline extended to December 2026. To date, only around 13% of credits requesting transition have been approved, with the rest still awaiting host country approval.
Why it matters
For countries, Article 6 is a finance mechanism, a route to attract climate investment and generate revenue from credits authorized for export. For project developers, it's a higher standard with a correspondingly higher price ceiling. For corporates and airlines with compliance obligations under schemes like CORSIA, it offers a parallel supply of credits with a clearer integrity story than much of the standard voluntary market.
Article 6 isn't replacing the voluntary carbon market. The two exist alongside each other, with different credit types, different prices, and different buyers. What Article 6 adds is an intergovernmental layer of accountability that the voluntary market has never had.
The architecture is largely settled. What happens next depends on whether the pipeline that's been signed actually delivers.
Our upcoming April 2026 Article 6 Report covers the full picture: bilateral agreements, the CDM transition pipeline, the host country revenue landscape, and what the first PACM issuances reveal about the new quality standard.
Keep an eye out for its release.