This blog is the first of three introducing the AlliedOffsets Article 6 Carbon Budget Model. Article 6 carbon budgets set the limit on how much a country is willing to transfer. This first post covers what those budgets are, which governments have published one, and how they affect sovereign buyers and CORSIA.
Under decision 2/CMA.3, a host country adds every ITMO it authorizes back to its emissions balance through a corresponding adjustment, and that balance is then compared with its NDC target. The Article 6 rulebook fixes this arithmetic but sets no limit on volume, so how much a country can transfer is a national policy choice. The problem is that most host countries have not published an Article 6 budget, yet those budgets set how much authorized supply is available to sovereign buyers and CORSIA. The published estimates that do exist cover a single country, or a limited number of countries, and each uses a different method, so their results cannot be compared across countries.
AlliedOffsets built the Article 6 Carbon Budget Model to apply one method across countries. It projects emissions to the target year from government projections and independent business-as-usual (BAU) estimates, rather than relying on reported emissions alone, and estimates how many ITMOs each country could authorize while still meeting its NDC. It then compares that volume with the country's current and projected carbon credit supply pipeline in AlliedOffsets' data, flagging where the pipeline would exceed the budget.
What are NDCs?
NDCs are the climate plans each Party submits under the Paris Agreement. They set out intended greenhouse gas (GHG) emission cuts by a target year, planned adaptation measures and, for many developing countries, capacity-building needs. Parties must submit an NDC and update it every five years, informed by the Global Stocktake, which periodically assesses collective progress toward the Agreement's goals of holding warming well below 2°C and pursuing 1.5°C. Submission is legally required, but the targets are not legally binding and no central body sets them. As a result, ambition and structure vary widely between countries, reflecting national capabilities and priorities.
What is an Article 6 Carbon Budget?
An Article 6 carbon budget is a national limit on the volume of mitigation outcomes a host country will authorize for transfer abroad as internationally transferred mitigation outcomes (ITMOs) under Article 6.2 or 6.4. It can take the form of a hard cap, a retention rule or sector restrictions. Budgets serve three functions:
How corresponding adjustments are calculated
Decision 2/CMA.3 sets out how a host applies corresponding adjustments, and the method depends on how its NDC is framed. Hosts with a multi-year NDC, expressed as a budget or trajectory over the whole implementation period, apply adjustments each year against that multi-year target. Hosts with a single-year NDC, such as a 2030 target, choose between two methods. Under the trajectory method, they set an indicative multi-year emissions trajectory or budget and apply adjustments each year against it. Under averaging, they apply an adjustment equal to the average annual volume of ITMOs transferred over the period. The chosen method is reported in the host's Initial Report and must be applied consistently throughout the NDC period.
Approaches to carbon budget modeling
There is no standard method for sizing an Article 6 carbon budget, and three recent studies take different approaches. IETA's 2026 review of Brazil's carbon market frameworks, which drew on AlliedOffsets’ forward price data, uses a bottom-up from sectoral abatement costs. Its hybrid pathway pairs a 50% retention rule with a security buffer, under which only reductions whose marginal abatement cost is at least 10% above the projected domestic carbon price. In its findings, Brazil’s ITMO exports reach about 121 MtCO2e a year by 2035 (66.7 Mt from hard-to-abate sectors, 54.6 Mt from afforestation and reforestation (ARR)), with an equal volume retained for the NDC.
GGGI's SPAR6C policy brief also works bottom up, using the Green Economy Model (GEM), to build the estimate from individual measures outside the NDC package. It puts Colombia’s potential ITMO portfolio at 101 Mt CO2e 2025–2030, focusing on how to reinvest revenue rather than on setting a ceiling. CACE notes this as potential, rather than transferable supply.
CACE's 2026 assessment of eight host countries works top-down, comparing each country's latest inventory data reported to the UNFCCC, and the BAU stated in its NDC or Biennial Transparency Report (BTR), with its 2030 NDC target. It found that apparent headroom often appears only when measured against unconditional targets or inflated baselines, such as Cambodia's, where BAU is more than double current emissions. The Paris rules do not define conditional and unconditional targets, so the choice of reference target can decide whether any budget exists. Delivering mitigation does not make it transferable; the binding constraint is accounting headroom.
Which governments have published quantified Article 6 limits?
Only a small number of governments have published a quantified limit on Article 6 transfers, set out in the table below. Behind these figures, host governments have taken different structural approaches. Kenya uses sector specification, opening its budget only to energy, transport, industrial processes and product use (IPPU) and waste projects, and excluding others until their measurement and permanence safeguards are stronger. Ghana structures its budget as a running authorization ledger, publicly reporting the share already committed through Letters of Authorization (LoAs), so the market can see how much headroom remains.
Why Article 6 budgets matter for CORSIA
CORSIA Eligible Emissions Units (EEUs) draw on the same national allocation as ITMOs sold to other governments. The Article 6.2 guidance requires corresponding adjustments for mitigation outcomes authorized for "other international mitigation purposes," which include CORSIA. ICAO Assembly Resolution A42-22 makes eligibility conditional on avoiding double counting, and IATA notes that the Letter of Authorization commits the host country to apply that adjustment. Every ton a host authorizes for airlines is a ton it cannot sell to Singapore, Switzerland or another sovereign buyer.
IATA forecasts airline demand of 146 to 236 million EEUs across CORSIA's first phase (2024-2026). As of April 2026, only ten countries had supplied EEUs through an LoA. Ghana's Carbon Markets Office reports 11.3 MtCO2e of remaining headroom against a pipeline of 91 projects seeking authorization for 423.1 Mt.
Supply has faced other constraints this year. The European Commission has proposed dropping its additional Phase 1 quality criteria for EEA aircraft operators, which Argus estimated would have excluded about 90% of credits tagged for Phase 1; a vote is expected in the fall. From 2027, the second phase extends obligations to every State with more than 0.5% of 2018 international RTKs, or within the group making up 90% of cumulative RTKs. LDCs, SIDS and LLDCs are exempt unless they volunteer.
To see country-level budget estimates, contact the AlliedOffsets team at www.alliedoffsets.com to schedule a demonstration.