Article 6 of the Paris Agreement: How global carbon markets are driving climate action

Article 6 of the Paris Agreement is one of the most significant—and debated—parts of the global climate framework. It provides countries with a mechanism to cooperate in reducing greenhouse gas emissions through carbon markets and other collaborative approaches, helping them meet their climate targets more efficiently.

As governments and businesses accelerate efforts to achieve net-zero emissions, Article 6 has become central to the future of international carbon trading.

What is Article 6?

Adopted under the 2015 Paris Agreement, Article 6 establishes rules that allow countries to voluntarily work together to meet their Nationally Determined Contributions (NDCs)—the climate commitments each nation submits under the agreement.

The article is divided into three main parts:

• Article 6.2: Enables countries to trade carbon credits directly through bilateral or multilateral agreements using Internationally Transferred Mitigation Outcomes (ITMOs).
• Article 6.4: Creates a UN-supervised global carbon market, replacing the Kyoto Protocol’s Clean Development Mechanism (CDM). Projects that reduce or remove emissions can generate internationally recognised carbon credits.
• Article 6.8: Promotes non-market approaches, such as technology transfer, climate finance and capacity-building, without involving carbon trading.

What are carbon markets?

A carbon market allows governments or companies to buy and sell carbon credits. One carbon credit generally represents the reduction or removal of one metric tonne of carbon dioxide (CO₂) or its equivalent.

The idea is simple: entities that reduce emissions beyond their targets can sell surplus credits to those facing higher costs in cutting emissions. This encourages emissions reductions where they are most cost-effective while maintaining an overall cap on pollution.

Carbon markets are broadly divided into:

• Compliance markets, which operate under government regulations.
• Voluntary carbon markets, where companies purchase credits to offset emissions as part of their sustainability goals.

Why does Article 6 matter?

Experts believe Article 6 can lower the overall cost of achieving global climate targets by enabling international cooperation.

Potential benefits include:

• Mobilising billions of dollars for climate-friendly projects.
• Supporting renewable energy, forest conservation and clean technology.
• Helping developing countries attract climate finance.
• Encouraging faster and more cost-effective emissions reductions.

Countries with abundant renewable energy or forest resources can generate carbon credits and earn revenue by selling them internationally.

Concerns and challenges

Despite its promise, Article 6 has faced criticism over concerns about environmental integrity.

Key challenges include:

• Double counting: Ensuring the same emissions reduction is not claimed by both the buyer and seller.
• Quality of carbon credits: Credits must represent real, measurable and permanent emissions reductions.
• Transparency: Strong monitoring and verification systems are needed to maintain trust.
• Human rights and biodiversity: Climate projects should protect local communities and ecosystems rather than harm them.

To address these issues, negotiators agreed on detailed implementation rules at the COP26 climate summit in Glasgow and have continued refining them at subsequent UN climate conferences.

India’s role

India is emerging as a major player in global carbon markets. The country has launched the Carbon Credit Trading Scheme (CCTS) to develop a domestic carbon market and is preparing policies that could enable participation under Article 6.

With its vast renewable energy capacity, afforestation potential and clean-energy initiatives, India could become a significant supplier of high-quality carbon credits while using carbon finance to support its climate goals.

The road ahead

Article 6 is expected to play a crucial role in global efforts to limit warming to 1.5°C above pre-industrial levels. However, its success will depend on robust governance, transparent accounting and high-quality carbon credits that deliver genuine climate benefits.

If implemented effectively, Article 6 could transform carbon markets into a powerful tool for accelerating global climate action while channeling investment toward sustainable development in both developed and developing countries.