The Paris Agreement’s Own Carbon Market: What Article 6.4’s First Rules Inherit from the Voluntary Market’s Failures

In February 2025, the Article 6.4 Supervisory Body met in Thimphu, Bhutan, and did three things that will shape how carbon credits are produced for years: it agreed to launch an interim mechanism registry, adopted a standard for demonstrating additionality, and approved the first transition of a Clean Development Mechanism activity into the new Paris Agreement Crediting Mechanism (PACM). The transition request was for a Programme of Activities called “Clean Energy Program Supported by Republic of Korea.” The first accredited validator was Carbon Check (India) Private Limited. These are procedural facts, and they matter because they show where the real rule-making is happening.

The Article 6.4 mechanism is the Paris Agreement’s own carbon market. It is not the voluntary market. It is not the old Clean Development Mechanism. It is a new instrument, governed by a Supervisory Body that reports to the Parties to the Paris Agreement, and it is being built now. The question this article asks is not whether PACM is “high-integrity” in the abstract. The question is who holds the pen when the substantive rules are written, and what happens to a community’s land, water, and risk when those rules are silent.

What the voluntary market’s credibility problem actually was

The voluntary carbon market’s most-criticised project type has been REDD+ — reducing emissions from deforestation and forest degradation. The criticism was not only that some credits were over-issued. It was that the rules governing baselines, additionality, and permanence were set by standard-setters who faced competing pressures from project developers, buyers, and the communities living in and around project areas.

Verra, the largest voluntary standard-setter, ran a public consultation from 5 October to 6 November 2022 on proposed revisions to its Avoiding Unplanned Deforestation and/or Degradation (AUDD) methodologies. The summary of comments, published in January 2023, records that stakeholders — including project proponents, environmental organizations, and industry groups — said the proposed changes “would be too difficult to implement within the proposed time period and could significantly compromise ongoing project activities.” Verra’s response was to drop the allocation approach from that proposal and defer it to the Consolidated REDD Methodology, which would use the allocation approach. In other words, the contested technical fix was not abandoned. It was moved to a different document, on a different timeline.

That is the pattern Article 6.4 inherits. The voluntary market’s credibility problem was never primarily a measurement problem. It was a governance problem about who gets to decide contested parameters and when those decisions become binding. The same structure now operates at intergovernmental level.

The inheritance mechanism: CDM transition

Article 6.4 does not start from a blank slate. It has a transition pathway for projects registered under the Clean Development Mechanism, the Kyoto Protocol’s offset mechanism. At its 15th meeting, the Supervisory Body revised the CDM activities transition standard and procedure, providing the basis for transition of CDM Afforestation/Reforestation projects, while noting that full implementation depends on the availability of applicable methodologies.

The projects queuing for transition are concentrated in renewable energy. According to an analysis published by Abatable, renewable energy projects “historically dominated the CDM and comprise a substantial portion of projects seeking transition” and “have faced mounting criticism over additionality.” The same source notes that “no credits can be issued until two key elements are established: a registry (and guidance from the secretariat on it) and a wider range of approved methodologies by the SBM.”

This is the inheritance mechanism. If the transition pipeline is dominated by renewable energy projects whose additionality has been contested, then PACM’s first units will inherit that contestation rather than resolve it. The relevant question for a host country is not “is this project additional?” but “who bears the cost if the answer turns out to be no?”

Permanence: flexibility over standardisation

The most consequential rule the Supervisory Body has adopted is the standard on non-permanence and reversals. According to Abatable’s analysis, the standard establishes four principles: flexible monitoring periods, methodology-level risk assessment, multiple exit pathways, and national sovereignty over corresponding adjustments.

The first principle is the one that redistributes risk. “Perpetual monitoring has been dropped,” Abatable reports. “Each methodology will specify its own monitoring duration, with responsibilities transferable to host countries or third parties, while reversal liability remains with project participants unless alternative safeguards exist.”

The second principle delegates acceptable reversal risk to each methodology rather than setting a universal threshold. Abatable characterises this as “flexibility over standardisation,” noting that it “accommodates national circumstances and enables innovation, but introduces a potential challenge: permanence requirements may vary significantly across project types and geographies, creating less comparability.”

What does this mean in practice? It means the substantive rules that will govern land, forest, and energy projects are being written in methodologies that are still being drafted. The Supervisory Body sets the framework. The methodologies set the parameters. And the parameters are where the distributional questions live.

Consider Verra’s own clarification on baseline validity periods, published 24 November 2023. For Avoiding Unplanned Deforestation projects where the baseline is allocated from jurisdictional-level data, “the initial project baseline validity period may be as little as one year but no more than seven years. The second and subsequent project baseline validity periods shall be no more than six years.” A one-year initial baseline validity period means the accounting foundation of a forest project can be reset almost immediately after registration. That is a defensible technical choice and a significant distributional one: it shifts uncertainty onto whoever holds the liability when the baseline moves.

Who decides, and who can contest

The Thimphu meeting shows the Supervisory Body is prioritising methodology reviews in renewable energy and energy efficiency in response to the CDM transition pipeline. That is where a land or forest community’s evidence about local deforestation drivers, tenure, and consent would have to land to matter. It is also a process most affected communities have never been invited into.

Verra’s voluntary market at least has a documented public comment period. According to Verra’s own program description, “All projects undergo a 30-day public comment period during pipeline listing. Comments received during this time must be addressed by the project developer.” The Article 6.4 mechanism has a stakeholder communication procedure that provides for calls for public input on new regulatory documents or major revisions, and for written input from any stakeholder on Supervisory Body meeting documentation. But the procedure does not create a standing channel for a community to contest a methodology before it is adopted. The Supervisory Body’s meetings are public, and observers can attend. But the technical work happens in expert panels and methodology documents, not in the plenary.

The Glasgow Climate Pact, adopted at COP26, acknowledges that Parties should, when taking action to address climate change, “respect, promote and consider their respective obligations on human rights, the right to health, the rights of indigenous peoples, local communities, migrants, children, persons with disabilities and people in vulnerable situations and the right to development, as well as gender equality, empowerment of women and intergenerational equity.” It also recognises “the important role of indigenous peoples, local communities and civil society, including youth and children, in addressing and responding to climate change.” These are the stated commitments. The question is whether the methodology process gives them operational effect.

Three questions that get collapsed into ‘integrity’

It helps to distinguish three different questions that are often collapsed into the single word “integrity.”

First: Is the emission reduction real? This is a measurement and accounting question. Article 6.4’s rulebook is strongest here. It has an additionality standard, a registry, accredited validators, and a process for approving methodologies.

Second: Is the claim to it exclusive and durable? This is a question about double counting and permanence. Article 6.4 is partial here. The permanence standard delegates monitoring duration and acceptable reversal risk to individual methodologies. The CDM transition pathway carries forward projects whose additionality has been contested. The rules are still being written.

Third: Who decided, and who can contest the decision? This is a question about governance. Article 6.4 is largely silent here. The stakeholder communication procedure provides for calls for public input and written submissions on meeting documentation, but it does not create a standing channel for a community to contest a methodology before it is adopted. The public comment period that exists in the voluntary market has no direct equivalent in the Article 6.4 methodology process.

Where a community can still intervene

The actionable entry point is the methodology consultation, not the COP. The Supervisory Body’s 2025 workplan prioritises methodology reviews in renewable energy and energy efficiency. The Methodological Expert Panel is working on tools for common practice analysis and lock-in risk analysis. The baseline standard is under development, with guidance on downward adjustments, alignment with the Paris temperature goal, and best available technologies.

These are the documents where the substantive rules will be set. A community that wants to influence what happens on its land needs to engage with the methodology, not just the project. That means tracking the Supervisory Body’s meeting documents, the Methodological Expert Panel’s workplans, and the public consultations that accompany methodology development.

It also means asking a different set of questions. Not “is this project additional?” but “who wrote the baseline methodology, and what does it assume about land use?” Not “is this credit permanent?” but “who holds the liability if the carbon is released, and for how long?” Not “does this project have community consent?” but “what does the methodology require, and what does it leave to the project developer’s discretion?”

The Article 6.4 mechanism is not fully operational. No credits can be issued until the registry is established and a wider range of methodologies is approved. That means the rules are still being written. The window for influence is open. It will not stay open indefinitely.

Frequently asked questions

What is Article 6.4?
Article 6.4 of the Paris Agreement establishes a mechanism for countries to cooperate on emission reductions, generating credits that can be used to meet national climate targets. The mechanism is governed by a Supervisory Body and is known as the Paris Agreement Crediting Mechanism (PACM).

How is Article 6.4 different from the voluntary carbon market?
Article 6.4 is an intergovernmental mechanism. Credits are issued under the authority of the Parties to the Paris Agreement, and host countries must authorise the transfer of mitigation outcomes. The voluntary market operates outside the Paris Agreement framework, with standards set by independent organisations like Verra.

What is the CDM transition pathway?
The Clean Development Mechanism was the Kyoto Protocol’s offset mechanism. Article 6.4 allows certain CDM projects to transition into the new mechanism. The Supervisory Body has approved the first transition request, for a Programme of Activities called “Clean Energy Program Supported by Republic of Korea.”

What does the permanence standard say?
The standard on non-permanence and reversals, approved by the Supervisory Body, drops perpetual monitoring and allows each methodology to specify its own monitoring duration. Reversal liability remains with project participants unless alternative safeguards exist. Acceptable reversal risk is defined at the methodology level rather than through a universal threshold.

How can communities engage with the Article 6.4 process?
The Supervisory Body’s meetings are public, and observers can attend. The mechanism’s stakeholder communication procedure provides for calls for public input on new regulatory documents or major revisions, and for written input from any stakeholder on meeting documentation. The technical work happens in expert panels and methodology documents. Tracking the Supervisory Body’s meeting documents and the Methodological Expert Panel’s workplans is the most direct way to see where the substantive rules are being set.

What is the main gap in the Article 6.4 rulebook?
The rulebook is strongest on measurement and accounting. It is partial on permanence and double counting. It is largely silent on governance — specifically, on how a community can contest a methodology before it is adopted.