A flood of environmentally questionable carbon credits that many observers had feared would swamp the United Nations’ new Article 6.4 carbon market has largely failed to materialize, after China and India declined to endorse any of their old projects seeking entry and more than three-quarters of all applicants missed a crucial government approval deadline, Climate Home News has reported.
An analysis of official UN data shows that only 415 of more than 1,500 projects and programs that applied to transition from the Clean Development Mechanism (CDM)—the now-superseded Kyoto Protocol offset scheme—to the new Paris Agreement Crediting Mechanism (PACM) received host government backing by the June 30 deadline. China and India, which together hosted roughly two-thirds of all applicants, approved none of their legacy projects for transition, accounting for the bulk of the rejections.
Had all applicants succeeded, they could have introduced more than 900 million credits—equivalent to Japan’s annual emissions—generated under rules now widely regarded as outdated and insufficiently rigorous. The CDM has long faced criticism for failing to deliver real emissions reductions and for a patchy record on human rights, and critics had warned that allowing its projects to continue in the successor market could undermine confidence in the new mechanism.
Brazil Bucks The Trend
Brazil took the opposite approach, approving nearly all 92 of its projects—all of them during the six-month extension window that governments agreed at COP30 in Belém after developing countries requested more time. Hydropower plants, landfill gas schemes, and wind farms make up the bulk of Brazil’s surviving portfolio.
Peru, Thailand, and Mexico also pushed approvals through in the final weeks, while African nations including Zambia, Malawi, and Ethiopia backed clean cookstove programs with the potential to generate millions of credits. A chart by type of activity, prepared by Climate Home News using data by United Nations Framework Convention on Climate Change (UNFCCC), is available here.
Among the projects that failed to win approval were nine fossil fuel company-backed programs from over a decade ago designed to subsidize gas plant construction across the Global South. One of them, linked to the Ressano Garcia gas plant in Mozambique, narrowly survived after the country’s government granted its approval on the deadline day itself.
Researchers welcomed the outcome as a sign that carbon markets are maturing. Injy Johnstone, a senior research fellow at the Munich-based Max Planck Institute, said the system was “trying to remove some of the hot air that had inflated it in the past,” describing the failure of most projects to transition as “the biggest contribution that Article 6 has made to climate yet.”
Relevant: UN Moves To Operationalize Article 6 And Support Global Carbon Markets
A Long Road Still Ahead
Securing government approval does not automatically grant projects access to the new market. Developers must submit additional documentation by the end of 2026 demonstrating compliance with the mechanism’s stricter rules on environmental safeguards, social protections, and reversal risk. The Article 6.4 Supervisory Body, which regulates the mechanism, retains final approval over which projects may issue credits.
So far, 30 programs have completed the full transition process. Only two cookstove projects in Myanmar have been formally approved to issue credits—and both have since drawn calls for investigation from civil society groups over alleged ties to Myanmar’s military junta and claims that their climate impact may have been significantly overstated.
Read more: UN Body Greenlights First Methodology For Global Carbon Market Under Article 6.4
