Correction: A previous version of this article stated that the Supervisory Body has adopted the methodology. This is now corrected to reflect that the expert panel has only made a recommendation but the Supervisory Body has not yet adopted it.
A United Nations (UN) panel has endorsed the first methodology under the Paris Agreement’s Article 6.4 mechanism, signaling a significant shift in global carbon markets infrastructure.
The newly approved method is targeted at renewable energy projects, such as small‑scale wind and solar initiatives in developing countries, providing a path for such projects to generate internationally tradable credits.
The Article 6.4 Supervisory Body‘s Methodological Expert Panel convened mid‑October to review market methods, and its recommendation of this initial methodology moves the system closer to being enacted.
Article 6.4, also known as Paris Agreement Crediting Mechanism (PACM), replaces the former Kyoto Protocol Clean Development Mechanism (CDM), which registered more than 7,800 emissions‑reduction projects between 2006 and 2020.
Under the new framework, one nation may fund emissions‑reduction initiatives in another and count the resulting credits toward its own climate goals.
The goal is to eliminate double‑counting, bring increased transparency and strengthen trust across developed and developing nations.
According to the International Energy Agency (IEA), renewable‑energy deployment in developing economies must roughly triple by 2030 to remain aligned with net‑zero ambitions and their own Nationally Determined Contributions (NDCs).
The World Bank estimates NDC cooperation under mechanisms like Article 6.4 could bolster as much as 5 billion tonnes of emission cuts annually by 2030 and unlock approximately $250 billion in climate finance per year.
Relevant: COP29: UN Approves Article 6.4, Launches Global Carbon Market
In 2023, the voluntary carbon market size stood at about $2 billion in 2023, according to research by McKinsey & Company, with projections to surpass $100 billion by 2030 driven by trading under Article 6.4.
However, as the Supervisory Body prepares for its upcoming session (October 29 and 30), during which they will consider adopting the new methodology, ahead of COP30 in Brazil next month, several hurdles remain.
Key methodologies for sectors such as forestry, agriculture, and industry are still awaiting approval, and some stakeholders caution that carbon trading must not become a substitute for cutting emissions at home.
Read more: UN Enacts Carbon Removal Standard Under Article 6.4
