Using International Carbon Markets to Meet Paris Agreement Commitments

COP 29, held in November 2024, concluded with significant progress towards the operationalization of Article 6 of the Paris Agreement. Article 6 enables countries to engage in voluntary cooperation to achieve their NDCs by trading carbon credits, establishing two main channels for transfer: Article 6.2, which allows countries to trade Internationally Transferred Mitigation Outcomes (ITMOs) through bilateral or multilateral agreements, and Article 6.4, where the United Nations Framework Convention on Climate Change (UNFCCC) oversees a centralized mechanism—the Paris Agreement Crediting Mechanism (PACM)—for host and buyer countries to trade carbon credits.

A large number of countries have expressed their intention to utilize Article 6 mechanisms to achieve their 2030 Paris Agreement targets. By the end of 2024, Parties to the Paris Agreement were required to submit their first Biennial Transparency Report (BTR) to the UNFCCC, detailing national emissions inventories, progress toward NDCs, and legal, technological, and financial measures undertaken to achieve these targets. As of January 2025, approximately 50 countries have submitted their reports, with more than half mentioning the potential use of international carbon markets to meet their commitments or to assist other countries in doing so.

Several Parties have declared they do not intend to use carbon credits under Article 6 to achieve their NDCs, including the European Union, the United Kingdom, Malaysia, Trinidad and Tobago, and Panama. Notably, Panama indicated the possibility of engaging in cooperative approaches for forest restoration projects.

Conversely, many Parties expressed interest in utilizing Article 6 mechanisms to achieve their NDCs. For example, Switzerland and Singapore, classified as developed countries, have committed to using ITMOs. Switzerland has already signed several bilateral agreements, notably completing the first-ever transfer of ITMOs with Thailand. Singapore stated its expectation that ITMOs will account for residual emissions reductions required to meet its NDC target after considering domestic abatement policies and plans. Other developed countries, such as Canada and Australia, have indicated openness to using Article 6 mechanisms but have yet to make formal commitments. Japan, having established its Joint Crediting Mechanism (JCM), will quantitatively evaluate contributions to GHG emission reductions and removals achieved in developing countries to apply them toward its NDC.

Many countries highlighted the development and establishment of monitoring, reporting, and verification (MRV) systems in their BTRs to enhance data collection and transparency, laying the groundwork for participation in Article 6 mechanisms.

Among developing countries in Africa, Latin America, and Asia, several standouts include:

• Argentina: Argentina’s BTR states it will use international carbon markets to achieve its NDCs; however, the country is not currently involved in cooperative approaches under Article 6.2.
• Belize: Belize plans to explore blue carbon projects in conjunction with Article 6 carbon markets.
• Chile: Chile has a pipeline of Article 6.2 projects as a host country, although its BTR did not specify whether these projects would contribute to its NDC..
• Colombia: While Colombia currently lacks bilateral or multilateral Article 6 agreements, it has expressed interest in using cooperative Article 6 approaches in the future.
• Gabon: Gabon reported that it has already met its Paris Agreement objectives and seeks to sell ITMOs for net absorption through REDD+ forest management projects.
• Guinea-Bissau: Guinea-Bissau stated it wants to engage in cooperative approaches from all sources eligible for the Article 6 mechanisms, in particular to develop energy savings and electricity production from renewable energy sources. The country mentioned the use of market-based (Article 6.2) and not market-based (Article 6.8) approaches.
• Mauritius: Mentioned that finance as a key requirement to Mauritius reducing its national GHG emissions by 40% from 2030 BAU level, it is pertinent to explore the possibility of co-operation under Article 6.2 and 6.4 of Paris Agreement. It is currently developing framework participation for cooperation under Article 6.
• Mexico: While Mexico has not explicitly committed to using ITMOs to achieve its NDC, its BTR emphasized the importance of forestry and reforestation projects in national mitigation efforts.
• Rwanda: The country has not yet engaged in cooperative approaches involving ITMOs. However, plans are underway to participate in these mechanisms, with project developers already allocating portions of their mitigation outcomes towards Rwanda’s NDC targets.
• Thailand: Recognized as having made significant progress in implementing cooperative approaches under Article 6.2, currently has two key agreements: Under the agreement with the Swiss Confederation, Thailand authorized a pilot mitigation activity “the Bangkok e-bus program” as part of its cooperative approach, which has an agreement to transfer carbon credits of 500,000 tons of carbon dioxide equivalent (tCO2eq) within the time frame from 1 October 2022 to 31 December 2030, under the JCM agreement with Japan, Thailand and Japan are actively reviewing potential mitigation activities for joint authorization, further expanding their collaborative efforts to reduce greenhouse gas emissions utilizing cooperative approaches.

As additional Parties submit their BTRs, the list of countries engaging with Article 6 mechanisms to achieve their NDCs is expected to grow.