For nearly a decade, Article 6.4 of the Paris Agreement existed mostly as an acronym in conference agendas. CoP29 changed that. The Supervisory Body adopted the standards for methodologies and for removals, which means the Paris Agreement Crediting Mechanism now has the machinery it needs to begin issuing units. That is a genuine milestone, and it is also the point at which the practical questions start.
The temptation is to read this as a replacement for the voluntary market. It is not. What has emerged is a parallel, more tightly governed track, and understanding where the two diverge matters more than tracking the headline.
What was actually adopted
Two standards were agreed. The first governs how methodologies are developed and approved. The second governs removals specifically, including how permanence and reversal risk must be handled. Both had been contested for years, largely because they force a decision on how conservative baselines should be.
- Baselines must be set below business-as-usual, and must decline over time rather than being fixed for the crediting period
- Additionality assessment is prescriptive rather than left to methodology developers
- Removals carry explicit monitoring obligations after credits are issued, not just before
- Reversal risk must be addressed through a defined mechanism rather than a buffer pool set at the developer discretion
The declining baseline requirement is the one that will reshape supply. Under most voluntary methodologies, a baseline is established at validation and then holds. Under 6.4, the counterfactual has to tighten as the crediting period progresses. The direct consequence is fewer credits per project over time, and a real repricing of long-dated project economics.
Why this is stricter than the voluntary market
It helps to be blunt about the difference. Voluntary standards are governed by independent bodies competing, to some extent, for project registrations. Article 6.4 is governed by a UN Supervisory Body that answers to Parties. The incentive structure is not the same, and neither is the tolerance for methodological generosity.
The value of an Article 6.4 unit is not that it is a better tonne. It is that the governance behind the tonne is harder to dispute.
That distinction matters for anyone who has been questioned about credit quality by an auditor, a regulator or a journalist. It does not mean voluntary credits are illegitimate. It means the defensibility burden is lower with a 6.4 unit, and buyers under scrutiny will pay for that.
Corresponding adjustments and the double-counting question
This is where most corporate confusion sits. When a host country authorises a unit for use towards another country nationally determined contribution, it applies a corresponding adjustment — it removes that reduction from its own accounts. That prevents the same tonne being counted twice.
But corresponding adjustments are not automatic, and they are not free. A host country giving one up is worsening its own NDC position. Several countries have already signalled they will authorise only limited volumes, or will charge for authorisation. For buyers, the practical implication is that authorised units will be structurally scarcer and more expensive than unauthorised ones from the same project.
What CoP29 did not resolve
Honesty about the gaps is more useful than a clean summary. Several things remain open.
- How CDM projects transition into the new mechanism, and how much legacy volume carries over
- Whether corporate buyers can use 6.4 units for voluntary claims, and how those claims should be worded
- How the mechanism registry will interoperate with the existing voluntary registries
- Pricing, which cannot be established until authorised supply actually reaches the market
The transition question is not academic. A large volume of CDM-era projects is waiting to move across, and how permissively that is handled will determine whether the first years of 6.4 supply look genuinely new or largely recycled.
What buyers should do now
Our advice to clients has not changed much in substance, but the emphasis has shifted.
- Do not pause your offsetting programme waiting for 6.4 supply. Authorised volume will be thin for some time.
- Separate your reduction strategy from your credit strategy. Credits should cover residual emissions, and a stricter crediting regime makes that discipline more important, not less.
- Start recording authorisation status in your own systems now, alongside registry and serial. Retrofitting that field across historic retirements is painful.
- Revisit any forward or offtake agreement that assumes a fixed baseline over the crediting period. Under a declining baseline the volume assumptions may not hold.
- Prepare your disclosure language for a two-tier market, so you are not describing authorised and unauthorised units in the same terms.
The broader point is that carbon markets are moving from a period of methodological pluralism to one of tighter governance. That is uncomfortable for supply, and it is good for buyers who intend to still be defending their claims in five years.