Executive summary
- Article 6 of the Paris Agreement introduces three key pathways for international cooperation:
- Article 6.2 establishes market-based cooperative approaches through binding accounting and reporting rules, enabling bilateral or multilateral transfers of internationally transferable mitigation outcomes (ITMOs). Article 6.2 mandates countries to apply corresponding adjustments, when internationally transferring mitigation outcomes, to avoid double counting of the underlying mitigation and preserve atmospheric integrity.
- Article 6.4 creates the Paris Agreement Crediting Mechanism (PACM), a UN-supervised system for generating verified emission reductions (A6.4ERs) that can be traded under Art. 6.2 (as ITMOs).
- Article 6.8 promotes non-market approaches, such as technology transfer, capacity building and policy cooperation, which support sustainable development without involving carbon trading.
- Nine years after Paris, COP29 in Baku finally delivered the full Article 6 rulebook. Art. 6.2 and the PACM are now legally operational, but registry infrastructure, methodology approvals and enforcement mechanisms remain works in progress. Article 6 markets are young and the data thin.
- The EU’s amended Climate Law allows up to 5% of 1990 net emissions –up to 230-240 Mt CO₂e per year– in international credits in line with the accounting rules under Article 6 from 2036-40 (with a pilot phase from 2031-35), implying at most 85% domestic net reductions. This directly contradicts the European Scientific Advisory Board on Climate Change (ESABCC), which recommended a 90%-95% domestic target. The gap: domestic emissions in 2040 could be up to 50% higher (465 Mt CO2e + international credits) than the accounted net 2040 target (465 Mt CO2e) by allowing international credits.
- The European Commission is tasked to create a level playing field in operationalising the use of international credits. One of the biggest questions in this regard is how the international credits will be sourced, procured, allocated and used under the EU 2040 Climate Target architecture: without diligence, 27 member states may fragment EU purchasing power and possibly open the door to driving a race to the bottom on quality, rewarding those that have invested least in domestic decarbonisation by allowing them to buy cheap offsets, while penalising member states like Spain that have already borne the cost of structural transformation in key sectors such as renewable electricity deployment.
- Article 6.1 of the Paris Agreement recognises that countries choose Article 6 to allow a higher ambition in their mitigation and adaptation actions.Whether the EU 5% credit window allows a higher climate ambition depends entirely on the design choices to be taken by the EU legislature. Quality criteria of the international credits and how the EU will use the credits internally will be decisive in this regard.
Introduction: why Article 6 matters now, in the EU and globally
In April 2026 the EU formally enacted its amended Climate Law, enshrining a binding target of 90% net greenhouse gas-emission reduction by 2040. Tucked within that legislation is a provision that may prove as consequential as the headline figure itself: from 2036, the EU may use international carbon credits under Article 6 of the Paris Agreement to meet up to 5% of the 1990 baseline, between 230 and 240 million tonnes of CO₂ per year depending on accounting methodology. The other 85 percentage points must be achieved domestically.
The timing of this decision is not coincidental. November 2024 saw the conclusion of COP29 in Baku, where nine years of negotiations on the Paris Agreement’s carbon market provisions finally produced a complete, operational rulebook. Under Art. 6.2, the accounting and reporting framework for bilateral and multilateral credit transfers between governments, the rules have been operational since Glasgow in 2021 and were further refined in Baku. Under Art. 6.4 the centralised UN-supervised Paris Agreement Crediting Mechanism (PACM) –the multilateral successor to the Clean Development Mechanism– became legally operational only at COP29, when the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA) adopted the methodological and removal standards the Supervisory Body required. International carbon trading under Article 6 is no longer a hypothetical architecture but a functioning, if still nascent, system.
This Policy Paper traces the journey from the nine paragraphs of Article 6 agreed in Paris in 2015 to the operational framework in place today. It examines the EU’s decision to re-enter the international carbon market and the scientific controversy it has generated, considers what the 5% provision means in practice both quantitatively and politically, and discusses what Spain’s situation in the EU’s Effort Sharing Regulation (ESR) tells us about the level playing field of the architecture of the post-2030 climate framework with potential international credit integration. The paper concludes with what the Commission could consider to ensure the 5% provision passes the foundational test Art. 6.1 of the Paris Agreement demands. That test is simple in its formulation and demanding in its application: international cooperation must enable higher ambition in achieving the EU’s NDC, not substitute for the domestic effort on which that ambition depends.
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