What is the Paris Agreement Crediting Mechanism?

Article 6 of the Paris Agreement sets out how countries can pursue voluntary cooperation to reach their climate targets. It enables international cooperation to tackle climate change and unlock financial support for developing countries.

This means that, under Article 6, countries are able to transfer carbon credits earned from the reduction of greenhouse gas emissions to help one or more countries meet their climate targets.

There are three tools which countries can draw upon under Article 6, one of which is the Paris Agreement Crediting Mechanism (PACM) - the UN’s new high-integrity carbon crediting mechanism.

How does the Paris Agreement Crediting Mechanism work?

The carbon crediting mechanism under the Paris Agreement allows countries to raise climate ambition and implement national action plans more affordably.

It identifies and encourages opportunities for verifiable emission reductions, attracts funding to implement them, and allows cooperation among countries and other groups to conduct and benefit from these activities.

For example, through this mechanism a company in one country can reduce emissions in that country and have those reductions credited, so that it can sell them to another company in another country. That second company may use them for complying with its own emission reduction obligations or to help it meet net-zero targets.

The Paris Agreement Crediting Mechanism can also be a source of climate finance for developing nations, with a share of proceeds going towards adaptation funding to build resilience to the inevitable impacts of climate change.

Procedural background

At their third session the Parties to the Paris Agreement (CMA), adopted Decision 3/CMA.3 containing the rules, modalities and procedures for a carbon crediting mechanism established by Article 6, paragraph 4, of the Paris Agreement. 

The CMA also designated a 12-member body (Article 6.4 Supervisory Body) to supervise the mechanism under the authority and guidance of the CMA and be fully accountable to the CMA.