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United Nations Project Mechanisms
Last update
31/08/2026
The use of international carbon market mechanisms – the crediting of emission reductions across countries and the international crediting of climate protection projects – is an important tool for climate protection. This page provides a detailed overview.
Climate protection requires a global commitment and worldwide measures. Market-based instruments, such as emissions trading, reduce greenhouse gas emissions where it is most cost-effective while also supporting international climate finance.
At the international level, such instruments have been based on the United Nations Framework Convention on Climate Change (UNFCCC) since the 1990s and were initially implemented under the Kyoto Protocol.
The Paris Agreement further developed this approach: the new project mechanism under Article 6 of the Paris Agreement (Paris Agreement Crediting Mechanism, PACM) replaces the Kyoto Protocol’s Clean Development Mechanism (CDM). This page explains how the international project-based mechanisms under Article 6 of the Paris Agreement work and discusses their significance and role for Germany.
Project Mechanisms under the Kyoto Protocol
The Kyoto Protocol was adopted in 1997 by the Third Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC). It entered into force in 2005 and is the world’s first legally binding international treaty aimed at mitigating climate change. It obligates Parties to the Convention to reduce emissions of greenhouse gases.
The Kyoto Protocol provided two project-based mechanisms: CDM and JI.
Climate protection projects under the Clean Development Mechanism (CDM) were based on Article 12 of the Kyoto Protocol. Industrialised countries could meet their emission reduction or stabilization commitments by financing or implementing CDM climate protection projects in less developed countries.
Joint Implementation (JI) climate protection projects were based on Article 6 of the Kyoto Protocol and offered industrialised countries an opportunity to reduce greenhouse gas emissions in other developed countries. The resulting emission reductions could be credited towards the respective commitments of the participating states under the Kyoto Protocol. Companies were also able to participate in JI projects and use the resulting certificates. In principle, only the countries listed in Annex B of the Kyoto Protocol, as well as companies based in those countries, were permitted to participate in JI climate protection projects.
The second commitment period (2013–2020) of the Kyoto Protocol ended on 31/12/2020, whereupon the CDM and JI project mechanisms also expired; in principle, they are replaced by the cooperation mechanisms under Article 6 of the Paris Agreement.
The existing regulations therefore remain relevant, particularly for projects registered up to the end of 2020. Accordingly, the German “Designated National Authority (DNA)” as the competent body at the German Environment Agency, terminated enforcement under the Project Mechanisms Act (ProMechG) upon expiry.
The CDM had faced criticism over the course of its implementation. In several cases, questions were raised as to whether the funded projects actually resulted in additional emission reductions. Moreover, emission reductions were overestimated for certain types of projects. Social and environmental aspects, as well as the contribution to sustainable development in the host countries, were also not always given sufficient consideration.
Furthermore, it became apparent that the existing regulations were not always sufficient to reliably prevent double counting of emission reductions or to adequately address long-term risks, for example in reforestation projects.
These lessons learned from the implementation of the Kyoto mechanisms have been incorporated into the further development of international project mechanisms. A study published by the German Environment Agency (“Lessons Learned from the Kyoto Mechanisms for the Article 6.4 Mechanism,” 2024) systematically analyses the insights gained and derives recommendations for the Paris Agreement Crediting Mechanism (PACM).
Since 2021, the Paris Agreement, which entered into force in 2016, has provided the international framework for the global use of project-based mechanisms for climate action. Article 6 of the Paris Agreement provides for the use of market-based mechanisms for international cooperation. Thus, project-based mechanisms remain an important tool for cooperation under the Paris Agreement. Unlike the Kyoto Protocol, the Paris Agreement requires all Parties commit to their own Nationally Determined Contributions (NDCs). International project mechanisms must therefore account for the crediting of emission reductions between countries and prevent double counting.
Article 6 of the Paris Agreement
Article 6 of the Paris Agreement establishes the framework for voluntary international cooperation on climate action. Under this framework, countries can jointly generate and transfer emission reduction results and use them to meet their nationally determined contributions (NDCs).
Prevention of Double Counting
Source: MEDDE - Arnaud Bouissou
A key mechanism under Article 6 of the Paris Agreement for the prevention of double counting is what are known as “corresponding adjustments” – that is, accounting adjustments made when crediting emission reductions. These adjustments become relevant when an emission reduction is transferred internationally and used by another country to meet its climate target.
In this case, the host country where the emission reduction was achieved makes a corresponding adjustment: it may not count the transferred reduction toward its own target. The beneficiary country, on the other hand, may count the reduction toward its own climate target. This prevents the same emission reduction from being counted twice.
Unlike under the Kyoto Protocol, the Paris Agreement obliges all Parties to submit their own nationally determined contributions (NDCs) and to implement climate action measures to achieve them. An emission reduction achieved through a project in a host country therefore initially contributes to the fulfilment of that country’s NDC. If the same reduction is subsequently transferred internationally and claimed by another state or another stakeholder towards its own climate target, there is a risk that the climate protection effect will be counted multiple times. Of particular relevance in this context is what is known as ‘double claiming’: the host country counts the reduction towards its national carbon footprint, whilst at the same time the purchaser of the reduction credits claims the same climate protection benefit towards its own target.
The three approaches set out in Article 6
Article 6 of the Paris Agreement sets out three approaches to an international carbon market:
Cooperation on the use of internationally transferred mitigation results to achieve NDCs, under the responsibility of the Parties (in Article 6.2)
An internationally monitored mechanism for mitigating emissions in a country, involving the transfer of mitigation results and support for sustainable development, with additional global emission reductions (in Article 6.4)
Non-market-based approaches to promote mitigation and adaptation (in Article 6.8)
These three approaches are supposed to ensure that the interests of all countries are met in terms of opportunities for international cooperation in the carbon market. The mechanisms are available to all countries on a voluntary basis to help them achieve the overarching objectives of the Paris Agreement. This allows emission reductions achieved through climate protection projects to be transferred and used between countries as credit towards agreed targets.
The Paris Agreement Crediting Mechanism (PACM)
The Paris Agreement Crediting Mechanism (PACM) is the new project- and programme-based mechanism under Article 6.4 of the Paris Agreement. It builds on the experience gained with the CDM under the Kyoto Protocol but goes beyond it.
The PACM can be used to register climate action that leads to verifiable reductions in emissions or removals of greenhouse gases and for which credits can be issued. Under certain conditions, these can be used by countries to meet their NDCs. Private sector stakeholders, such as airlines, may also be eligible to purchase these emission reduction credits. A robust crediting system is of central importance. This includes clear requirements regarding additionality, methodologies, monitoring, reporting, verification and the prevention of double counting. Corresponding adjustments play an important role in this context when credits are transferred internationally and counted towards climate targets.
With the approval of the first methodologies and the initial issuance of carbon credits in February 2026, the PACM is now effectively operational. Project activities may either be registered as new activities under Article 6.4 of the Paris Agreement or, subject to certain conditions, be transferred from the CDM to the PACM.
The research project “Strengthening the transformative effect of market approaches under the Paris Agreement” (research reference number 3719 42 504 0) analysed and identified the prerequisites for Article 6 of the Paris Agreement. In doing so, it focused on more transformative approaches. These should, where possible, be designed and implemented in such a way that ambitious transformation pathways are embarked upon and maintained.
In the project, the research team defined the term ‘transformation’ or ‘transformative change’ as follows: “A fundamental, sustainable change of a system that brings an end to established carbon-intensive practices and contributes to a zero-emission society, in line with the Paris Agreement’s goal of limiting global warming to between 1.5 and 2 °C and the United Nations Sustainable Development Goals”.
Four characteristics are particularly relevant to the objectives of Article 6: ‘digitalisation’, ‘the private sector and governments’, ‘carbon pricing’ and ‘dynamic baselines’.
The project “Adaptation of Clean Development Mechanism methodologies for use under Article 6 of the Paris Agreement” comprises a ‘Lessons Learned’ report and a final report. The ‘Lessons Learned’ document presents the key findings from the project-based mechanisms of the Kyoto Protocol. The final report, meanwhile, contains further analyses of the extent to which existing methodologies for determining additionality and baseline scenarios, and monitoring procedures, can be adapted for use under the Article 6.4 mechanism.
A comprehensive factsheet has been produced as a result of another research project entitled ‘Analysis of the role of Article 6 in Parties’ NDCs’. It examines the role of Article 6 of the Paris Agreement in the Nationally Determined Contributions (NDCs) submitted by the parties to the United Nations Framework Convention on Climate Change. The findings show that, in general, there is considerable openness towards Article 6, although the intention to purchase units is significantly lower than the willingness to sell such units.
A research project commissioned by the German Environment Agency, entitled ‘Using Article 6 to boost climate ambition’, has examined how Germany can utilise the cooperation mechanisms under Article 6.2 of the Paris Agreement to boost climate ambition. The study identified options for supporting long-term climate strategies, for utilising international emission reductions in the national emissions trading scheme, for providing high-quality units for international aviation (CORSIA), for the targeted promotion of climate finance, and for supporting stakeholders in the voluntary carbon market in gaining access to high-quality credits. The research project sees particularly great potential in voluntary use options, as these are comparatively easy to implement whilst also preserving environmental integrity.
Germany does not currently issue Letters of Authorisation (LoAs) for Corresponding Adjustments (CAs) under Article 6. National emission reductions are required in their entirety to meet Germany’s own climate targets (NDCs) and are therefore not available for international certificate flows or private national purposes.
However, from 2036 onwards, the EU will be able to use high-quality international credits to a limited extent to meet its 2040 climate target. Apart from that, private and public stakeholders may use internationally authorised Article 6 credits to offset their emissions.
Overview of Global Climate Conferences
The term ‘world climate conferences’ refers to the annual Conferences of the Parties (COP) to the UN Framework Convention on Climate Change. These are also often referred to as the UN Climate Conference or the (World) Climate Summit. From 2005 to 2017, the conference was supplemented by the meeting of the Parties to the Kyoto Protocol (Conference of the Parties serving as the meeting of the Parties to the Protocol, COP/MOP, or CMP for short); since 2018, it has been supplemented by the meeting of the Parties to the Paris Agreement (COP to the Paris Agreement, or CMA for short).
The following outlines the subsequent climate conferences relating to the project mechanisms since the Paris Agreement in 2015:
At COP30 in Belém, following the adoption of the implementing rules in the previous year, the Article 6 market mechanisms of the Paris Agreement were discussed as a regular agenda item by the CMA. The work of the Supervisory Board (SBM) for the PACM was acknowledged, as were the standards published to date. Also, attention was drawn to the significant need for capacity building and broader participation by relevant stakeholders.
The deadline for host countries to provide their approval for the transition of existing CDM activities to the PACM was extended by six months to 30/06/2026. Attention was also drawn to a funding gap for the PACM. In a parallel decision under the Kyoto Protocol, it was agreed that remaining CDM funds would be made available to the PACM Trust Fund or the Adaptation Fund. Furthermore, a binding timetable for the phasing out of the CDM by 2027 was adopted.
At COP29 in Baku, the Supervisory Board adopted operational standards for the generation of emission credits, thereby laying the foundations for the mechanism to become fully operational.
There was little progress regarding Article 6 of the Paris Agreement. No consensus was reached on Articles 6.2 and 6.4. Whilst the technical infrastructure for the Article 6.4 mechanism is due to be implemented by 2025, many important procedural issues remain unresolved. For example, the EU advocated the establishment of a specific appeal and complaint procedure. Consequently, Articles 6.2 and 6.4 will once again be on the agenda of COP29 in Baku, Azerbaijan. Details regarding implementation under Article 6.8 were agreed.
The market-based cooperative mechanisms under Article 6 of the Paris Agreement reached a major milestone at COP26 in 2021 and took an important step towards implementation with the adoption of the Glasgow Rules. The topic of implementation dominated at COP27, hosted in Sharm El-Sheikh under the Egyptian Presidency. The Supervisory Body (SB) for Article 6.4, which takes over the role of the Clean Development Mechanism (CDM) Executive Board within the new mechanism under Article 6.4, was established in July 2022 and had held several meetings. Draft texts on the development of methodologies and the inclusion of carbon sequestration in the mechanism were discussed but not adopted. Issues relating to the transition of existing Clean Development Mechanism (CDM) projects and existing credits under the umbrella of the Paris Agreement were clarified. Further provisions were agreed upon to distinguish between ‘authorised’ and ‘non-authorised’ emission reduction units, known as ‘mitigation contribution A6.4ER’. However, answers to fundamental questions regarding the authorisation of mitigation outcomes by the host country in accordance with its NDC are still pending.
Further key issues relating to implementation remain unresolved, including those concerning the development of the IT infrastructure and reporting. Thus, work will continue in 2023 with the participation of the Parties in the form of written submissions and workshops.
At COP26 in Glasgow, which was postponed from 2020 to November 2021 due to the COVID-19 pandemic, the outstanding chapter of the Paris Agreement regulatory framework on the market-based cooperation mechanisms defined under Article 6 was adopted. Information on the outcomes of this conference can be found on the UNFCCC website.
The structure of the market mechanisms under Article 6 was once again the focus of the negotiations. Although a detailed draft text had been presented at COP24 in Katowice, no consensus could be reached; the aim was therefore to reach an agreement in Madrid. In parallel, several discussion papers were published on behalf of the German Environment Agency, which examined in particular the future mechanism under Article 6.4, intended to replace the Clean Development Mechanism (CDM). The focus was on environmental integrity, robust accounting and greater integration into the host countries’ national climate policies.
The negotiations ultimately failed – no agreement was reached on Articles 6.2 and 6.4, which is why the decision was deferred to the COP26 in Glasgow.
COP24 took place in Katowice in December 2018. A key objective was the finalisation of the Paris Rulebook, particularly Article 6 on market-based cooperation. The Parties agreed on a detailed draft text for Articles 6.2 and 6.4, but were unable to reach agreement on contentious issues such as double counting, the ‘share of proceeds’ (solidarity contribution) and authorisation rules.
COP23 in Bonn was dominated by the detailed elaboration of the Paris Agreement’s rules. In the context of Article 6, initial technical discussions were held on the international accounting of emission reductions. In particular, discussion focused on issues relating to the establishment of reference scenarios for the Parties to the Paris Agreement and to the verifiability of the additionality of emission reduction units generated under Article 6 of the Paris Agreement. Although no final decisions have yet been taken, the negotiations laid important foundations for the regulations.
Robust accounting for international mitigation contributions
The discussion paper ‘Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Discussion Paper’, commissioned in advance by the German Environment Agency, analyses key aspects and approaches for ensuring robust accounting in the international transfer of emission reductions from market mechanisms under Article 6 of the Paris Agreement. It begins by providing an overview of the aspects that need to be regulated and sets out possible regulatory approaches. The publication has now been expanded to include the issue of the relationship between the timing of reductions and the timeframe of the Parties’ climate targets for accounting purposes. Moreover, it analyses issues relating to the tracking and documentation of international transfers.
Ensuring environmental integrity in the transfer and use of international mitigation actions
One of the most important cross-cutting aspects in the structure of the new market mechanisms under Article 6 of the Paris Agreement is ensuring environmental integrity in the transfer and use of international mitigation actions. The discussion paper summarises key findings regarding design options for safeguarding environmental integrity.
It makes it clear that – compared with the use of domestic mitigation actions to achieve the NDC – the transfer of international mitigation actions must not lead to higher global greenhouse gas emissions. Four measures to safeguard environmental integrity are identified and described:
COP22 in Marrakesh marked the official start of negotiations on Article 6 following the entry into force of the Paris Agreement.
In the run-up to the international climate conference in Marrakesh (7–18/11/2016), the German Environment Agency commissioned the drafting of three discussion papers. These papers address key issues for the discussion and drafting of international rules for Article 6 of the Paris Agreement. Article 6 allows for the use of international market mechanisms to fulfil countries’ nationally determined contribution.
Analyses of the conceptual foundations of Article 6 of the Paris Agreement, as well as of how to optimise the wording and specificity of existing indicators relating to the market mechanisms of the Kyoto Protocol.
Analysis of the role of international market mechanisms under the Paris Agreement and their potential interactions with emissions trading schemes. Our analysis suggests that the purpose of international carbon markets has changed.
