Current Developments in Bilateral Cooperation and Article 6.4 Mechanism as of 02 June 2025
4.1 Bilateral Cooperation
Since the adoption of Article 6 of the Paris Agreement, many countries have initiated bilateral cooperation under the context of Article 6.2 of the Paris Agreement. The bilateral cooperation provides the necessary framework for countries to cooperate in implementing Article 6, including by setting the modalities for cooperation relating to authorization, transfer of ITMOs, mutually agreed environmental integrity standards and sustainable development consideration, as well as reporting and avoidance of double counting, which must be implemented consistently with the Article 6.2 guidance and relevant decisions. Depending on the forms of cooperation and arrangements between Parties, bilateral cooperation may be implemented through implementing agreements, Memorandum of Understanding (MoU) and/or other forms of documents.
4.1.1 Bilateral Cooperation Status
To date 97 bilateral agreements and arrangements have been signed among 63 Parties. Bilateral cooperation consists of 57 Memoranda of Understanding (MoU), 30 Bilateral Agreements (BAs), and 10 “others”, which include declarations of intents and other forms of bilateral agreements. Recent partnerships include Japan’s expansion of its Joint Crediting Mechanism (JCM) through new collaborations with Tanzania. Similarly, Singapore and Rwanda have formalized cooperation, as have Switzerland and Kenya. These partnerships are critical in unlocking mitigation potential and delivering sustainable development benefits through carbon markets.
4.1.2 Bilateral Cooperation between Parties
A total of 63 Parties engaging in bilateral cooperation, consisting of 53 Host Parties and 10 Acquiring Parties. Ghana stands out in the implementation of Article 6, having successfully engaged with five acquiring parties. Senegal and Indonesia also demonstrate strong engagement in this area, each collaborating with four acquiring parties. Their involvement shows a broader trend of increasing participation among developing nations in international carbon trading, highlighting the importance of cooperative efforts in achieving global climate goals.
4.1.3 Number of Projects Under the Bilateral Cooperation
There are 286 ongoing projects under bilateral cooperation frameworks in accordance with Article 6.2 of the Paris Agreement. Japan accounts for a substantial 262 ongoing projects through JCM, Switzerland ranks as the second-largest contributor, with 20 projects. These initiatives show the increasing adoption of Article 6.2 as Parties leverage cooperative mechanisms to meet their NDCs and foster global sustainable development.
4.2 Article 6.4 Mechanism (PACM)
The Article 6.4 mechanism also known as the Paris Agreement Crediting Mechanism (PACM) allows Parties to participate in international carbon markets by enabling generation and transfers of "Article 6.4 mechanism emission reductions" (A6.4ERs) and removals. The Designated National Authority (DNA) is responsible for approving Article 6.4 activities and ensuring they align with national climate objectives. Effective communication between DNAs and the Article 6.4 mechanism Supervisory Body is critical to uphold the rules of Article 6.4. Parties must submit Host Party Participation Requirements, establishing the conditions that Parties must meet to participate in the mechanism. Participants in a proposed Article 6.4 mechanism activity must additionally demonstrate consideration of the Article 6.4 mechanism benefits by submitting prior consideration notifications. The prior consideration notification is required before the start of project activities. It serves as an initial step, creating transparency and a record of the project’s intention to participate in the international carbon market.
4.2.1 Article 6.4 DNA & Host Party Requirements
To date 104 Parties formally submitted information regarding their Designated National Authorities (DNAs) and 16 Host Party Participation Requirements have been submitted indicating growing institutional readiness. About 36 Parties submitted DNA details in Africa, showcasing significant progress across the continent. In Asia, 19 Parties submitted DNA information as well as 18 submissions for Latin America and the Caribbean. The submission of DNAs is a key step for Parties intending to participate in international carbon markets in the Context of Article 6.4 mechanism and cooperate to enhance climate action, as it establishes the institutional groundwork needed to participate in Article 6.4 mechanism.
While many Parties have a DNA for Article 6.4 mechanism, only a limited number have officially communicated the Host Party participation requirements for Article 6.4 mechanism and their specific roles and responsibilities. This gap in readiness highlights the importance of additional support to empower DNAs to fully operationalize the Article 6.4 mechanism
4.2.3 Prior Consideration Notifications for an A6.4 Mechanism
About 1,000 prior consideration notification have been submitted, with a significant portion of these submissions are concentrated in the renewable energy sector, along with household and community-level interventions. The notification of prior consideration plays a pivotal role, demonstrating that the Article 6.4 mechanism benefits were deemed necessary to implement the project. The notification ensures that Article 6.4 mechanism enhances global climate ambition.
4.3 Transition of the Clean Development Mechanism (CDM) Activities to Article 6.4 Mechanism (PACM)
The transition of Clean Development Mechanism (CDM) activities to the Article 6.4 mechanism under the Paris Agreement ensures a conversion to the new framework under the Paris Agreement and promotes early climate action. The Article 6.4 mechanism was established to promote transparency and cooperation for achieving NDCs. Activities registered under the CDM may transition to the Article 6.4 mechanism, provided they fulfill all necessary requirements. Conditions include an active crediting period as of 1 January 2021, compliance with the Rules, Modalities, and Procedures (RMPs) as outlined by the Supervisory Body, and adherence to any methodological requirements set forth by the host Parties. Project participants must have submitted the transition request to the secretariat by 31 December 2023, and host Party approval must be finalized by 31 December 2025.
4.3.1 CDM activities requesting and approved for transition
About 1500 CDM activities requested transition to Article 6.4 mechanism. Of the 1500 activities requested for transition, and 35 activities have been approved by the Host Party for transition to Article 6.4 mechanism.
4.3.2 CDM Activity by Type and Region Approved for Transition
The CDM activity types approved for transition are primarily concentrated in the household and community sector, with East and Southern Africa taking the lead. This is followed by renewable energy projects, which are predominantly led by South Asia, and then by industrial and commercial activities.
4.3.3 Key insights and trends of CDM activities requested for transition
The transition of CDM activities to the Article 6.4 mechanism marks a pivotal step in maintaining the continuity of carbon market initiatives under the Paris Agreement. The transition process reflects the global effort to integrate past mechanisms into the new climate framework while ensuring environmental integrity and aligning with the goals of the Agreement. Many developing Parties are keen to ensure that their activities are approved. However, the success of this transition depends on a clear process for approvals, compliance with new standards, especially methodological areas and the ability to avoid double counting. The transition process has a deadline of host Party approval by the end of December 2025. Only 35 activities have been approved for transition, raising concerns about the feasibility of approving all eligible activities in time. Addressing these challenges will be essential to unlocking the full potential of the Article 6.4 mechanism, ensuring it contributes effectively to sustainable emissions reductions and supports the goals of the Paris Agreement.