A new report highlights where the Article 6 market stands today and what participants should expect as implementation accelerates.
For years, Article 6 of the Paris Agreement was discussed primarily as a future mechanism; an important policy framework with significant potential, but limited real-world implementation. This is beginning to change. As highlighted in a recent report from Allied Offsets, The Article 6 Market: Scale, Value and Pipeline, the market has reached an inflection point, transitioning from rulemaking and negotiations toward active transactions, credit issuances, and emerging demand signals.
The report provides one of the clearest snapshots to date of where the Article 6 market stands today and what participants should expect as implementation accelerates. While the long-term opportunity remains significant, the findings also reveal a market that is still in its early stages, with important gaps between ambition, authorization, issuance, and actual credit transfers.
One of the report’s most important findings is the growing disconnect between signed agreements and completed transactions. While 128 bilateral agreements have been signed under Article 6.2, only five transactions have been completed and approximately 65,000 ITMOs have been transferred to date. This highlights a critical reality: policy momentum is not yet translating into large-scale market activity. Many countries are still developing the governance frameworks, registries, reporting systems, and authorization processes necessary to operationalize transfers at scale. For buyers and investors, this means patience and careful due diligence will remain essential as markets mature.
The report also underscores the importance of understanding authorization pathways and retirement outcomes. As countries establish their own approaches to implementing Article 6, carbon credits can follow different routes depending on whether they are intended for international compliance, domestic compliance, or voluntary use. Corresponding adjustments, authorization status, and final retirement pathways all have implications for how credits can be used and what claims can be made. As corporate buyers increasingly seek high-integrity credits, understanding these distinctions will become a core component of procurement and portfolio management strategies.
Another notable finding relates to CORSIA. While approximately 36 million CORSIA Phase 1-eligible credits have been issued, airlines have retired only a small fraction of available supply. This suggests that demand has yet to fully materialize despite growing compliance obligations. The result is a market that currently appears better supplied than many anticipated, though future demand growth could alter that dynamic quickly as compliance deadlines approach and participation increases.
The report also highlights a narrowing window for projects seeking to transition from the Clean Development Mechanism (CDM) into the Paris Agreement Crediting Mechanism (PACM) under Article 6.4. Of more than 1,500 projects pursuing transition, only a small percentage have received approval. With key deadlines approaching, many projects may not successfully transition into the new system. This could have significant implications for future credit supply and reinforces that Article 6.4 is not simply a continuation of the CDM under a different name.
Perhaps most importantly, early evidence suggests that PACM may generate fewer credits than historical CDM methodologies would have produced. The report notes that the first issuance under PACM resulted in substantially lower credit volumes than would have been generated under previous CDM rules. This reflects the more rigorous integrity requirements being embedded within the Paris Agreement framework and may ultimately contribute to stronger environmental credibility, albeit with reduced supply.
The emergence of government revenue opportunities is another trend worth watching. Host countries stand to generate meaningful revenue through authorization fees, levies, and participation in international carbon markets. However, many jurisdictions have yet to establish clear fee structures or regulatory frameworks. As governments seek to balance investment attraction with national climate objectives, policy decisions made over the next several years could have a significant influence on project economics and market competitiveness.
The overarching message from the Allied Offsets report is clear: Article 6 is no longer a future concept, it is becoming an operational market. However, implementation remains uneven, and many of the systems needed to support large-scale transactions are still being built.
For corporate buyers, project developers, governments, and investors, success in this next phase will depend on more than simply understanding carbon credits. It will require a deeper understanding of authorization frameworks, corresponding adjustments, retirement pathways, and the evolving relationship between voluntary and compliance markets.
As the market continues to mature, those who invest in understanding these dynamics today will be best positioned to navigate the opportunities and complexities of the international carbon market tomorrow.
💡 Historically, buyers focused primarily on project quality and credit issuance. Under Article 6, authorization status, corresponding adjustments, and retirement pathways are increasingly important determinants of value. Market participants who understand these distinctions will be better positioned to manage compliance, reputational, and strategic risks.
💡 Supply growth may be slower than many expect. Although the Article 6 opportunity is substantial, the report suggests that administrative approvals, host-country governance requirements, and stricter Article 6.4 methodologies could constrain supply growth in the near term. Organizations relying on future Article 6 volumes should carefully evaluate timing assumptions.
💡 The report notes that bilateral, unilateral, and Article 6.4 pathways are currently developing as largely separate markets with limited overlap among participants. As these pathways evolve, organizations that build expertise across multiple mechanisms may gain access to a broader range of opportunities while reducing exposure to policy and market concentration risks.
