Article 6.4 Goes Live: What the Paris Agreement Crediting Mechanism Means for Indian Companies in 2026

For most of the past decade, Article 6.4 was an acronym that lived in negotiating rooms. In 2026 it became a functioning market. In February, the UN issued the first-ever credits under the Paris Agreement Crediting Mechanism (PACM) — 58,428 tonnes from a clean-cooking programme in Myanmar. On 30 June 2026, the host-country approval window for Clean Development Mechanism (CDM) projects seeking to transition into the new mechanism closed. And by the end of this year, the CDM itself — the system that trained India's first generation of carbon project developers — will stop operating.

For Indian companies this is not distant UN machinery. India holds one of the world's largest legacy CDM pipelines, has formally notified the activities it will trade under Article 6, and is stitching Article 6 into the same policy fabric as its domestic Carbon Credit Trading Scheme. Whether you develop projects or buy credits, PACM will shape the supply, price and credibility of what you touch. Here is what has actually happened this year, and what to do about it.

From CDM to PACM: what Article 6.4 actually is

Article 6 is the section of the Paris Agreement that lets countries cooperate on emission reductions through markets. It has two working arms. Article 6.2 enables bilateral trades between governments — internationally transferred mitigation outcomes, or ITMOs. Article 6.4 creates a centralised, UN-supervised crediting mechanism open to both governments and private players. That mechanism is the PACM, the formal successor to the CDM, run by a Supervisory Body that approves methodologies, accredits auditors and controls issuance.

PACM credits are called A6.4ERs, and they come in two flavours. Authorised units carry a "corresponding adjustment" — the host country gives up the right to count the reduction toward its own climate target so that a buyer country, or an airline under CORSIA, can. Mitigation contribution units (MCUs) carry no adjustment and are intended for domestic schemes and voluntary corporate use. That distinction drives price, eligibility and what a buyer can legitimately claim. If you are new to the mechanics, our primer on how carbon credits work covers the foundations.

What has happened in 2026 so far

• First credits issued. In February 2026 the UN issued the first A6.4ERs in history — 58,428 credits to a clean-cooking programme in Myanmar financed by South Korean buyers.

• A roughly 40% haircut. Applying PACM's updated, more conservative baselines, the activity earned about 40% fewer credits than the CDM-era calculation for the same work — a deliberate integrity signal.

• Methodologies and auditors are arriving. The Supervisory Body approved its first PACM methodology (landfill gas capture and use) and accredited its first operational entities; renewable energy and cookstove methodologies are expected during 2026, with the first new project registrations targeted by year-end.

• The CDM sunset is confirmed. At COP30 in Belem, parties agreed the CDM phases out during 2026 and ceases fully in 2027, with US$26.8 million from the CDM Trust Fund transferred to finance PACM's ramp-up.

• The transition window has closed. Host-country approvals for CDM projects moving to PACM were due by 30 June 2026, with remaining documentation due by December 2026. Close to a billion legacy CERs could carry over in principle, but only a fraction of the 2,400-plus applying activities had approvals in hand by late 2025.

The first PACM issuance credited roughly 40 per cent fewer tonnes than the same project earned under the CDM. That one number tells you where UN carbon markets are heading: conservative baselines, tighter verification, fewer — but far more defensible — credits.

Why the 40% haircut matters for supply, price and quality

PACM's stricter baselines, mandatory downward adjustment of crediting over time and tougher additionality tests all point the same way: each project will mint fewer credits than it would have a decade ago. Constrained UN-grade supply is arriving just as demand channels open — airlines under CORSIA, sovereign buyers under Article 6.2, and corporates that want units robust enough to survive scrutiny. The likely result is firmer pricing for high-integrity supply even while legacy-heavy corners of the voluntary market stay soft.

For buyers, PACM also becomes a reference point. Its verification chain — accredited auditors, approved methodologies, continuous monitoring — is effectively the new global bar, and voluntary standards are converging on it. Our guides to how carbon credit verification works and how to evaluate high-integrity credits before you buy explain the checks that now separate defensible credits from the rest.

Where India stands

India has been deliberate about Article 6. The government has notified a National Designated Authority for implementing Article 6 of the Paris Agreement (NDAIAPA) and finalised the activities eligible for international carbon trading: renewable energy with storage, offshore wind, solar-thermal power, green hydrogen and green ammonia, compressed biogas, sustainable aviation fuel, tidal and ocean energy, HVDC transmission paired with renewables, high-end energy efficiency technologies, and carbon capture, utilisation and storage.

The logic is explicit: keep low-cost abatement — the solar parks and efficiency retrofits India needs for its own NDC and its domestic compliance market — at home, and use Article 6 to pull international finance into technologies that are still expensive. Bilateral cooperation, including the arrangement with Japan under Article 6.2, is opening the first corridors for such trades. Meanwhile the domestic Carbon Credit Trading Scheme is approaching its first trades, and its offset mechanism will give projects that missed the PACM transition a domestic route to market.

What Indian developers and buyers should do now

The next six to twelve months are a sorting period. Practical moves:

• Developers with legacy CDM projects: if host-country approval was secured before 30 June, complete the remaining transition documentation well before the December 2026 cut-off. If the window was missed, evaluate migrating to a voluntary standard or the CCTS offset mechanism rather than writing the asset off.

• New project sponsors: design against the emerging PACM methodologies — renewables and cookstoves first — and India's eligible-activities list. Decide the authorisation strategy (A6.4ER with corresponding adjustment vs MCU) at design stage, not after issuance.

• Corporate buyers: ask for authorisation status and corresponding-adjustment treatment in every term sheet, and treat PACM-grade MRV as your quality benchmark even when buying voluntary units.

• Budget owners: plan for a two-tier market in which adjustment-backed, high-integrity units command a widening premium — our 2026 carbon credit price guide sets out current ranges.

Where Csquare fits

Csquare works on both sides of this transition. For project developers, we assess PACM eligibility, transition options for legacy CDM assets, methodology fit and MRV readiness. For corporate buyers, we source and screen high-integrity credits, benchmark pricing, and align purchases with net-zero claims, BRSR disclosure and the emerging Article 6 rulebook. If Article 6.4 touches your project pipeline or your procurement plans, talk to us — a short scoping call is usually enough to map your options.