Article 6.4 Explained: How the Paris Agreement’s New Carbon Mechanism Works for Indian Companies

If you have spent any time inside corporate climate teams in the last twelve months, you have probably heard the phrase Article 6.4 thrown around. It is doing a lot of conceptual work, and most people using it cannot tell you exactly what it is, who supervises it, or why it matters for Indian project developers and buyers. This post fixes that.

Article 6.4 of the Paris Agreement establishes a centrally-supervised global carbon market: the successor to the Clean Development Mechanism. It complements the bilateral approach under Article 6.2, and unlike the old CDM, it is built around stricter additionality, environmental integrity, and an explicit share of proceeds for adaptation. The mechanism is moving from rule-making to first authorised issuances in 2026, with COP30 in Belem expected to be the operational ignition point.

How Article 6.4 actually works

Five moving parts you need to understand:

• A Supervisory Body (the 6.4SB) sets methodologies, approves projects, and issues credits known as A6.4ERs.

• A host country (where the project sits) authorises each activity and decides whether the resulting credits can be used internationally.

• When credits are authorised for international use, the host country must apply a corresponding adjustment to its own NDC accounting. This is the no-double-counting backbone.

• A 5 percent share of proceeds is automatically retired into the Adaptation Fund, and a further percentage delivers overall mitigation in atmospheric terms.

• Credits can be used for NDC compliance, CORSIA, voluntary claims, or, increasingly, under domestic compliance schemes like Indias CCTS via cross-recognition.

Why corresponding adjustments matter

This is the concept that trips up almost every corporate buyer. A corresponding adjustment means that when an Article 6.4 credit is sold internationally, the host country can no longer count that tonne against its own climate target. For a company buying a credit, this is what makes the claim defensible. Without it, you risk double-counting against your Net Zero or SBTi target. As of mid-2026, only a subset of host-country authorisations include corresponding adjustments. Read the contract before you sign.

What this means for Indian project developers

India has not yet finalised its Article 6.4 authorisation framework, but the early signal from MoEFCC and BEE is that authorisation will be selective and prioritised toward projects that align with national targets. If you are developing carbon projects in India, including afforestation, biochar, renewable energy, and energy efficiency, you need to plan for two scenarios: a higher-priced authorised pathway with corresponding adjustments, and a lower-priced unauthorised voluntary pathway. The economics are very different.

What this means for Indian corporate buyers

If your Net Zero strategy depends on offsets, your future offset portfolio will look meaningfully different from your past one. Article 6.4 credits with corresponding adjustments will carry a premium, likely 20 to 50 percent above comparable voluntary credits, but they will also be the only credits robust enough to survive third-party scrutiny under SBTi v2 and the upcoming ICVCM CCP-Plus label. We covered the broader pricing logic in our carbon credit pricing guide.

The COP30 watchlist

Five items to track between now and November 2026:

1. First A6.4SB approval of methodologies under the new rules, expected mid-2026.

2. Indias bilateral Article 6.2 agreements and any standing-letter framework.

3. EU and Japan signalling on whether Article 6.4 credits will be accepted in compliance regimes.

4. CORSIA Phase 2 (2027-2035) supply assessment, where Article 6.4 is the dominant expected source.

5. OMGE percentage decision, which affects every unit of supply economics.

Companies that move first on Article 6.4 will not be the ones who buy the cheapest credits. They will be the ones who build defensible offset portfolios their auditors and customers will still respect in 2030.

Where Csquare fits

We help Indian corporates scope, structure, and source carbon credit portfolios that include Article 6.4-aligned supply where it matters, and we help project developers position for host-country authorisation. If you would like a 30-minute brief on what this means for your sector, get in touch.