One workflow across CFR credits, BC LCFS, CleanBC & provincial ZEV programs.
From Article 6.2 bilateral agreements to CORSIA aviation offsets — how international carbon credits flow through global carbon pricing mechanisms.
Article 6.2 bilateral agreements signed
States participating in CORSIA (2026)
CORSIA credit demand projected by 2035
From project conception to permanent retirement, every carbon credit follows a rigorous four-stage journey.
A carbon credit is a verified certificate representing one tonne of CO₂ equivalent that has been reduced, avoided, or removed from the atmosphere. Think of it like currency: you can buy, sell, trade, and retire these credits to offset emissions. But unlike regular currency, each credit must be created, validated, monitored, and issued through a standardised process before it can be used.
Design emissions reduction or removal activity. Define baseline, additionality, and methodology.
Independent auditor reviews methodology. Confirms project meets registry standards.
Track emissions reductions annually. Third-party verification confirms actual reductions.
Credits issued to registry. Buyers retire credits to offset emissions permanently.
A carbon credit is a verified certificate representing one tonne of CO₂ equivalent that has been reduced, avoided, or removed from the atmosphere. The lifecycle ensures integrity: projects are validated before they start, monitored while running, verified by independent auditors, and only then issued as tradeable credits that can be retired to offset real emissions.
The international framework enabling countries to cooperate on carbon credits and prevent double-counting.
Article 6 is the Paris Agreement's mechanism for international cooperation on emissions reductions. It establishes rules for trading carbon credits between countries while preventing the same reduction from being claimed twice. There are two main pathways: Article 6.2 (bilateral arrangements) and Article 6.4 (multilateral crediting mechanism).
Two or more countries negotiate directly to transfer emissions reduction credits. When Country A (buyer) purchases an ITMO from Country B (seller), Country B must report these transfers in its national greenhouse gas inventory and make "corresponding adjustments" to prevent double-counting.
When Country A buys an ITMO from Country B, Country B must add those emissions back to its own inventory. This prevents double-counting — the same reduction cannot be claimed by both parties for their climate targets.
A centralised mechanism under UN oversight that certifies emissions reductions from projects in any country. Successor to the Clean Development Mechanism (CDM), Article 6.4 now allows credit trading to any country that participates, not just developed nations.
Deal Size: 160,000 tCO₂e. Project: Renewable energy and cookstove distribution. Significance: Landmark Article 6.2 transaction showing South-South cooperation and emerging market leadership in carbon trading.
Deal Size: 500,000+ tCO₂e expected. Project: Nature-based forest conservation. Terms: Premium pricing reflecting removal quality.
Deal Size: 3 million tCO₂e. Project: Energy efficiency in industry. Historic Note: First verified ITMO transfer under Article 6.2, demonstrating operational framework.
Coverage: 31 partner countries. Approach: Bilateral agreements with technology transfer and capacity building. Volume: 100+ million tCO₂e credited since 2013.
Deal Size: 8 million tCO₂e phased. Project: Waste-to-energy and methane reduction. Status: Framework agreement with ongoing implementation.
How Singapore, Japan, and South Korea operationalise carbon credit frameworks.
Three Asia-Pacific markets exemplify how countries integrate carbon credits into their climate strategies. Each uses international credits differently: Singapore leverages them to offset high domestic costs, Japan emphasises technology transfer, and South Korea caps them to prioritise domestic action.
The Carbon Offsetting and Reduction Scheme for International Aviation, mandating offset purchases for emissions growth above a baseline.
CORSIA is aviation's sector-wide carbon market. Airlines must offset emissions growth above 85% of their 2019 baseline. This creates a massive demand signal for carbon credits: CORSIA offsets are projected to exceed 1 billion tonnes by 2035.
Phase 1 (2024–26) will see cumulative offsets reach ~150 million tonnes. Phase 2 (2027–35) ramps up dramatically as all aviation participants become mandatory. This creates unprecedented demand, potentially exceeding supply from current voluntary carbon credit sources — a key driver for Article 6 bilateral agreements and CDM successor mechanisms.
Climate Decode provides comprehensive carbon market intelligence, compliance advisory, and residual emission procurement across 16 global markets.