Takeaways

• The UN carbon market has issued its first Paris Agreement carbon credits under Article 6.4, marking the mechanism’s official launch.
• The first project, a clean-cooking initiative in Myanmar, received about 40% fewer credits than under the old Clean Development Mechanism (CDM), reflecting stricter integrity standards.
• Credits will support both South Korea’s and Myanmar’s Nationally Determined Contributions (NDCs) through corresponding adjustments.

The United Nations has issued the first Paris Agreement carbon credits under Article 6.4, formally moving the long-awaited UN carbon market from rulemaking to live operation.

The inaugural issuance comes from a clean-cooking project in Myanmar. The project distributes efficient cookstoves to households, helping reduce indoor air pollution, cut emissions, and limit deforestation. The initiative addresses a major global challenge: More than two billion people still lack access to clean cooking solutions.

The launch of the Article 6.4 mechanism follows years of negotiations over environmental integrity, accounting rules, and safeguards. These issues have shaped global debates around international carbon markets since the Kyoto era.

Simon Stiell, Executive Secretary of UN Climate Change, said the project demonstrates how the new system can channel climate finance to activities that improve daily lives. He noted that clean cooking protects health, saves forests, reduces emissions, and supports women and girls, who are often most affected by household air pollution. He added that strong environmental safeguards and a clear redress system are now in place to ensure integrity and inclusiveness.

Read More: Money Meets Mission: The Climate Fintech Revolution

Integrity First: 40% Fewer Credits

The Myanmar project had previously received provisional issuance under the Clean Development Mechanism (CDM) established by the Kyoto Protocol. However, under the Paris Agreement carbon credits framework, updated methodologies and more conservative calculations were applied.

According to Article 6.4 Supervisory Body, the credited emission reductions are about 40% lower than what would have been issued under the older CDM rules. This reduction reflects stricter baselines and updated scientific data.

Officials say this approach strengthens environmental integrity, ensuring that each credited tonne represents a genuine and additional emissions reduction. For investors and compliance buyers, the shift means fewer credits per project, but greater confidence in the quality and credibility of each unit.

Clear Connection to National Climate Goals

The project also demonstrates how Article 6.4 supports cross-border cooperation while protecting national climate goals.

Authorized participants from the Republic of Korea are involved in the project. Credits approved for use in Korea can be transferred to Korean entities for compliance under the Korean Emissions Trading System. These credits will count toward South Korea’s Nationally Determined Contribution (NDC).

Meanwhile, the remaining credits will contribute to Myanmar’s own NDC. This system of corresponding adjustments ensures that emission reductions are not double-counted.

For governments, this model offers flexibility in meeting climate targets. For companies operating in compliance markets, it creates a new, UN-governed supply channel.

Growing Pipeline and Market Demand

The first issuance responds to strong private-sector demand for a functioning UN carbon market. More than 165 projects previously registered under the CDM are now transitioning into the new mechanism. These projects span sectors such as waste management, energy, industry, and agriculture.

All approvals remain subject to a 14-day appeal period, allowing stakeholders to raise concerns.

For corporate leaders and institutional investors, the implications are significant. While the market may issue fewer credits per project than its predecessor, it is designed to be more resilient and transparent.

Also Read: Is Article 6 Fueling Greenwashing?

As the Article 6.4 mechanism expands, its success will depend on maintaining environmental integrity while scaling supply. The first issuance signals a clear message: Quality will take priority over volume in the evolving global carbon market.

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Source: ESG NEWS