Article 6.2 Carbon Market Is Live. But Are We Building a Market or a Maze?

Four years after Glasgow gave us the rulebook, cooperative approaches under Article 6.2 of the Paris Agreement are moving from paper to practice. Countries are writing national carbon market frameworks and signing bilateral agreements. National registries are being built. Letters of Authorization are being granted. ITMOs are being issued. On the surface, this looks like progress.

Look closer, and a more complicated picture emerges.

Every Country Is Building Its Own System

Spend time reading the national carbon market frameworks of Ghana, Zimbabwe, Singapore, Switzerland, or any of the many countries now operationalizing Article 6.2, and one thing becomes immediately clear: every country is designing its own architecture, setting up its own technical dictionary, and following its own sequencing for approving projects and authorizing ITMOs.

One country issues a Letter of Intent at the development stage; another issues a Letter of No Objection. One country issues a Letter of Approval prior to registration; several do not. One country issues a Letter of Authorization before project registration with a crediting program; another issues it only after registration on the national registry. Some countries require a Letter of Positive Examination before authorizing mitigation outcomes; others do not recognize the instrument at all. And the same letter name can mean entirely different levels of approval — or entirely different legal obligations — depending on which jurisdiction you are in.

For an international standard, project developer or buyers trying to navigate multiple Host Party frameworks, this is not a minor inconvenience. It is a fundamental barrier to accessing and scaling the international Article 6.2 carbon market. The same instrument, called by different names, triggering different obligations, issued by different authorities, at different stages of the project cycle, across different jurisdictions — this is not a market. This is a collection of separate, incompatible systems wearing the same Paris Agreement label. The Paris Agreement created one framework, what countries are building are many.

Independent Crediting Programs Are Caught in the Middle

For independent carbon crediting programs, the challenge is acute. Writing a single Article 6.2 standard that works across all Host Party frameworks is not a theoretical problem — it is the central operational challenge of the moment. A tailor-made standard for every jurisdiction is not feasible. The administrative cost alone would be prohibitive. More fundamentally, it would fragment the market further, creating country-specific rules and in doing so defeating the entire purpose of an international crediting mechanism.

The only viable path is a common minimum standard that establishes the floor — environmental integrity, real, additional, and permanent emission reductions, corresponding adjustments, robust MRV — while explicitly deferring to Host Party frameworks on the specific procedural requirements that vary by jurisdiction. But that approach only works if the Host Party frameworks themselves share enough common architecture to make deference meaningful. Right now, they do not share commonality on many aspects.

There are, however, encouraging signals. Singapore’s Article 6.2 Crediting Protocol is a meaningful step in the right direction. It is the kind of model that other Host Parties should study carefully and that the broader Article 6.2 community should be actively promoting as a template for structured, interoperable national frameworks that share the same basics.

The Nomenclature Problem Is Not Trivial

There is a temptation to dismiss the terminology variation as a technical footnote — something lawyers and standard-setters can sort out in the fine print. This misunderstands what is at stake.

When an international buyer purchases an ITMO or an Article 6.2-labelled credit, they need to know with confidence that the authorization chain is complete and legally sound. Does a Letter of Approval constitute a binding commitment to authorize, or merely a precondition to applying for authorization? Was the project authorized before registration, after registration, or at the time of issuance? Were ITMOs required authorization prior to issuance on the registry of the crediting program, or only upon reissuance on the national registry? Is the Letter of Authorization supposed to be issued by the ministry, the designated national authority, or a competent authority acting under delegated powers?

These are not abstract questions. They determine whether the ITMO has been issued through the correct legal chain of command, whether the corresponding adjustment will be applied, and ultimately whether the credit the buyer holds represents a real, authorized, and accountable unit of mitigation — or an expensive piece of paper with an uncertain legal status.

The proliferation of instruments and nomenclature is not just confusing. It creates legal risk at every point in the transaction chain — for developers, for buyers, for crediting programs, and for the Host Parties themselves.

The Hidden Cost Crisis Nobody Is Talking About

The fragmentation problem is not limited to nomenclature and process. It has a direct and growing financial dimension that is beginning to undermine the economic viability of Article 6.2 project activities — and it is not getting nearly enough attention.

Consider what a project developer faces today when seeking to issue ITMOs under a national carbon market framework that operates alongside an international crediting program.

Take, for example, sustainable development and safeguards. International crediting programs already impose rigorous requirements on project developers to assess, document, and demonstrate sustainable development benefits and social and environmental safeguards. These requirements are validated and verified by accredited third parties. Yet a growing number of Host Party frameworks require project developers to submit entirely separate sustainable development assessments and safeguards reports tailored to national templates and national approval processes — in addition to, not instead of, what has already been demonstrated to the international crediting program. The result is duplicated effort, duplicated documentation, duplicated cost — and no additional environmental or social outcome.

Other commonly observed issue is registry fees. In frameworks where mitigation outcomes must be issued on the international crediting program’s registry and later cancelled for reissuance as ITMOs on the national registry, project developers are effectively bearing additional registry costs, such as on issuance, registry account opening, account maintenance, for the same carbon unit.

These are also significant issues around buffer deductions. Buffer accounts exist to address reversal risk and ensure environmental integrity. They are a legitimate and necessary mechanism on addressing reversal risk in international crediting programs. But when both the international crediting program and the national registry independently apply buffer deductions to the same mitigation outcome, the effective buffer rate applied to a single project can reach levels that make the economics of certain project types deeply challenged. Developers are being asked to surrender a disproportionate share of their issuable units not because the environmental risk justifies it, but because two separate systems are each applying their own rules to the same underlying asset.

Lastly, double VVB accreditation. Validation and Verification Bodies are the quality assurance backbone of the carbon market. Accreditation under international crediting programs is rigorous, expensive, and time-consuming. An increasing number of Host Party frameworks now require VVBs to obtain separate national accreditation or approval before they can conduct validation and verification of Article 6.2 project activities in that jurisdiction — regardless of their existing international credentials. This doubles the accreditation burden on VVBs and in some cases many create effective monopolies where only one or two nationally accredited bodies are available to service an entire country’s project pipeline.

Taken individually, each of these cost layers can be justified by reference to national policy objectives. Taken together, they are compounding into a cost structure that is beginning to price smaller developers and smaller projects out of the Article 6.2 market entirely — and concentrating activity among only the largest and best-capitalized participants. That is the opposite of what a high-integrity, high-ambition carbon market should look like.

If Article 6.2 is to mobilize climate finance at scale — particularly in developing countries where the mitigation potential is greatest and the need for climate finance most acute — the cost of accessing the market must be proportionate to the value it delivers. Right now, for too many projects, it is not.

The CMA Cannot Do This Alone

The Conference of the Parties serving as the Meeting of the Parties to the Paris Agreement has done essential work through Decisions 2/CMA.3, 6/CMA.4, and 4/CMA.6. But the CMA meets once a year. Its decisions set the international architecture. They cannot — and should not — prescribe the granular procedural and institutional details of how each country operationalizes its national carbon market.

That gap needs to be filled. And it will not be filled by waiting for the next CMA.

What is needed urgently is structured collaboration among Article 6.2 implementing countries — outside the formal CMA process — to agree on a minimum common framework for authorization procedures, terminology, registry interoperability, issuance processes, and the elimination of duplicative cost layers. This does not require a new treaty. It requires political will and technical cooperation of the kind that regional bodies and international institutions such as the World Bank and UNDP are uniquely positioned to facilitate. The West African Alliance on Carbon Markets and Climate Finance is one model worth scaling. But these efforts need to be accelerated and connected to the standard-setting work happening at the level of crediting programs.

Sovereignty Is Not an Excuse for Incompatibility

Here is the argument that defenders of the status quo will reach for: Article 6.2 is built on the principle of national sovereignty. Countries have the right to design their own carbon market frameworks. Standardization is an imposition.

This argument confuses sovereignty with incompatibility — and they are not the same thing.

Sovereignty means countries determine their own mitigation targets, their own eligible sectors, their own institutional arrangements, and their own share of proceeds. It does not mean that the technical dictionary, the authorization sequencing, the registry architecture, and the cost structure of every country must be entirely unique and mutually unintelligible.

There are international conventions that are adopted as national laws but strong consistency across different countries. Article 6.2 needs the same discipline. Countries can and should retain sovereignty over their carbon markets. But the instruments they use to authorize projects and ITMOs, the sequencing of those authorizations, the terminology that describes them, and the cost layers they impose on international transactions should converge on a common minimum standard that developers, buyers, and crediting programs can navigate without a jurisdiction-specific legal and financial team for every Host Party they engage with.

Collaboration Is Not Optional — It Is the Market

Article 6.2 is premised on cooperation. The clue is in the name — cooperative approaches. Yet the dominant dynamic in the current moment is fragmentation. Each country building its own system, in its own timeline, with its own language and its own cost structure, disconnected from the international buyers, developers, and crediting programs that need to operate across all of them simultaneously.

This needs to change — and it needs to change now, not after five more years of bilateral negotiation and regulatory divergence.

International project developers, institutional buyers, and crediting programs are not passive observers in this process. They hold significant market power and convening capacity. They should be at the table — not merely as stakeholders to be consulted, but as active partners in designing the interoperability standards that will determine whether Article 6.2 becomes a functioning global market or an archipelago of disconnected national experiments.

The long-term climate goals that Article 6.2 is designed to serve — mobilizing finance toward urgent mitigation, enabling higher NDC ambition, delivering overall mitigation in global emissions — cannot be achieved by fragmented, high-friction, high-cost, legally uncertain markets. They require scale. Scale requires standardization. Standardization requires collaboration.

The Bottom Line

Article 6.2 has the potential to be one of the powerful climate finance mechanisms. The legal foundations are evolving. Bilateral agreements are being signed. Registries are going live. Real money is beginning to move.

But right now, the variation in rules, procedures, systems, and terminology across implementing countries — compounded by duplicative cost structures that stack fee upon fee, buffer upon buffer, and accreditation upon accreditation — is a direct and growing threat to that potential. Not because any single country is doing something wrong, but because the collective result of individually rational decisions is a market that is structurally expensive, legally complex, and operationally fragmented at precisely the moment it needs to be scaling rapidly.

The countries building Article 6.2 frameworks, the crediting programs writing Article 6.2 standards, the developers financing Article 6.2 projects, and the buyers purchasing Article 6.2 credits all want the same thing: a market that works.

Making it work requires more than ambition. It requires the hard, unglamorous work of alignment — on terminology, on process, on systems, on interoperability, and on the cost burden imposed on those who are actually building the projects that will deliver the mitigation the world needs.

Sovereignty is not the obstacle. The obstacle is the absence of the political will to draw the line between what must remain sovereign and what must become common.

That line needs to be drawn now.

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Disclaimer: The views expressed in this article are the author’s own and do not represent the position of any organization or institution. Claude is used to assist in refining this article.