COP29, held in Baku, Azerbaijan, achieved a landmark breakthrough by finalizing the rules for Article 6.4 of the Paris Agreement, establishing the world's first internationally governed carbon trading framework. This development, covered by Down to Earth and The Hindu, resolves nearly a decade of contentious negotiations that have stalled since COP21 in Paris in 2015.

Article 6 of the Paris Agreement creates mechanisms for international carbon market cooperation. Article 6.2 enables bilateral country-to-country carbon credit trading, while Article 6.4 establishes a centralized UN-supervised carbon crediting mechanism — often described as a successor to the Kyoto Protocol's Clean Development Mechanism (CDM).

The finalized Article 6.4 rules establish: a UN-based Supervisory Body to oversee carbon project registration and credit issuance; robust accounting methodologies to prevent double-counting of emission reductions (where a single reduction is counted by both the host country and the buyer country); baseline-setting rules for carbon projects in developing countries; and requirements for host country authorization before credits can be issued.

The agreement also finalizes country-to-country trading rules under Article 6.2, including requirements for Corresponding Adjustments — accounting entries that ensure a country exporting carbon credits adjusts its own national emissions accounting accordingly.

For India, the COP29 Article 6 agreement has significant implications. India has substantial renewable energy and afforestation projects with carbon reduction potential, making it a likely major seller of carbon credits to developed countries seeking to meet their NDC targets. The Indian Carbon Market — currently being developed under the Energy Conservation (Amendment) Act 2022 and BEE's Carbon Credit Trading Scheme — will need to align with international Article 6.4 standards to enable cross-border trading.