Carbon credits explained: what is one carbon credit?
What one carbon credit means, compliance vs voluntary markets, avoidance vs removal, additionality, permanence, registries, ICVCM labels and Article 6, in plain words.
What is Article 6 of the Paris Agreement?
Article 6 of the Paris Agreement (2015) lets countries cooperate on emission reductions:
- Article 6.2 allows countries to transfer emission reductions to each other as "internationally transferred mitigation outcomes" (ITMOs). When a host country transfers a reduction, it must make a corresponding adjustment, meaning it adds the tonne back to its own accounts so that only the buyer counts it.
- Article 6.4 creates a UN-supervised crediting mechanism, now called the Paris Agreement Crediting Mechanism, overseen by a Supervisory Body, that issues A6.4ERs.
The detailed rules for both were negotiated at successive UN climate conferences. They matter for India because India's government also discusses Article 6 cooperation alongside its domestic carbon market.
Sources: Verra: Verified Carbon Standard (VCS) Program; Verra: First ICVCM CCP labels now active on the Verra Registry (2024); ICVCM: Core Carbon Principles; ICVCM: Integrity Council approves three cookstove methodologies among latest decisions (2025); Gold Standard for the Global Goals; UNFCCC: The Paris Agreement (2015), Article 6; Ministry of Power / Gazette: Carbon Credit Trading Scheme, 2023, S.O. 2825(E), 28 June 2023 (cited via BEE Detailed Procedure for Compliance Mechanism); CERC (Terms and Conditions for Purchase and Sale of Carbon Credit Certificates) Regulations, 2026
This article was prepared with AI assistance and checked by the GreenEye team against the sources shown in each section.
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