How Does Article 6 Of The Paris Agreement Regulate Carbon Markets?

The Paris Agreement, which was agreed between 196 party countries at COP21 in 2015 aims to limit the global temperature increase to 1.5°C above pre-industrial levels. Since 2020, countries party to the Paris Agreement are required to commit to reducing their greenhouse gas (GHG) emissions and reach a specified target, known as a Nationally Determined Contribution (NDC). For instance, the UK's NDC is to reduce all greenhouse gas emissions by at least 81% by 2035, compared to 1990 levels (excluding international aviation and shipping emissions).

While some countries aim to focus on GHG emissions reduction to achieve their NDC, rather than offsetting emissions, Article 6 of the Paris Agreement enables parties to use carbon markets to achieve their NDCs. Carbon markets allow countries to buy carbon credits generated though projects which either remove GHGs from the atmosphere or mitigate the production of GHGs and offset their own GHG emissions against the credits.