A decade of negotiations, a failed predecessor, and a cookstove factory in Myanmar - this is how the world's first Paris Agreement carbon market came to life.
For nearly a decade after the Paris Agreement was signed, its flagship carbon crediting mechanism remained unfinished - stalled by technical disputes, political disagreements, and lingering distrust from the failures of earlier markets. Governments promised a new system that would be more transparent, more scientifically grounded, and immune to the double-counting problems that plagued the Kyoto era. On February 26, 2026, that long-delayed architecture finally produced its first verified credits.
On February 26, 2026, the Article 6.4 Supervisory Body approved the first carbon credits ever issued under the Paris Agreement's official crediting mechanism - a long-awaited milestone that formally activated a global market designed to channel billions of dollars toward climate projects in the developing world. The approved activity was not a gleaming solar farm or a sweeping reforestation program. It was a modest cookstove initiative in Myanmar, operated by the Climate Change Center, a South Korean NGO, distributing high-efficiency Envirofit M5000 stoves to rural households in the country's dry zone.
The stoves reduce firewood consumption by more than 50%, easing pressure on forests while cutting indoor air pollution that kills millions each year. The program, registered as PoA 10471, began in 2019 under the older UN crediting scheme known as the Clean Development Mechanism and is backed by investment from private South Korean firms. Its 54 component project activities cover more than one million cookstoves distributed across Myanmar's dry zone.
The 60,000 credits approved in February represent verified reductions from the earliest tranche of the program - covering just 218,955 stoves, the 2021-2022 monitoring period, and 58,428 tonnes of CO2 equivalent reduced. A second, larger issuance request covering roughly 864,000 stoves and 590,355 tonnes of CO2e is pending further review. Once issued, the credits authorized for international transfer will flow to Korean entities for use in the Korean Emissions Trading System, contributing directly to South Korea's Nationally Determined Contribution under the Paris Agreement. Myanmar retains a portion toward its own climate targets.
Approval remained subject to a 14-day appeal period, during which project participants, the host country, and directly affected stakeholders could contest the decision.
The mechanism that issued those first credits - formally called the Paris Agreement Crediting Mechanism, or PACM - is the successor to the Kyoto Protocol's Clean Development Mechanism. Its governing body is the Article 6.4 Supervisory Body, a rotating group of 12 members drawn from UN regional groups, including representatives from least developed countries and small island developing states.
The Supervisory Body oversees every element of the mechanism: approving methodologies, registering projects, accrediting verification bodies, and managing the Article 6.4 Registry. Credits issued through this system are known as A6.4ERs - Article 6.4 Emission Reduction units - and can be used by both governments and private companies to meet climate commitments. Crucially, every authorized transfer requires a "corresponding adjustment" in the host country's greenhouse gas inventory, ensuring that the same emission reduction cannot be counted twice by two different parties.
This anti-double-counting architecture is one of the fundamental differences between the new mechanism and its predecessor. The old CDM issued credits that could flow freely across compliance boundaries without formal government authorization, creating persistent accounting problems. Under Article 6.4, Myanmar must formally authorize each credit for international use, removing the reduction from its own national ledger when the credit is transferred to Korea.
The rules for the mechanism were years in the making. After nine years of negotiations that deadlocked repeatedly at successive COP summits, the core Article 6 rulebook was finally adopted at COP29 in Baku in November 2024. COP30, held in Belem, Brazil, in late 2025, added further guidance. With the rules in place, the Supervisory Body moved through 2025 approving methodologies, accrediting verification bodies, and processing CDM transition requests. The Myanmar cookstove project became the first to complete that entire gauntlet.
To understand why the February 26 issuance mattered so much to carbon market participants, it helps to understand what the CDM became before it collapsed. Established under the Kyoto Protocol in 1997, the CDM was the world's first international carbon finance mechanism. By its peak, it had registered more than 7,800 projects across the developing world and issued 1.2 billion tonnes of certified emission reductions. Prices for CDM credits briefly touched 25 euros per tonne in 2008.
Then came the carbon panic. In 2012, with the Kyoto Protocol's first commitment period ending, the European Commission restricted the use of CDM credits in the EU Emissions Trading System, and Japan - still reeling from the Fukushima nuclear disaster - withdrew entirely from Kyoto targets. Demand collapsed. By late 2012, CDM credit prices had fallen to below one euro per tonne. The Economist described the mechanism that year as a complete disaster in the making. By 2013, prices had bottomed out near 0.50 euros and thousands of projects were stranded with unclaimed credits. The market effectively ceased to function.
The CDM's failure also surfaced serious integrity problems. Many projects were criticized for lacking "additionality" - meaning they would have gone ahead regardless of carbon finance. Others were shown to overstate emission reductions through methodological flaws. Cookstove projects, in particular, faced scrutiny for unrealistic assumptions about stove usage rates and the fraction of wood gathered from non-renewable forest sources.
These are precisely the methodological fault lines that the new Article 6.4 system addresses. The key technical adjustment in the Myanmar approval centered on the "fraction of non-renewable biomass" - or fNRB - a parameter that estimates how much of the firewood being replaced came from forests that would not naturally regrow. Higher fNRB estimates mean more carbon credit per stove. Under old CDM assumptions, fNRB rates of 60-90% were common. The Article 6.4 Supervisory Body applied Myanmar's updated national default value of 36%, which is what drove the 40% reduction in credited volumes compared to what the same project would have generated under the CDM.
Supervisory Body Chair Mkhuthazi Steleki framed the adjustment as a feature, not a limitation: the credits issued are roughly 40% lower than older systems would have issued, but each one reflects a genuine, science-backed reduction.
The February 26 approval arrived into a carbon market world that remains deeply divided about whether such mechanisms can ever work as intended.
The most pointed criticism came from Brussels-based NGO Carbon Market Watch, which had been tracking the Myanmar project's transition from the CDM and in 2025 published analysis claiming the project could issue as many as 26 times more credits than peer-reviewed scientific literature would support. That analysis was based on older CDM-era data and assumptions that the Supervisory Body's updated methodology has since addressed - but Carbon Market Watch maintained that the residual crediting volumes still exceed what the science justifies. The organization's policy experts warned that if 165 transitioning CDM projects are followed by the roughly 1,500 that have filed transition documents, the nascent PACM pipeline could be flooded with rebranded Kyoto-era credits of questionable environmental value.
Lambert Schneider, a carbon market expert at the Oeko-Institut, offered a measured version of this concern: buyers should examine whether credits originate from CDM transition projects or entirely new PACM-developed methodologies. The integrity gap between the two categories is real.
From the market side, the concerns run in the opposite direction: the conservative new methodologies will constrain supply just as institutional demand begins to build. Over 60 countries now reference Article 6 mechanisms in their updated NDCs, including Japan, Switzerland, and South Korea. The voluntary carbon market, worth roughly $2 billion annually in recent years, is estimated to grow to more than $100 billion by 2030 if Article 6.4 mechanisms scale as intended.
The World Bank estimates that NDC cooperation facilitated by Article 6 trading could cut up to 5 billion tonnes of emissions annually by 2030 and reduce the cost of implementing climate plans by as much as $250 billion per year. Those numbers represent the market's aspirational ceiling. The question is whether the floor - environmental integrity - has been built strongly enough to support that ceiling.
The first 60,000 credits were the opening of a much larger pipeline.
More than 165 CDM projects have already received host-country authorization to transition to the PACM framework, spanning waste management, renewable energy, industry, and agriculture. A further 1,500 projects have filed transition documentation with the UNFCCC. Africa - whose forests, grasslands, and renewable energy potential represent enormous credit-generating capacity - is estimated to supply up to 30% of global high-quality carbon credits by 2030, according to projections cited at COP29.
The structure of where the credits go matters as much as where they come from. The Korean Emissions Trading System is among the world's oldest compliance carbon markets, and its willingness to accept authorized A6.4ERs for compliance purposes establishes a direct link between the UN's Paris-aligned market and a national regulatory regime. The credits authorized for CORSIA use - the International Civil Aviation Organization's offsetting scheme for international aviation - would, if approved by ICAO's technical bodies, create a second compliance demand channel. That approval was still pending as of the February 26 issuance.
UNFCCC Executive Secretary Simon Stiell used the Myanmar approval to frame the mechanism's development purpose directly. More than two billion people globally still lack access to clean cooking, and household air pollution from traditional stoves kills millions each year - predominantly women and girls, who spend the most time cooking. Clean cooking projects, whatever their measurement complexities, address a real human problem. The question is whether the credits they generate accurately account for that benefit, and the updated methodology represents the Supervisory Body's attempt to answer that question with science rather than commercial optimism.
The long-term vision for Article 6.4 is ambitious: a functioning global market where emission reductions and removals from forestry, renewable energy, methane capture, soil carbon, and dozens of other project types can be verified, issued, and traded across borders - with governments counting transfers against their NDCs, and companies using authorized credits to meet voluntary or compliance obligations.
The voluntary carbon market has been through a brutal credibility crisis since 2022, when a series of investigative reports - from The Guardian, Channel 4, and BBC Panorama, among others - exposed widespread over-crediting in forest offset projects, leading to sharp drops in demand an…