The operationalisation of Article 6.4 (Paris Agreement Crediting Mechanism) at COP29 marks a shift from the Kyoto Protocol's CDM. Analyse the key differences and the implications for developing countries like India.

Q. The operationalisation of Article 6.4 (Paris Agreement Crediting Mechanism) at COP29 marks a shift from the Kyoto Protocol's CDM. Analyse the key differences and the implications for developing countries like India. (15 marks, 250-350 words)

Article 6.4 of the Paris Agreement creates the Paris Agreement Crediting Mechanism (PACM) — a centralised, UN-supervised carbon crediting system made fully operational at COP29, Baku (November 2024) after nearly a decade of stalled negotiation [1]. Succeeding the Kyoto Protocol's CDM, it replaces a two-tier crediting world with a universal, NDC-anchored architecture.

Key differences from the CDM - Coverage: CDM credited projects only in developing countries for developed-country compliance; PACM operates where all Parties carry NDCs, making crediting a two-way transaction [1]. - Accounting integrity: PACM requires corresponding adjustments — credits authorised for transfer are deducted from the host country's own NDC tally, closing the double-counting gap CDM never faced [1]. - Governance: a 12-member Article 6.4 Supervisory Body, accountable to the CMA and supported by methodological and accreditation panels, replaces the CDM Executive Board; COP29 adopted standards on methodologies and carbon removals on day one [1][2]. - Equity design: a share of proceeds is channelled to adaptation finance, and eligible CDM activities may transition into the mechanism under defined approval timelines [2].

Implications for developing countries like India - Finance and technology: PACM, alongside Article 6.2, lets India monetise mitigation and attract green investment — evident in the India–Japan Memorandum of Cooperation on the Joint Crediting Mechanism (2025), expressly designed not to compromise India's NDC [3]. - Institutional burden: the Rules of Implementation adopted with Japan require a joint committee, third-party validation and national registries — capacities most developing countries must build afresh [4]. - Strategic caution: corresponding adjustments mean cheap abatement sold abroad is lost to domestic targets, so authorisation must be selective. - Domestic readiness: the Carbon Credit Trading Scheme, 2023, notified under the Energy Conservation Act, 2001 (amended 2022), must be made interoperable with Article 6 rules [5].

PACM thus trades CDM's easy volumes for higher integrity and higher entry costs. For India, the gain lies in sequencing — strengthening MRV and registry infrastructure first, authorising transfers second — so that carbon markets finance, rather than dilute, its own net-zero pathway.

(~330 words)

Sources: 1. UNFCCC — Key Outcomes from COP29: Article 6 of the Paris Agreement — COP29 operationalisation, corresponding adjustments, methodology and removals standards 2. UNFCCC — Paris Agreement Crediting Mechanism (Article 6.4) — Supervisory Body under Decision 3/CMA.3, share of proceeds for adaptation, CDM transition 3. PIB — India and Japan sign Memorandum of Cooperation on Joint Crediting Mechanism under Article 6.2 — India–Japan JCM and protection of NDC commitments 4. PIB — India and Japan Adopt Rules of Implementation for the Joint Crediting Mechanism — joint committee, third-party validation, national registries 5. Bureau of Energy Efficiency — Indian Carbon Market / Carbon Credit Trading Scheme — CCTS, 2023 notified under the Energy Conservation Act, 2001 (amended 2022)