The Paris Agreement, under Article 6, sets out the requirement to apply a corresponding adjustment (CA) to avoid double counting between the host country of a project and another nation state wanting to use the carbon credit when reporting its progress against its Nationally Determined Contribution (NDC) to the UNFCCC. The International Civil Aviation Organisation (ICOA) has mandated the same for use of carbon credits under its compliance trading scheme (CORSIA), to avoid the double counting between the host country and the international aviation sector.
COP29 in Baku in November 2024 completed the rulebook for Article 6, clarifying that a host country can authorise either a CA for use towards an NDC of another country or another international mitigation purpose (such as CORSIA), or a mitigation contribution for other purposes (such as voluntary markets). Only a handful of countries currently have an accounting mechanism for issuing CAs, and it is likely to be several years before most ‘Paris-ready’ national accounting systems are operational. It is therefore unlikely that any significant volume of carbon credits backed by CAs will be issued before the end of 2025.
How to communicate these actions forms part of the ongoing process to determine future best practice, and future editions of the Protocol will provide updated guidance as this emerges.