BILATERAL ARTICLE 6 AGREEMENTS

Bilateral Article 6 agreements are government-to-government arrangements that authorise the transfer of internationally transferred mitigation outcomes (ITMOs). In a CDR context, the buyer country finances verified removals in the host country and receives credited tonnes, while the host applies a “corresponding adjustment” to avoid double counting. These tailored deals can channel finance, technology, and capacity into high-integrity removals that exceed the host’s NDC needs and support collective ambition.

Parties must clarify authorisation processes, eligibility of removal types, baseline/additionality tests, MRV protocols, permanence obligations, reversals handling, and benefit-sharing. Legal form (MoU, treaty, or linked to domestic law) determines enforceability and procurement options. Pricing arrangements should reflect durability and risk (e.g., stratified prices for geologic vs biogenic storage). Safeguards for environment and communities, registry interoperability, and timelines synchronised with NDC cycles are critical design choices.

Bilateral deals can accelerate capital flows to high-integrity removals, create early compliance-grade demand, and de-risk first-of-a-kind projects. They enable methodological experimentation under supervision, drive South–North technology partnerships, and crowd-in MDB/DFI co-finance. Structured pipelines signal bankability for storage hubs and CO₂ transport. Done well, they can raise collective ambition by funding removals beyond host-country trajectories while building durable MRV institutions.

Poorly crafted agreements risk double counting, legal disputes, or reversals that undermine integrity. Political changes may jeopardise delivery or authorisation. If prices are set too low, they can crowd out domestic mitigation or create perverse incentives. Administrative burden is substantial: aligning registries, audits, and Article 6 reporting. Equity concerns arise if local communities bear risks without fair benefit-sharing; transparency deficits can erode trust and market acceptance.

Monitoring & Evaluation Evaluation should reconcile the tonnes authorised, issued and cancelled across national and international registries, and examine reversals, storage duration, prices by durability and the time from project approval to credit issuance. Independent audits and annual reports linked to national climate accounts can reveal double counting, verify environmental integrity and inform changes to the agreement.

Environment and finance ministries, host-country developers, affected communities, independent verifiers, registries and development finance institutions each contribute to workable agreements. Indigenous Peoples and civil society can shape safeguards. Buyer-country treasuries and procurement agencies can align payments with verified delivery, while parliaments and supreme audit institutions provide democratic and financial oversight.

National governments currently negotiate and authorise Article 6.2 transfers, as Switzerland’s bilateral agreements demonstrate. The lever also operates at International level because transfers occur between Paris Agreement Parties and depend on common rules for authorisation, reporting, corresponding adjustments and registry tracking. A Supranational route is now emerging: the EU’s 2040 framework allows international credits to cover up to 5% of the target from 2036 and requires Union-level rules governing their quality, origin, timing, use and accounting. The 2026 EU ETS review is also exploring an indirect connection whereby international credit purchases could justify additional emissions space within the ETS and be financed through allowance-auction revenues, rather than allowing operators to surrender international credits directly. The EU could therefore become a common purchaser, accountant and integrity rule-setter, although no operational EU Article 6 agreement yet exists.