%20(2).png)
“Over the years we’ve invested significantly in our field data team - focusing on producing trusted ratings. While this ensures the accuracy of our Ratings, it doesn’t allow the scale across the thousands of projects that buyers are considering.”
For more information on carbon credit procurement trends, read our "Key Takeaways for 2025" article. We share five, data-backed tips to improve your procurement strategy.
One more thing: Connect to Supply customers also get access to the rest of Sylvera's tools. That means you can easily see project ratings and evaluate an individual project's strengths, procure quality carbon credits, and even monitor project activity (particularly if you’ve invested at the pre-issuance stage.)
Book a free demo of Sylvera to see our platform's procurement and reporting features in action.
The Methodological Expert Panel (MEP) for the Article 6.4 Paris Agreement Crediting Mechanism (PACM) has made great strides in creating the essential guidance for methodologies. This is a crucial step towards launching the first PACM projects.
Although it will take time to issue credits under these new PACM methodologies, some existing Clean Development Mechanism (CDM) projects are transitioning to the PACM. This transition will lead to the first issuances of Article 6.4 Emission Reductions (6.4ERs), with a few CDM projects already having fully transitioned. However, legitimate concerns persist regarding the quality of these transitioned credits, many of which fall into project categories rejected by the Integrity Council for the Voluntary Carbon Market (ICVCM).
Nevertheless, these projects are required to adopt PACM methodologies by the end of 2025. This mandate demonstrates a clear intention to address environmental integrity issues and facilitates the initial operationalization and system development of the long-awaited PACM.
From the CDM to the PACM
The Paris Agreement Article 6 recognizes two market-based mechanisms that countries can voluntarily use to achieve and increase the ambition of their targets or Nationally Determined Contributions (NDCs).
- Article 6.2 covers decentralized bilateral cooperation under which buyers and sellers have some leeway regarding the activities to implement and the methodologies to follow to issue carbon credits, called Internationally Transferred Mitigation Outcomes (ITMOs).
- Article 6.4 covers the Paris Agreement Crediting Mechanism (PACM), a centralized UN-led international market whereby States and non-State entities can issue and trade carbon credits, called Article 6.4 Emission Reductions (6.4ERs).
The PACM is often referred to as the successor of the Kyoto Protocol’s Clean Development Mechanism (CDM). The CDM allowed developed countries to finance carbon projects in developing countries by purchasing the resulting mitigation outcomes, and use the carbon credits called Certified Emission Reductions (CERs) to meet their targets. Unlike the Paris Agreement, under the Kyoto Protocol, only developed countries had mitigation targets and purchased CERs.
Several active CDM projects have been allowed to transition and continue operating under the PACM. Eventually, these projects will need to switch to PACM methodologies, expected to be more stringent. However, the PACM methodological guidelines are currently under development, and no methodologies have been approved yet.
However, the first approvals are anticipated by the end of the year. The Article 6 Methodological Expert Panel (MEP) recently finalized guidelines for establishing baselines and managing leakage. These guidelines have since been approved by the Supervisory Body (SBM) at their 16th meeting in Bonn, joining the previously approved additionality guidelines.
CDM Transition Process for Eligible Activities
In early February of 2025, the UNFCCC published the latest standard and procedural documents for the transition process of CDM projects, including both individual projects, called Project Activities (PAs), and Programs of Activities (PoAs).
CDM PAs and POAs eligible to transition can submit a transition request to the UNFCCC Secretariat. The general deadline for PAs and PoAs was December 31, 2023, while afforestation and reforestation (A/R) projects have until December 31, 2025. Following the UNFCCC Secretariat review, the transition request is made publicly available.
The host Party (i.e. the country where the project is located) then submits its approval to the SBM via its Designated National Authority (DNA) by December 31, 2025 (applies to all projects and PoAs except A/R, for which the approval timeline is unknown). For multi-country PoAs, at least one host Party must approve the transition by this deadline. Approved projects using CDM methodologies must submit additional documentation (for which a template is provided) demonstrating compliance with requirements under the standard.
This includes details on addressing non-permanence risk, the environmental and social impacts of the activity, and requirements under the Article 6.4 Sustainable Development Tool (SD Tool). For A/R activities, compliance with the Standard: Requirements for activities involving removals under the PACM should also be met. This additional documentation must be submitted within 180 days of approval of transition, or by December 31, 2025, for A/R activities.
In addition to a longer submission deadline for transition requests, transitioned A/R projects or PoAs must also request that an SBM-accredited designated operational entity (DOE) validate additional documentation demonstrating compliance with A/R A6.4 requirements. This additional validation, which is not required for Emission Reduction activities until they transition to the PACM methodology, will occur at the same time as verification for the first issuance.
CDM transition status
As of 15 April 2025, over a quarter (26.6%) of the registered PAs and almost half (45%) of the registered PoAs are eligible to transition to the PACM. Transition requests have been submitted by 41% of eligible projects, representing 67% (or 717M) of all eligible CDM project issuances to date. Similarly, transition requests have been submitted by 70% of eligible PoAs representing 87% (or 55M) of all eligible CDM PoA issuances to date.
China and India host the majority of projects and PoAs that have requested to transition, with roughly 36% and 33%, respectively. Although these two countries host the majority of the projects, neither has approved any transition request to date.
In contrast, several other countries, including Bangladesh, Bhutan, the Dominican Republic, Ghana, Myanmar, and Uganda have each approved multiple CDM activities to transition to the PACM. Only nine PoAs or PAs have been fully transitioned and registered under the PACM, as many activities are still awaiting final approval from the SBM.
The quality of CDM transition activities
Nearly 80% of CDM activities eligible to transition to the PACM and that have requested to do so utilize grid-connected renewable energy methodologies. Major carbon credit registries, including Verra and Gold Standard, stopped accepting new grid-connected projects in 2019, except those located in LDCs, as they were generally no longer considered additional. Also, these methodologies were rejected by the ICVCM, raising concerns about the environmental integrity of the credits generated, which are expected to be among the first to issue 6.4ERs.
ACM0002 and AMS-I.D., respectively accounting for over 50% and 20% of the activities that have requested transition, are methodologies used to quantify emission reductions from renewable energy projects, but they differ in their scope and applicability. ACM0002 is generally used for large-scale grid-connected renewable energy projects, while AMS-I.D. is typically used for small-scale grid-connected projects. The average Sylvera rating for projects using ACM0002 is "C".
Links to methodologies:
The fragmented landscape of eligibility lists and quality initiatives presents a significant hurdle for buyers seeking carbon credits from projects with robust environmental integrity. These lists establish eligibility criteria and quality benchmarks through the evaluation of carbon standards and methodologies. This is insufficient and project-level due diligence is needed to truly ascertain the quality and additionality of emission reductions or removals.
The tools you need to navigate the CDM/Article 6 Market:
Carbon Credit Ratings: To support transparency and guide procurement strategies in the transition to PACM, Sylvera is currently rating CDM transition projects. These ratings will help ensure that carbon investment is directed towards the most impactful projects.
Market Commentary: Sylvera delivers expert market commentary on evolving Article 6 regulations, methodology developments, and quality standards, enabling informed decision-making in this rapidly changing market. You can read our recent Article 6 guidance here.
Country Profiles: Our comprehensive country profile analysis helps stakeholders understand regulatory frameworks, approval processes, and market dynamics in key jurisdiction.
Market Data: Leverage real-time carbon market data on credit quality, pricing trends, and market movements to make smarter decisions that align with your strategy. You can build custom views by focusing on quality, country, project type and more, helping you stay ahead of the latest trends and developments.
