The Illusion of Crediting SpaceWhen Carbon Credit Transfers Risk Undermining NDC Achievement

When an investor recently questioned whether Kenya could credibly issue a Letter of Authorization (LOA) for a clean-cooking project operated by KOKO Networks, the query exposed a deeper fault line. The concern was not only about KOKO's methodology. It was about the host country's capacity to authorize the transfer of Internationally Transferred Mitigation Outcomes (ITMOs) without undermining its own Nationally Determined Contribution (NDC). Can a country afford to export emission reductions it may itself need? That question drives this analysis across eight host countries.

The findings are stark. Our assessment of Bhutan, Burundi, Cambodia, Ghana, Guyana, Kenya, Malawi, Rwanda, Sri Lanka, Tanzania, Uganda, and Zambia shows that most countries face substantial implementation gaps between reported emissions pathways and their 2030 NDC targets. Every ton transferred via Article 6, subject to corresponding adjustments (CA), deepens the host country's implementation deficit unless credible NDC implementation headroom exists. Yet many buyers continue to behave as though host-country crediting space were effectively unconstrained, creating systemic risks to NDC integrity and long-term mitigation ambition.

Participation in Article 6 cooperative approaches requires a country to be party to the Paris Agreement, maintain an updated NDC, establish authorization and tracking arrangements, publish its most recent National Inventory Report (NIR) — including where submitted as part of a Biennial Transparency Report (BTR) — and ensure that participation contributes to the achievement of its NDC.2 To participate in Article 6.2 cooperative approaches, a country must demonstrate that it complies with these requirements through its initial report. As of February 2026, 19 countries have submitted Initial Reports to UNFCCC's Centralized Accounting and Reporting Platform (CARP).3

These requirements are established in the Article 6.2 guidance adopted in 2021 at COP26 (Decision 2/CMA.3)4 and form the institutional and data backbone needed to determine whether a country has credible implementation headroom available for authorizing mitigation outcomes for transfer. While the requirements are clear, the practical delivery of these systems depends on the diverse realities of public-sector data systems and domestic institutional capacity.

In practice, the underlying information base is often incomplete. Some NDCs rely on business-as-usual (BAU) projections developed many years earlier or have not been updated within the expected five‑year cycle.5 National Inventory Reports (NIRs) may be missing, outdated, or inconsistent across sectors, limiting the ability to track progress against targets. BTRs vary in completeness, and, in some cases, do not provide the information required to support corresponding adjustments or assess NDC progress. Examples of these issues are reflected in the results presented in this paper.

These structural limitations matter because implementation headroom cannot be inferred from NDC design alone. BAU trajectories, target structures, and inventory methodologies differ widely across countries, and these differences directly shape the appearance of potential crediting space. Where inventories are incomplete or BAU projections are uncertain, any assessment of potential headroom becomes highly sensitive to underlying assumptions.

In this report, "implementation headroom" and "crediting space" are used interchangeably and defined as the portion of a country's conservatively assessed forward‑looking mitigation capacity that could be authorized for ITMO transfers without materially increasing the risk of NDC under‑achievement after corresponding adjustments.

This context motivates the analytical approach used in this paper: a simple assessment grounded in observed emissions and transparent comparison against stated NDC targets.

This paper evaluates whether host countries have mitigation outcomes available for transfer under Article 6 by comparing observed emissions against stated NDC targets. The approach is designed to avoid reliance on inflated or uncertain emissions trajectories and instead anchor the analysis in the most recent verified emissions data available.

The analytical approach is grounded entirely in the UNFCCC transparency framework. It does not model future emissions, construct new BAU trajectories, or forecast mitigation pathways. Instead, it conducts a simple assessment using the information countries themselves report through National Inventory Reports (NIRs), Biennial Transparency Reports (BTRs), and NDC submissions.

The methodology serves two purposes. First, it tests the internal robustness and consistency of countries' reported operational elements that determine crediting space, particularly BAU projections, NDC structures, and inventory completeness. Second, it assesses the extent of potential crediting space by comparing the latest available national inventory figures to each country's stated 2030 NDC target. This approach provides an indication of how far countries are from achieving their commitments and whether any mitigation outcomes could credibly be authorized for transfer.

The analysis uses two baselines and two ambition levels, producing four scenarios to assess crediting space, as shown in Table 1 below.

Scenarios 1 and 2 (Implementation Gap) compare 2022 observed emissions with the 2030 NDC targets. They indicate how far a country is from achieving its commitment based on real, reported emissions.

Scenarios 3 and 4 (NDC Mitigation Volumes) reproduce the mitigation volumes implied by countries' NDCs, calculated as the difference between the reported BAU and the 2030 target. They reflect what countries aim on paper, not tradable mitigation potential.

Taken together, these four scenarios provide a basis for assessing countries' progress toward their NDC targets and the potential availability of implementation headroom for ITMO authorization. The next two sections present the outputs of this assessment. Section 3 summarizes the data‑quality and structural weaknesses identified during the compilation of NIRs, BTRs, and NDC submissions—issues that emerged as a secondary but important outcome of the analysis. Section 4 then presents the results of the four scenarios, comparing observed emissions and reported BAU trajectories against countries' stated 2030 targets.

The assessment conducted in this paper relied exclusively on information reported through the UNFCCC transparency framework. As the data were compiled across NIRs, BTRs, and NDC submissions, a set of structural weaknesses emerged that, while not the primary focus of the analysis, proved essential for interpreting the four scenarios. These issues affect the reliability of both baselines used in the assessment—2022 observed emissions and 2030 BAU—and therefore shape any evaluation of potential crediting space. This section summarizes the six main limitations encountered in countries' submissions.

3.1 Weak compliance with Article 6 participation requirements: Incomplete or Outdated NDCs

Participation in Article 6 requires countries to maintain updated NDCs and provide regular reporting through BTRs6, including information necessary for applying corresponding adjustments. Across the countries examined, these requirements are met unevenly.

For example, participation in Article 6 requires Parties to "prepare, communicate and maintain successive nationally determined contributions" (Paris Agreement, Article 4.2)7 and to communicate an NDC every five years (Article 4.9)8. Decision 1/CP.21 further requests Parties whose initial NDCs contained a timeframe up to 2025 to communicate a new NDC by 2020 and every five years thereafter.9 Maintaining an up‑to‑date NDC is a core participation requirement for cooperative approaches.

In practice, however, some countries have not maintained their NDCs in line with these provisions. Guyana illustrates this challenge clearly.

Guyana's Case: Outdated NDC

Guyana submitted its first NDC in 2016 with a timeframe up to 2025, but did not communicate a new NDC by 2020 as required.10 As a result, Guyana has not maintained an NDC in compliance with Article 4 and Decision 1/CP.21 since 2021, despite issuing its first Article 6 Letter of Authorization in 2024.11

The issue was not flagged as non‑compliance in Guyana's Initial Report Technical Expert Review (TER). The Initial Report12 stated that the NDC "will be revised by 2025," and the TER did not identify inconsistencies with the requirement to maintain successive NDCs. Instead, the TER13 focused on inconsistencies in the reported NDC timeframe. Guyana's Initial Report described the NDC having 2030 as the target year (item 3D of the Initial Report), while the annex to the BTR indicated an implementation period of 2016–2025. During the review, Guyana clarified that the current NDC covers the period up to 2025 and that an updated NDC will be submitted in 2025 as part of its Low Carbon Development Strategy 2030. The TER acknowledged this clarification and recommended that Guyana include the corrected information in future reporting. As of February 2026, Guyana has not updated its NDC.14

This case highlights a broader structural issue: the transparency framework can identify inconsistencies but has limited mechanisms to enforce compliance, such as (ensuring timely NDC updates, even though maintaining an up‑to‑date NDC is a prerequisite for Article 6 participation. If participation requirements are too flexible or treated as optional in practice, the burden of "integrity policing" shifts informally to buyers and auditors.

For assessments such as the one conducted in this paper, outdated NDCs introduce uncertainty into both the interpretation of targets and the credibility of any implied crediting space.

3.2 Incomplete National Inventories and BTRs

Reliable BAU projections and credible tracking of mitigation progress depend on complete, regularly updated national greenhouse gas inventories. Several countries in the sample fell short. For example, Sri Lanka relies on NRI data from 2021, with no 2022 figures published.15 Tanzania was initially considered for this analysis, but the country has not published its BTR16 nor its Article 6 Initial Report, making it impossible to complete its assessment. This reporting gap is notable given that Tanzania already issued an LOA in 2025, authorizing the transfer of 180,000 ITMOs.17 Uganda presents a similar case: no BTR has been published, and no Common Reporting Tables (CRT) are available on UNFCCC's BTR repository.18

Where inventories are incomplete or outdated, and where BTRs do not report on NDC progress, any derived crediting space calculations derived from them become unreliable.

3.3 Inflated or Uncertain BAU Trajectories

BAU projections are the denominator against which most NDCs measure their ambition. When they are set high, the resulting "mitigation volume" appears large even if actual emissions never approach the projected baseline. The analysis made this dynamic visible: the appearance of crediting space is highly sensitive to the modeling choices behind BAU‑setting and therefore to the robustness and transparency of those assumptions.

Some BAUs appear inflated relative to historical emissions trends or economic indicators, while others lack documentation on the models or assumptions used. Because the NDC mitigation volumes (Scenarios 3 and 4) depend directly on the BAU, any uncertainty or inflation in the BAU translates into uncertainty in the implied mitigation volume. This limits the interpretability of BAU‑based assessments of crediting space. For example, Cambodia projects BAU emissions of 133,700 kt CO₂e (using 2035 data) against 2022 observed emissions of only 63,322 kt CO₂e a BAU more than double current levels.19 Burundi's BAU of 6,855 kt CO₂e is roughly three times its 2022 observed emissions of 2,228 kt CO₂e, implying aggressive growth assumptions.20

3.4 Cross-country inconsistencies in BAU construction and target design

Even among countries with similar economic structures or emissions profiles, BAU trajectories and target formulations differ markedly. However, this diversity is a core feature of the Paris Agreement's design: NDCs were intentionally structured to allow flexibility in target types, baselines, and metrics, enabling broad participation and national ownership. Some NDCs express targets as percentage reductions below BAU, others as absolute emissions levels, and others as sector‑specific commitments.

Yet, these differences make cross‑country comparisons of crediting space difficult. As a result, mitigation volumes derived from BAU trajectories are not directly comparable across countries.

A further complication arises from the treatment of conditional and unconditional components: because current guidance does not specify which benchmark should be used when assessing potential crediting space, materially different interpretations can emerge depending on whether the full or unconditional target is applied.

For the purposes of Article 6, this creates a practical challenge: while NDCs do not need to be standardized, assessing crediting space for international transfer requires a minimum level of clarity on how each country defines its target and reference pathway. Without such clarity—whether provided in NDCs, BTRs, or Article 6 frameworks—assessments of crediting space remain sensitive to national design choices and difficult to interpret consistently across countries.

Ghana's Case: Implications of a cumulative emission reductions NDC target

Ghana's NDC does not define a 2030 emissions level as its NDC target, as most countries do. Instead, it commits to achieving 64 MtCO₂e of cumulative emission reductions over 2021–2030, comprising 24.6 MtCO₂e of unconditional reductions and 39.4 MtCO₂e of conditional reductions.21 This cumulative target is derived from the mitigation potential of 34 identified measures.

Ghana's Article 6 Initial Report further operationalizes this cumulative target by converting it into average annual reductions—7.1 MtCO₂e per year for the full target: 2.7 MtCO₂e per year for the unconditional component, and 4.4 MtCO₂e per year for the conditional component22—over the implementation period from 2021 to 2030. The same averaging logic is applied to corresponding adjustments: Ghana proposes to divide cumulative ITMOs first transferred by the number of elapsed years in the crediting period and apply indicative annual adjustments accordingly.

Ghana's CTF23 also notes that its NDC target "aims to achieve 64 MtCO₂e absolute emissions reduction without reference to either a static or dynamic baseline." This means the target is not anchored to a specific 2030 BAU emissions level and therefore cannot be directly compared to countries whose NDCs define 2030 emissions outcomes. Moreover, without a defined 2030 emissions target level, any assessment of crediting space becomes interpretive.

This design gives Ghana greater flexibility in how mitigation is distributed across the decade, but it also makes it more challenging to analyze against a single‑year baseline such as 2022 emissions or 2030 BAU. As a result, Ghana's mitigation volume cannot be interpreted in the same way as countries with single‑year or BAU‑based targets, underscoring the broader difficulty of comparing NDC structures across countries when assessing crediting space for Article 6 transfers.

3.5 Misaligned crediting and national accounting

A well-recognized structural gap in the Article 6 design is the disconnect between project-level crediting methodologies and national inventory reporting.24 Projects generate credits using their own baselines and activity-level methodologies, which may not align with the host country's national accounting for emissions. When a credit is issued and a CA applied, the host country's carbon budget is debited—but the national inventory may not reflect the project's activity, or may account for it under different sectoral boundaries. This parallel-accounting problem remains unresolved in practice. A further structural weakness arises when emission reductions authorized for transfer under Article 6 are not captured in the national inventory. National inventories remain the basis for tracking progress toward NDCs and for applying corresponding adjustments, but project‑level MRV systems often operate independently and on different timelines. When reductions achieved by an Article 6 activity are not reflected in the NIR, the application of a corresponding adjustment can create a distortion in the national accounting framework.

If a host country authorizes ITMOs from a mitigation activity whose reductions are absent from the inventory, the corresponding adjustment effectively adds emissions to the national balance without a matching reduction. Instead of transferring real, inventory‑verified mitigation, the CA inflates the inventory, making it appear as though the country emitted more than it actually did. This has two consequences:

• It artificially reduces the country's remaining headroom to meet its NDC, because the inflated inventory must still be reconciled with the target.
• It undermines the environmental integrity of the transferred ITMOs, because the reductions being "exported" are not visible in the national accounting system that underpins Article 6.

In practice, this means that a CA applied to unaccounted emission reductions does not transfer mitigation; it inflates the host country's reported emissions. This creates a risk of over‑transfer, in which the host country's ability to meet its NDC is compromised even though actual mitigation may have occurred at the project level. It also highlights the importance of ensuring that project‑level mitigation is fully integrated into national inventories before corresponding adjustments are applied.

…

These structural constraints do not invalidate the scenario analysis but shape how its outputs should be interpreted. Weak or incomplete inventories affect the reliability of the 2022 emissions baseline; uncertain BAUs affect the credibility of NDC mitigation volumes; and inconsistent reporting affects the comparability of results across countries. Recognizing these limitations is essential for interpreting the results presented in the following section and for understanding the degree of confidence that can be placed in any assessment of potential crediting space.

This section presents the results of the four scenarios defined in Section 3. The analysis compares countries' latest reported emissions (2022), their reported 2030 BAU trajectories, and their NDC targets under both ambition levels (full target and unconditional target). The purpose is not to forecast future emissions or evaluate mitigation potential, but to assess—using only reported data—the extent to which countries appear on track to meet their NDCs and whether any credible crediting space may exist.

Because the analysis relies exclusively on reported data, the results should be interpreted in light of the structural weaknesses identified in Section 3. Weak inventories affect the reliability of the 2022 baseline; uncertain or inflated BAUs affect the credibility of mitigation volumes; and inconsistent target designs—such as cumulative and/or multi‑year commitments—limit comparability across countries. These issues do not invalidate the scenarios but shape how their outputs should be understood.

These results provide a view of how reported emissions, BAU trajectories, and NDC targets align—and where potential crediting space may or may not exist based on the information countries have submitted to the UNFCCC.

Table 2. Implementation Gaps (Scenarios 1–2) and NDC Mitigation Volumes (Scenarios 3–4) across assessed countries

Country	Implementation GapBaseline: 2022 observed emissions		NDC Mitigation VolumesBaseline: 2030 BAU projection
	Scenario 1iImplementation Gap (full target)= 2022 Emissions − 2030 Full NDC Target (kt CO₂e)Full target (unc. + cond.)	Scenario 2iImplementation Gap (unconditional)= 2022 Emissions − 2030 Unconditional Target (kt CO₂e)Unconditional only	Scenario 3iNDC Mitigation Volume (full target)= 2030 BAU − 2030 Full NDC Target (kt CO₂e)Full target (unc. + cond.)	Scenario 4iNDC Mitigation Volume (unconditional)= 2030 BAU − 2030 Unconditional Target (kt CO₂e)Unconditional only
Rwanda25	403	−2,261	4,600	1,936
Malawi26	12,481	7,191	6,470	1,180
Kenya27	15,943	−20,207	45,760	9,610
Cambodia28	2,922	−48,778	73,300	21,600
Ghana*	Cumulative target — not directly comparable with the four scenarios approach
Sri Lanka*	Cumulative target — not directly comparable with the four scenarios approach
Burundi29	−3,554	−4,418	1,073	208
Bhutan30	−2,140	−3,633	1,493	−3,168

*Ghana and Sri Lanka have cumulative targets, which are not directly comparable with the four scenarios approach. All values in kt CO₂e.

Positive value (Implementation Gap): The country must reduce emissions between now and 2030 to meet its target; no crediting space up to the latest reported year. Negative value: Current emissions are already below the target; could reflect crediting space for transfers, a weak target, or temporary suppression (e.g., due to macroeconomic shocks).

Positive value (NDC Mitigation Volumes): The NDC aims for reductions below BAU. Negative value: The target sits above BAU. In the case of Bhutan, Scenario 3 reflects absolute emission reductions before absorptions and since its target is 100% conditional, Scenario 4 is the 2030 BAU net emissions scenario.

The values in Table 2 illustrate how differently countries' reported data interact with the four‑scenario framework. Two broad patterns emerge:

1. Implementation gaps exist in most countries when assessing crediting space against full NDC targets (Scenario 1)

Most countries show positive implementation gaps, meaning their 2022 emissions remain above the level implied by their full NDC targets. Interpreted through the lens of crediting space, this indicates that—when considering mitigation additional to both unconditional and conditional commitments—there is no evidence of headroom available for international transfer. The only exceptions are Burundi, whose generous BAU and low historical emissions place its 2022 levels below its target trajectory, and Bhutan, which has already achieved and maintained its goal of carbon neutrality.31 These cases illustrate that negative gaps are possible but remain rare, and in both instances the apparent headroom is linked to an atypical baseline—i.e., either a generous BAU or a target that has already been met.

Moreover, current Article 6 guidance does not specify whether crediting space should be assessed against unconditional targets alone or against the combined unconditional and conditional ambition, leading to materially different results depending on the benchmark applied. This is why Scenario 2 is included.

2. There may be crediting space to trade when assessing against unconditional NDC targets only (Scenario 2)

When the analysis is limited to unconditional NDC targets, several countries show negative implementation gaps, meaning their 2022 emissions already fall below the level implied by their unconditional commitments. Under a narrow interpretation—where crediting space is defined as mitigation additional only to unconditional targets—this could be read as evidence of potential headroom for international transfer.

However, this interpretation must be approached with caution. In many cases, the apparent headroom reflects progress in conditional targets, the already discussed generous BAU assumptions, or structural issues in reporting rather than genuine overachievement. As a result, while Scenario 2 highlights where headroom might exist under a minimal ambition test, it does not necessarily indicate the presence of robust, high‑integrity mitigation outcomes suitable for transfer.

Malawi is the only exception, as it has an implementation gap even under Scenario 2. This is aligned with Malawi's self-assessment in its BTR1, where it states that the country is "out of progress." This may be due to the anomaly that actual 2022 emissions of 25,261 kt CO₂e overshoot its BAU of 19,250 kt CO₂e. All the other assessed countries assume that BAU emissions increase due to economic growth. This results in Malawi having the only positive implementation gap under Scenario 2.32

How the patterns play out, country by country

These broad patterns do not tell the whole story. Each country's position in the scenario framework reflects a distinct combination of target design, data availability, and BAU assumptions. The brief profiles below highlight what the numbers reveal about crediting space in each case.

Rwanda

Rwanda sits right on the edge. Its Scenario 1 gap of just 403 kt CO₂e is the narrowest positive gap in the sample that's close enough that a single inventory revision could tip it negative. Under Scenario 2, the position flips to an apparent headroom of 2,261 kt, but the margin is thin, and the CTF annexed to the BTR offers no self-assessment of NDC progress, leaving the relevant reporting table empty (CTF- NDC, Table 4). Without that assessment, any claim of tradable crediting space is essentially unsupported by the country's own transparency reporting.

Malawi

The broad patterns discussion already flags Malawi as the only country with a positive implementation gap under both Scenarios 1 and 2. What warrants emphasis here is that Malawi's own BTR quantifies the scale of the problem: actual 2021 emissions exceeded planned emissions under NDC-measures by 13.24 million tCO₂eq, and the gap widened to 14.16 million in 2022. This is not a borderline case but one in which emissions are notably diverging from the NDC trajectory. The fact that Malawi's 2022 emissions exceed its 2030 BAU projection suggests that the BAU itself may be overly stringent, and a future revision may be warranted to reflect more realistic growth and emissions dynamics. Any ITMO authorization under current conditions would compound an already-acknowledged lack of headroom.

Kenya

Kenya presents a paradox. Its BTR reports emissions 19.4% below the start of the NDC implementation period, suggesting genuine domestic progress. Yet the full-target gap remains large at 15,943 kt, and the dramatic swing to −20,207 kt under Scenario 2 is almost entirely explained by the large size of the conditional commitment, not by overachievement. For a buyer relying on Scenario 2 to justify transfers, the question is whether Kenya's conditional ambition—which depends on international support and may or may not materialize—should be treated as available crediting space.

Cambodia

The BAU dynamics discussed in Section 3 are most extreme here, but the BTR adds a telling detail: Cambodia self-reports only 1.8% emission reduction against BAU by 2022. The Scenario 2 headroom of 48,778 kt, the largest in the sample, stems from the elevated baseline rather than achieved mitigation. Crediting decisions anchored to these numbers would be based on projections, not a track record.

Ghana

Ghana's cumulative target structure, discussed at length in Section 3, makes it incomparable in the four-scenario framework. But the BTR does offer a progress metric: cumulative reductions through 2022 stand at 28,690 ktCO₂e, or roughly 45% of the 64 MtCO₂e target. That is partial progress at the halfway mark enough to suggest effort, but not enough to demonstrate headroom. Because the target is cumulative and not anchored to a 2030 emissions level, any assessment of crediting space remains interpretive and depends on how reductions achieved to date are allocated across the decade. Until the target is expressed in terms that allow a single‑year comparison, Ghana's position in relation to potential crediting space cannot be assessed consistently with the other countries

Sri Lanka

Sri Lanka shares Ghana's cumulative-target condition and carries a constraint: its inventory stops at 2021. The BTR provides no overall progress assessment, only partial sectoral updates. This does not indicate a lack of effort, but it does mean that the information needed to situate Sri Lanka within our assessment framework is incomplete. With both the target structure and the data baseline still evolving, Sri Lanka was the least comparable country in the sample. Crediting-space claims here remain speculative.

Burundi

Burundi's high BAU, noted in Section 3, drives the negative gaps across both scenarios. Yet its BTR tells a more interesting story: in 2023 Burundi reports reductions of 9.85% (unconditional) and 21.26% (conditional), both exceeding the 2025 forecasts in its NDC. If accurate, this would suggest the country is genuinely ahead of schedule. However, the scale of the apparent headroom is heavily influenced by the 2030 BAU, which is roughly three times observed emissions in 2022—a ratio that amplifies the size of any calculated headroom. This means that while progress may be real, crediting space is highly sensitive to baseline assumptions and the small share of the 2030 unconditional mitigation target (3.04% against BAU), rendering it difficult to interpret as transferable mitigation.

Bhutan

Bhutan is the only country where the apparent crediting space is unambiguously grounded in reality: net emissions of −6,801 kt CO₂e in 2022 confirm that carbon neutrality is being maintained—a structural feature of its LTS‑derived target rather than an indication of weak ambition. In this sense, Bhutan's headroom is real but not directly comparable to other countries, because its target architecture embeds absorptions and long‑term neutrality commitments in ways that differ from standard NDC formulations. Bhutan's challenge is therefore one of comparability, not credibility.

Since the country‑level target has already been achieved, any future cooperation under Article 6 would place particular importance on project‑level additionality assessments, which become the primary basis for determining whether mitigation is genuinely beyond business‑as‑usual.

…

These country profiles suggest that crediting space, where it appears to exist, is almost always a function of how targets and baselines were designed rather than of demonstrated mitigation performance. The few countries reporting genuine progress offer thin margins or face structural data limitations that undercut confident headroom claims. Taken together, these dynamics point to a deeper ambiguity in the current market architecture: the system lacks a consistent way to distinguish numerical headroom created by accounting choices from crediting space grounded in real, additional mitigation.

The scenario assessment and the data‑quality review point to a simple but important conclusion: the credibility of international carbon markets depends not only on the integrity of individual mitigation activities, but also on the transparency and robustness of the national‑level information underpinning Article 6 accounting. Implementation gaps, inflated BAUs, cumulative targets, and incomplete inventories can all create the appearance of crediting space where none exists—or obscure genuine progress where it does. While this assessment covers eight host countries, we consider the findings indicative and broadly representative of wider structural challenges across the global Article 6 landscape, underscoring the need for stronger national data systems and more rigorous accounting safeguards.

A credible market is therefore one in which reported data, NDC structures, and accounting practices align with the reality of national emissions trajectories. This requires that:

• NDCs are updated on time and expressed in ways that allow transparent assessment of progress.
• National inventories capture all Article 6 mitigation activities occurring within the country.
• BAU trajectories are documented, justified, and periodically revised to reflect observed trends.
• Corresponding adjustments are applied only when emission reductions are reflected in the national accounting system.
• Countries avoid relying on structural weaknesses—such as inflated BAUs or targets detached from credible baselines—to create the appearance of crediting space.

The results presented in this paper do not suggest that countries are acting in bad faith. Rather, they highlight how gaps in reporting, outdated assumptions, and inconsistent target designs can distort the perception of available crediting space. A credible market acknowledges these limitations and works to correct them, ensuring that transferred mitigation outcomes represent real, additional reductions beyond what is needed to achieve NDCs.

As Article 6 implementation accelerates, the integrity of the market will depend increasingly on the quality of national‑level reporting and the clarity of NDC commitments. Strengthening these foundations is not a technical detail—it is a prerequisite for a credible, durable, and trustworthy international carbon market.

Moreover, the analysis underscores a deeper structural challenge: Article 6 is an advanced accounting-and-transfer framework built on top of national systems—GHG inventories, BAU/reference pathway construction, and transparency reporting—that in many participating countries remain constrained by limited institutional capacity, uneven data infrastructure, and chronic delivery bottlenecks across core public functions.

In other words, the mechanism assumes a level of timeliness, completeness, and consistency that is difficult to sustain when public administrations are simultaneously managing competing priorities in basic service delivery. Even with strong goodwill and technical support, it is unrealistic to expect Article 6 governance to consistently outperform other areas of public-sector governance in the near term.

This does not justify lowering integrity expectations or obscuring weaknesses. Rather, it underscores the need for a more implementation-realistic integrity strategy; one that aligns high standards with reliable support, phased readiness pathways, and accountability for delivery.

Development partners and implementing agencies have a central role to play: not only in financing capacity building, but in institutionalizing inventory systems as permanent public functions, embedding them in budgets and mandates, strengthening inter-agency coordination, and supporting the data foundations required for inventories and BAU trajectories. The binding constraint is therefore not funding alone, but the quality, continuity, and durability of implementation, evidenced through governance arrangements, sustained staffing, functioning data systems, and clear accountability for results.

The early years of Article 6 implementation also present an opportunity: countries are experimenting, learning, and adjusting course in real time. A growing group of pioneering participants—many of them the same countries navigating the data and capacity constraints described above—are already engaging with one another through emerging cooperation platforms. Existing spaces such as non‑market approaches under Article 6.8 and the Article 6.4 Designated National Authorities Forum, launched in May 2025, provide venues for shared learning, peer support, and collective problem‑solving. These mechanisms can help countries converge on more consistent approaches to BAU construction, inventory integration, and crediting space assessment, reducing fragmentation and strengthening the foundations of a credible market.

A market that is honest about its constraints is one that can grow on firmer ground. If countries use these early years to build shared practices, strengthen national systems, and align accounting with reality, Article 6 can evolve into a mechanism that rewards real mitigation—and earns the trust it will need to endure.