Article 6 is moving from negotiation to implementation at speed. But not all countries are moving equally fast.
Article 6 is a key part of the Paris Agreement that sets out how countries can cooperate to meet their climate targets by transferring emissions reductions across borders. In practice, it creates a framework for authorising and transferring mitigation outcomes between countries, allowing emissions to be reduced where it is most cost-effective while still contributing towards national climate goals.
As countries come under increasing pressure to meet their climate commitments, Article 6 is rapidly evolving from a negotiated framework into a fully operational international carbon market system.
Countries such as Singapore, Switzerland, and Japan are actively developing and have signed bilateral implementation agreements that enable participation in Article 6 through Internationally Transferred Mitigation Outcomes (ITMOs). These agreements provide the basis for authorising, transferring, and accounting for emissions reductions across borders, while ensuring environmental integrity and avoiding double counting.
New Zealand’s position has been somewhat different. While there has been some early, preliminary engagement through memoranda of understanding and cooperation agreements with partner countries, these arrangements remain exploratory in nature and fall well short of the frameworks and systems required for meaningful participation in Article 6 markets.
More fundamentally, current government policy places a strong emphasis on meeting climate targets through domestic emissions reductions rather than through the use of international mitigation outcomes. As a result, New Zealand is not actively building the policy settings or institutional framework required for large-scale participation in Article 6.
The implications of this position become more significant when viewed against New Zealand’s current emissions trajectory and projected NDC shortfall.
By the end of 2023, New Zealand had emitted about 15.3 million tonnes more than what would be consistent with meeting its Paris-aligned target (Carbon News, 2024). When combined with projections from the Ministry for the Environment indicating a potential shortfall of around 84 million tonnes over the first NDC period (2021-2030), this suggests a significant emissions gap. Such a gap is unlikely to be closed through domestic reductions alone, increasing the importance of access to international mitigation through mechanisms such as Article 6.
If New Zealand continues to delay engagement with Article 6, it risks being a late entrant to a rapidly developing market. By that point, it may face fewer opportunities to secure international mitigation outcomes, higher participation costs, and less influence over how the system is shaped.
However, the significance of Article 6 extends beyond the procurement of international mitigation outcomes. A functioning framework could also enable New Zealand businesses to play a more active role in developing and investing in mitigation projects that generate Article 6 credits, while also attracting international investment into domestic emissions reduction activities. This would support a more strategic approach to participation in emerging carbon markets, where mitigation outcomes increasingly flow in both directions.
Taken together, these developments suggest that Article 6 is not only a mechanism for meeting emissions targets, but also a platform that may shape future economic and investment flows.
As the system continues to evolve, the question is becoming less about whether New Zealand can participate and more about whether current policy settings are preserving future options in a system that is already moving ahead.
Is New Zealand keeping pace with this shift, or could it find itself needing to develop the necessary frameworks later, under tighter timeframes and with fewer available opportunities?