Asian countries leverage Paris Agreement Article 6.2 through international carbon trading to achieve new NDC targets.（Image: iStock）
Following the establishment of detailed framework for bilateral cooperation under Article 6.2 of the Paris Agreement during COP29 in Baku, countries have been strengthening their implementation of international carbon trading.
This article provides an overview and latest update on the status of bilateral cooperation under Article 6.2 across the Asia-Pacific region. Japan and Singapore have been so far the most active countries in implementing Article 6.2, with several agreements and MOUs inked in the previous months.
In contrast, countries in the Pacific region like New Zealand and Australia have yet to explicitly specify their approaches towards international carbon trading within Article 6.2. As the scheduled deadline for countries to submit their 2035 NDC targets draws near, this article further examines new climate commitments by key Asia-Pacific countries, as well as key uncertainties for implementing Article 6.2 as a tool to help countries achieve their new NDC targets.
Figure 1. International cooperative under Article 6.2: Bilateral agreements and MOUs (Source: IETA)
Status-quo: Bilateral cooperation under Article 6.2 across Asia-Pacific
Asia’s acceleration of Article 6.2 bilateral cooperation
As estimated by World Economic Forum, Asia accounts for above half of the world’s emissions and Gross Domestic Product (GDP). A majority of countries in the region are currently in the industrialisation process and have yet to peak emissions, thus have a huge potential to reduce emissions and become key sellers of Internationally Transferred Mitigation Outcomes, or ITMOs – tradable units under Article 6.2.
In Asia, Japan has been amongst the most active countries in seeking bilateral cooperation under Article 6.2. The country has been promoting Joint Crediting Mechanism (JCM) partnership with 30 countries. In late August 2025, Japan signed a MOU with India (making India the 31st partner country), agreeing to invest in low carbon technologies in India and enable the internation trading of ITMOs.
India, aiming to achieve its Net Zero target by 2070, has been preparing for the launch of its voluntary carbon market, scheduled for the end of this year. Early this year, this country issued a dozen of draft offset methodologies and indicated a strong willingness to export their domestic credits under Article 6.2. In late July, India articulated a list of activities eligible for carbon credit issuance under Article 6. With trading commencement planned to occur by 2026, carbon market in India is estimated to be the third largest one worldwide, inferior only to those in China and the EU.
While further details regarding both sides’ cooperation still need to be fleshed out, their MOU at the first glance appears to be a significant step: India with its carbon market’s scale has a potential to become one of the largest carbon credit suppliers worldwide, whereas Japan will likely be amongst the global biggest purchasers, given its anticipated rising demand in the upcoming mandatory phase of Japan’s Green Transformation (GX) ETS.
In parallel, Japan has been seeking JCM cooperation with other Southeast Asian countries. Since mid-July, Japan and Thailand have deepened discussions on three proposed JCM methodologies. Japan subsequently called upon comments regarding Thai’s 13 emissions reduction projects. Currently, Japan and Malaysia are also working on launching their JCM partnership scheduled for this year end.
In comparison, South Korea has been recently active in revitalising its domestic voluntary market and preparing infrastructure for future Article 6 credit exchange. In mid-September, the current trading platform of its national ETS – South Korea Exchange (KRX) inked a MOU with Xpansiv – a global infrastructure provider for environmental commodity market.
Both sides aimed to develop the KRX carbon credit market in South Korea, which will facilitate trading of Article 6 credits. In July 2025, this country secured its first host-country approval for a bilateral initiative with Cambodia, which also marked the first authorised Article 6 project of this Southeast Asian country.
Since early 2025, South Korea has been actively working on establishing an intergovernmental cooperation model for facilitating international emissions reduction projects, followed by the release of its agreements with the UNFCCC and the Global Green Growth Institute (GGGI) in late May. This collaboration focuses on creating a model framework and project methodologies aligned with Article 6 of the Paris Agreement, strengthening transparency and credibility in international carbon trading. in any bilateral cooperation under Article 6.2, China recently indicated initial policy signals towards its implementation of Article 6. The policy document entitled “Opinions on Promoting Green and Low-Carbon Transformation and Strengthening the Construction of the National Carbon Market” issued by China’s State Council in late August emphasised that the world largest emitter to align its domestic voluntary carbon market with international standards, and that this country would actively participate in the formulation of rules under Article 6. count towards their NDC targets might be high. Nevertheless, it remains to be seen what extent these countries plan to utilise ITMOs, and the development of disclosure mechanisms and legal frameworks for ITMO transfers could be a lengthy process.
As for Australia, the country’s NDC target released on 19 September has been widely considered to be weak, causing the bearish trend in current prices of carbon credits in the Australia Safeguard Mechanism. The lack of climate ambition in Australia’s 2035 NDC may hint at the country’s low ITMO demand, pointing to its restrained engagement in Article 6 activities over the short- to medium-term.
This column is a collaboration between RECCESSARY and Mai Duong. All rights reserved. Reproduction without permission is strictly prohibited.
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