An Update on the Paris Agreement Crediting Mechanism
After two years of work to develop technical standards that prescribe how carbon crediting methodologies will operate, implementation of the Paris Agreement Crediting Mechanism is focused on the development of methodologies and their supporting methodological tools.
The Parties to the United Nations Framework Convention on Climate Change will soon gather in Germany for a negotiating summit that marks the halfway point between last year’s COP30 in Brazil and the upcoming COP31 in Turkey. Although UN carbon markets are not the primary focus of the summer session, I wanted to provide an update on ongoing work on the Paris Agreement Crediting Mechanism (PACM).
I joined the PACM Methodological Expert Panel (MEP) at its inception in 2024 and have since been working on the mechanism’s implementation. For context, the MEP is a technical body that operates at the direction of the PACM Supervisory Body, which in turn is accountable to the Parties to the UNFCCC Paris Agreement (as always, this post reflects my personal views and not any official views of the UNFCCC or PACM).
Most of the MEP’s first two years focused on the development of methodological standards to elaborate key Supervisory Body decisions on the topics of carbon crediting methodologies and requirements specific to carbon removal. Implementing these decisions required additional technical guidance and careful legal drafting to translate the Supervisory Body’s requirements into formal carbon market standards.
In 2025, the MEP completed work on the mechanism’s core methodological standards, which were approved by the Supervisory Body and reviewed by the Parties to the Paris Agreement at COP30 (see Decision 20/CMA.7). These methodological standards set requirements that must be met by any carbon crediting methodologies before they can be approved and used to issue carbon credits under the PACM (see Table 1).
| Name | Purpose |
|---|---|
| Additionality Standard | Specifies how methodologies determine that Article 6.4 activities would not occur in the absence of carbon credits. |
| Baseline Standard | Specifies how methodologies determine an Article 6.4 activity’s counterfactual baseline scenario, which helps inform how many carbon credits are issued. |
| Leakage Standard | Specifies how methodologies address the displacement of pre-project activities (e.g., when new activity shifts emissions outside the project’s boundary). |
| Suppressed Demand Standard | Specifies how to credit improvements in service levels to meet basic human needs, such as housing, sanitation, and access to energy services (e.g., lighting, cooking, mobility, and thermal comfort). |
| Reversals Standard | Specifies how methodologies address the risk that credited carbon storage is lost (or “reversed”) due to natural disasters or human-mediated factors. |
Beyond finalizing these core methodological standards, the MEP also revised a carbon crediting methodology on landfill gas management that had originally been developed under the UNFCCC’s predecessor carbon market, the Clean Development Mechanism (CDM). The methodology was updated to align with the requirements in Table 1, and in 2025 the Supervisory Body approved it as the first PACM methodology (AMM-001).
Now that the PACM’s core methodological standards are in place, the Supervisory Body and MEP have shifted their attention to developing new carbon crediting methodologies. In May 2026, the Supervisory Body approved a second PACM methodology focused on N2O abatement from nitric acid production (AMM-002). The MEP has developed, and the Supervisory Body has approved, nine methodological tools, with applications ranging from tools to support the Additionality Standard to a tool that calculates greenhouse gas emissions from electricity consumption and generation.
As with the CDM, methodologies under the PACM can either be developed by the MEP directly (“top-down”) or submitted by third-party stakeholders, including from voluntary and compliance carbon markets outside the UN system (“bottom-up”).
To date, the top-down development process has focused on the needs of so-called CDM transition activities. More than two thousand CDM projects have applied to transition to the PACM but will need new PACM-approved methodologies to earn carbon credits as of January 1, 2026 (Decision 3/CMA.3, annex, paragraph 73(d)).
At its next meeting in June, the MEP is expected to consider draft methodologies addressing clean cooking and renewable energy projects, both of which underwent public consultation earlier this year. Meanwhile, as of April 2026, the UNFCCC secretariat had received 39 bottom-up submissions, of which seven passed an initial screening test.
Both the MEP and Supervisory Body will meet twice before COP31 in Turkey, providing additional opportunities to recommend and approve additional methodologies. With the PACM’s core methodological framework now largely in place, the development of carbon crediting methodologies now takes center stage.
Danny Cullenward
Shleifer Senior FellowDanny Cullenward is a Shleifer Senior Fellow at the Kleinman Center. He is an economist and lawyer focused on the scientific integrity of climate policy.
