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# Article 6.4 PACM Compared with Article 6.2 ITMOs
- URL: https://blog.financely.io/article-64-pacm-vs-article-62-itmos/
- Published: 2026-11-13T15:10:47.000Z
- Updated: 2026-11-13T15:21:20.000Z
- Description: Article 6.4 creates the Paris Agreement Crediting Mechanism, a UN-supervised crediting mechanism that can issue A6.4 emission reductions. Article 6.2 is the accounting guidance for internationally transferred mitigation outcomes, or ITMOs. Authorized A6.4 units can become ITMOs.
- Author: Financely Debt Advisors
- Tags: Carbon Project Finance, Market Insights

Article 6.4 creates the Paris Agreement Crediting Mechanism, a UN-supervised crediting mechanism that can issue A6.4 emission reductions. Article 6.2 is the accounting guidance for internationally transferred mitigation outcomes, or ITMOs. Authorized A6.4 units can become ITMOs after first transfer. This guide compares the two tracks and points to the live Financely pages that already cover authorization and corresponding adjustments.

## What does Article 6.4 do that Article 6.2 does not?

Article 6.4 establishes a crediting mechanism, now called the Paris Agreement Crediting Mechanism or PACM, with a Supervisory Body, activity registration, methodologies and issuance of A6.4 emission reductions. Article 6.2 does not create that mechanism. It sets accounting, reporting and review rules for cooperative approaches that involve ITMOs, including authorized Article 6.4 units after first transfer.

That distinction is easy to blur in commercial documents. A sponsor can have a PACM activity that issues only Mitigation Contribution A6.4ERs, which the host Party has not authorized. Those units can still represent mitigation, but they are intended to count toward the host Party's nationally determined contribution and are not ITMOs. Authorized A6.4ERs, once first transferred, are ITMOs and pull Article 6.2 corresponding adjustment and reporting obligations with them.

The existing top-level overview remains the group site guide, [Article 6 of the Paris Agreement: a top-level guide for carbon market developers](https://www.financely-group.com/article-6-of-the-paris-agreement-a-top-level-guide-for-carbon-market-developers?ref=blog.financely.io). Readiness, authorization and corresponding-adjustment strategy already have blog pages, including [Article 6 readiness for voluntary carbon project developers](https://blog.financely.io/article-6-readiness-for-voluntary-carbon-project-developers/), [when a carbon project may need host country authorization](https://blog.financely.io/when-a-carbon-project-may-need-host-country-authorization/), and [corresponding adjustments and carbon credit commercial strategy](https://blog.financely.io/corresponding-adjustments-and-carbon-credit-commercial-strategy/). This article does not replace those URLs. It isolates the 6.4 versus 6.2 comparison that those pages do not use as their primary keyword.

## When does an A6.4 unit become an ITMO?

An A6.4 emission reduction becomes an internationally transferred mitigation outcome when it is an authorized unit and it has been first transferred, as that term is used in the Article 6.2 guidance and related PACM registry reporting. Until authorization exists, the unit remains a mitigation contribution unit, even if a buyer is interested in it.

Host Parties can, in some cases, authorize units later. They can also attach conditions, and UNFCCC materials note that authorization can be changed in defined circumstances. Commercial files should therefore record the current authorization tag, the intended use (nationally determined contributions, other international mitigation purposes, or both), and the date and source of that information, rather than assuming a unit will be authorized because a buyer wants it to be.

Preparation of the authorization discussion itself is already covered in [how to prepare a carbon project for Article 6 authorization discussions](https://blog.financely.io/how-to-prepare-a-carbon-project-for-article-6-authorization-discussions/). International buyer structuring remains on [Article 6 carbon project structuring for developers seeking international buyers](https://blog.financely.io/article-6-carbon-project-structuring-for-developers-seeking-international-buyers/). Lender-facing corresponding adjustment risk remains on [corresponding adjustment risk for carbon lenders](https://blog.financely.io/corresponding-adjustment-risk-carbon-lenders/) and [Article 6 authorization risk in project finance](https://blog.financely.io/article-6-authorization-risk-project-finance/).

## How does CDM transition relate to this comparison?

A Clean Development Mechanism activity that transitions into the PACM becomes an Article 6.4 activity, not an Article 6.2 cooperative approach by that fact alone. Host approval, current cut-off dates, and the later switch to an Article 6.4 methodology are PACM issues. Whether the resulting units are authorized, and can become ITMOs, is a separate authorization question.

Sponsors should confirm current transition dates on the official UNFCCC CDM transition pages, because those dates have been set and later discussed in Conference decisions. This article does not freeze a deadline in the text. End-to-end development, if still needed, starts from the [carbon project consulting hub](https://www.financely.io/carbon-project-consulting-full-scope-advisory-from-feasibility-to-credit-issuance?ref=blog.financely.io).

| Track                                          | What it is                                                                                         | Typical output                                                                                        | What must still be checked                                                         |
| ---------------------------------------------- | -------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- |
| Article 6.4 PACM                               | A UN-supervised crediting mechanism                                                                | A6.4ERs, either mitigation contribution units or authorized units                                     | Host Party participation, methodology, validation, registration and issuance rules |
| Article 6.2                                    | Accounting, reporting and review guidance for cooperative approaches                               | ITMOs, including authorized A6.4 units after first transfer, and other authorized mitigation outcomes | Authorization, first transfer, and corresponding adjustment and reporting          |
| Voluntary program credit without authorization | A credit issued under a program such as Verra or Gold Standard, without a host Party authorization | A voluntary carbon credit                                                                             | Whether the intended use actually requires authorization, which it may not         |

## What should a commercial file say, and what should it not say?

The file should name the mechanism or program, the unit type, whether authorization exists, and whether the parties are transacting mitigation contribution units, authorized units, ITMOs, or voluntary credits. It should not describe an unauthorized unit as an ITMO, and it should not treat a hoped-for letter of authorization as already issued.

Financely can advise on how to keep that wording accurate, as an advisor and arranger only. It does not issue A6.4ERs, grant letters of authorization, perform corresponding adjustments, or act as a designated operational entity or designated national authority. Official outcomes sit with the Supervisory Body process and the host Party.

## Frequently asked questions

### Is every Article 6.4 unit an ITMO?

No. Only authorized A6.4 emission reductions become internationally transferred mitigation outcomes, and only after first transfer as defined in the Article 6.2 guidance. Mitigation Contribution A6.4ERs have not been authorized and are intended to count toward the host Party's nationally determined contribution. Calling those units ITMOs in a contract is inaccurate.

### Does Article 6.2 issue carbon credits?

No. Article 6.2 provides accounting, reporting and review guidance for cooperative approaches that involve ITMOs. It is not a crediting program and it does not issue units. Credits or emission reductions come from the PACM, from another authorized cooperative approach, or from a voluntary program, depending on the structure.

### Can a host Party authorize units after they have been issued?

UNFCCC materials recognize that mitigation contribution units may, under certain circumstances, be authorized later, and that authorization can be changed in defined cases. The current host Party decision and registry tag are what a commercial file should record. Parties should not assume a later authorization will be given just because a buyer wants it.

### Does a CDM transition automatically create authorized units?

No. Transition, if approved under the current procedure, moves a CDM activity into the Article 6.4 mechanism. Authorization is a separate host Party decision. A transitioned activity can still issue mitigation contribution units if the host Party has not authorized the resulting reductions for NDC or other international mitigation purposes.

### Do all voluntary carbon credits need corresponding adjustments?

No. Corresponding adjustments apply to ITMOs under Article 6.2 guidance, including authorized A6.4 units after first transfer. A voluntary credit used only as a voluntary claim may not involve an ITMO at all. Whether authorization is needed depends on intended use and host Party rules, which the existing authorization guides already discuss.

### Where should I read about authorization mechanics in more depth?

Use the live blog guides on when a project may need host-country authorization, how to prepare for authorization discussions, and corresponding-adjustment commercial strategy, plus the group site's top-level Article 6 guide. This article is only the comparison between the PACM and Article 6.2 ITMOs. It is not a second authorization manual.

## Related reading

- [Article 6.4 PACM and CDM transition advisory](https://www.financely.io/article-64-pacm-cdm-transition-advisory?ref=blog.financely.io)

If you want advisory help distinguishing PACM units, authorization and ITMOs in a transaction file, submit it through the deal submission form. Financely is an advisor and arranger only. It does not issue units or grant host Party authorization.

[Submit a deal](https://www.financely.io/deal-submission?ref=blog.financely.io)

Sources

1. [UNFCCC, Article 6.4 mechanism (PACM)](https://unfccc.int/process-and-meetings/the-paris-agreement/article-6/article-64-mechanism?ref=blog.financely.io)
2. [UNFCCC, Article 6.4 manual for host Parties' participation in the PACM](https://unfccc.int/sites/default/files/resource/HPparticipation%5Fmanual.pdf?ref=blog.financely.io)
3. [UNFCCC, Article 6.2 reference manual](https://unfccc.int/sites/default/files/resource/Article%5F6.2%5FReference%5FManual.pdf?ref=blog.financely.io)
4. [UNFCCC, FAQs on transitioning CDM activities to the Article 6.4 mechanism](https://unfccc.int/process-and-meetings/the-paris-agreement/article-6/article-64-pacm/CDM%5Ftransition/faqs?ref=blog.financely.io)