Paris Agreement Article 6.2 & 6.4 Regular Update: Comparison of Japan and Singapore Approaches
This article is an automatically translated version of the original Japanese article. Please refer to the Japanese version for the most accurate information.
This is a newsletter from Sustainacraft Inc. This article is Section B (Trends in major international regulations) of VCM Updates (Voluntary Carbon Market Updates). Please contact us here for inquiries.
This article covers key carbon-related policy developments announced from August to September 2025, according to the following topics:
Following our monthly summary of developments regarding Paris Agreement Article 6.2 and 6.4, this month we will discuss a comparative analysis of Singapore's and Japan's approaches to Article 6.2, and the conclusion of a JCM partnership between Japan and India.
- Paris Agreement Article 6.2 (Bilateral Cooperation)
- Paris Agreement Article 6.4 (Paris Agreement Credit Mechanism)
- Paris Agreement Article 6.2: Comparative Analysis of Singapore's and Japan's (JCM) Approaches
- India Becomes 31st JCM Partner Country
Keywords: 6.2, JCM, India, Singapore, VCS, NDC
Introduction
An S&P Global article highlighted that Singapore and Japan are taking distinct and different approaches to utilizing Article 6.2. The article reported that Singapore is targeting conventional Voluntary Carbon Market (VCM) Methodologies and VCM projects under its Article 6.2 cooperative approach, while Japan, in contrast, is developing its own unique system, the Joint Crediting Mechanism (JCM).
The article is interesting in that it highlights the distinctiveness of each approach by comparing Japan and Singapore. In this newsletter, we will review the original purpose of the JCM and discuss its uniqueness, current status, and future outlook.
This article was written by Chisa Umemiya (who joined our company in July 2025, after working at the Institute for Global Environmental Strategies (IGES) and the National Institute for Environmental Studies).
Paris Agreement Article 6.2 (Bilateral Cooperation)
Bilateral cooperation under Paris Agreement Article 6.2 is a framework for international Carbon Credit trading aimed at achieving each country's Nationally Determined Contributions (NDCs). The developments observed in the past month are as follows:
Singapore and Thailand signed an Implementation Agreement to cooperate on Carbon Credit projects under Paris Agreement Article 6. This is Singapore's first agreement with an ASEAN partner and its eighth overall (link).
Notably, similar to India (introduced below), Thailand has also cabinet-approved and published a list of activities for Article 6.2 (and Article 6.4) (link), explicitly targeting a wide range of activities such as forestry, agriculture, and renewable energy (in contrast to India).
Jordan issued its first Letter of Authorization (LoA) under Paris Agreement Article 6 (link).
Singaporean developer Climate Bridge signed a Memorandum of Understanding (MoU) with Rwanda, aiming to develop carbon projects under an Article 6.2 implementation agreement between the two governments (link).
The Brazilian government plans to launch a public consultation in September on regulations regarding the Issuance method for Internationally Transferred Mitigation Outcomes (ITMOs).
Swiss developer EcoSecurities partnered with Rwanda's development bank to design and implement the country's first two pilot projects under Article 6, aiming to generate high-integrity Carbon Credits (link).
A clean water project in Rwanda (GS13118) secured Article 6 authorization (LoA) for international Carbon Credit trading under Paris Agreement Article 6 (link).
The above developments can be interpreted as follows:
The supply of Carbon Credits under Article 6.2, including JCM, faces a bottleneck due to Corresponding Adjustments (CAs). To date, Rwanda has issued over 6 million tCO2e of credits with a Paris Agreement Article 6 label (i.e., LoAs for Corresponding Adjustments from the Rwandan government), which has led to increased investment in Article 6.2 projects in Rwanda.
Thailand has many JCM projects, but with the signing of an Article 6.2 cooperation agreement with Singapore, Project Developers will now face a choice between Singapore's Article 6.2 and Japan's JCM, which means a more competitive environment. As described below, while Singapore is adopting an approach that utilizes existing Methodologies like Gold Standard and Verra, it will become increasingly important for JCM to smoothly proceed from Methodology development to project Registration.
Brazil has been one of the largest Issuers of Carbon Credits in the Voluntary Carbon Market, but there has been high Uncertainty regarding whether it would transfer credits internationally under the Paris Agreement. The above report states that public consultations on ITMOs Credit trading will begin in September in preparation for COP30 in November. While Uncertainty remains high and it is expected to take time, it is noteworthy that concrete discussions are progressing in a country with very high Credit Issuance potential.
Paris Agreement Article 6.4 (Paris Agreement Credit Mechanism: PACM)
Regarding Article 6.4, the following developments have been recently reported, overlapping with what was introduced last month:
- A UN official body introduced a new standardized form for submitting proposed Baseline and Monitoring Methodologies under the Paris Agreement Article 6.4 mechanism.
- The UN's Article 6.4 Supervisory Body adopted new criteria for "suppressed demand" to promote climate action in communities lacking basic services (such as water and sanitation). This will allow climate projects addressing these needs to earn Carbon Credits.
Paris Agreement Article 6.2: Comparative Analysis of Singapore's and Japan's (JCM) Approaches
What was the original purpose of JCM?
Japan's JCM, which has expanded incrementally since its first partnership with Mongolia in 2013, was originally intended to promote (export) Japan's low-carbon technologies to partner countries. The mechanism allows Japanese companies with such technologies to implement projects, utilizing equipment subsidies from the Japanese government, and then share the Emission Reductions achieved with the partner country according to Japan's contribution.
It seems that this purpose has shifted with the formulation of Japan's current NDC. The current NDC explicitly states that JCM will be used to "secure approximately 100 million tCO₂ of cumulative Emission Reductions by FY2030 and approximately 200 million tCO₂ by FY2040, and utilize them for Japan's NDC achievement" (link). Subsequently, the government indicated that companies could utilize JCM Credits to achieve targets under GX-ETS1. This signifies a shift in JCM's purpose from government support for technology export to companies securing Emission Reductions.
The latter, as a new concept called "Private Sector JCM" (link), seems to have been relatively smoothly accepted among companies interested in JCM. This is backed by the fact that companies have, over time, set voluntary targets and taken action under international frameworks such as SBTi. Especially globally-minded companies feel prepared for this, recognizing that advancing climate action themselves is crucial for business. This was a situation rarely seen when JCM first started.
Private Sector JCM
As mentioned above, JCM is transitioning from its traditional form, where the government incentivized companies with subsidies, to a "Private Sector JCM" where companies participate to secure Emission Reductions themselves. Let's consider whether "the traditional JCM currently provides an environment where companies can easily secure Emission Reductions, i.e., procure JCM Credits."
The barrier of JCM Methodologies
One of the first barriers that comes to mind when companies struggle with developing nature-based JCM projects is the development of JCM Methodologies, which are essential for project Registration. In JCM, Project Proponents develop the Methodologies themselves. In these cases, companies often find themselves troubled less by the technical difficulty of Methodology development and more by the opaqueness of the path to bilateral agreement on the Methodology. The reality is that it is difficult to grasp the situation from publicly available information alone, regarding how intergovernmental negotiation processes are conducted, how much time they will take, or to what extent negotiations have progressed or not at all.