Paris Agreement Article 6.2/6.4 Update | Brazil Critical Minerals
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 the newsletter of sustainacraft Inc.
This article reports on major carbon-related policy developments announced from January to February 2026, following the items below:
- Policy Developments
- Paris Agreement Article 6.2 (Bilateral Cooperation)
- Paris Agreement Article 6.4 (Paris Agreement Credit Mechanism (PACM))
- National Carbon-Related Policies
- Non-State Actor Initiatives
- UNFCCC Registry
- Analysis Article
- Brazil's Critical Minerals and Decarbonization: The Paradox of Energy Transition and Risks to the Amazon
Keywords: Article 6, Bilateral Cooperation, PACM, JCM, SBTi, Critical Minerals, Amazon
Author of this article: Chisa Umemiya (Carbon Specialist)
Introduction
Under Paris Agreement Article 6.2, momentum is accelerating, particularly centered around Singapore and Japan (JCM), moving from bilateral agreements to concrete project solicitations and funding contributions. Meanwhile, under Article 6.4 (PACM), the first project Registration in the Middle East and transitions from the CDM are progressing, signaling the operational start of the new mechanism.
On the policy front, practical challenges and advancements accompanying system implementation are emerging, such as trade friction as the EU CBAM enters its full operational phase, and the introduction of a carbon tax in Taiwan.
The analysis article focuses on Brazil's critical minerals, explaining the paradox of the global energy transition towards decarbonization and Deforestation. Brazil finds itself caught between two global demands: as a resource supplier for decarbonization technologies and, simultaneously, as a forest nation possessing vast tropical forests. We believe that the role of due diligence will become increasingly important to promote actions such as ensuring traceability and the circulation of funds and technologies towards environmental conservation through investment in downstream activities.
Policy Developments
Paris Agreement Article 6.2
Projects Based on Bilateral Agreements
Efforts to enhance the effectiveness of agreements are intensifying globally, particularly centered around Singapore and Japan.
- Singapore and Rwanda have opened applications for new Carbon Credit projects under their bilateral Article 6.2 agreement (Source).
- Chile has secured $1.4 billion in investment for Article 6.2 projects and approved its first project with Switzerland (Source)
- Japan (JCM) is also strengthening relationships with various countries and advancing the formation of concrete projects.
- With Chile, Japan renewed a memorandum signed 10 years ago, reaffirming deeper JCM cooperation in line with the framework of Paris Agreement Article 6.2 (Source).
- With Azerbaijan, a 6.2-Article trading agreement for Credit Issuance from a decarbonization project at an oil and gas terminal in the Caspian Sea is in its final stages (Source).
- In the Philippines, a Shell subsidiary launched an Emission Reduction project (e.g., reductions from paddy fields) under the JCM (Source).
- Brazil signed agreements with Singapore and Switzerland for future bilateral trade under Article 6.2 (Source). Following the LOI signing with Japan in December 2025 (Source), Brazil is now fully emerging as a major player in the international carbon market.
Paris Agreement Article 6.4
Regarding Paris Agreement Article 6.4 (PACM), achievements towards the implementation of the mechanism are being reported, including the first project Registration in the Middle East.
- In Jordan, the first project in the Middle East was registered under the PACM (Source). This is a landfill gas project, a transition case from the CDM. The progress in the Methodology approval process and the actual commencement of project operations under PACM contribute to enhancing the reliability of the system.
Regarding the transition from the CDM, as the CDM will conclude at the end of 2026, a continued increase in similar transition applications and new Registrations is anticipated.
National Carbon-Related Policies
Various countries have promoted diverse policies aimed at reducing carbon emissions, but discussions surrounding the EU's CBAM and ETS have been particularly intense.
Discussions on CBAM (Carbon Border Adjustment Mechanism)
- China warned of potential countermeasures, stating that the EU CBAM is unfair and discriminatory (Source).
- The European Commission added a clause (Article 27a) allowing for temporary exemption of products in serious and unforeseen circumstances, in response to concerns from sectors such as fertilizers (Source).
ETS (Emission Trading System) Reforms and Trends
- Taiwan introduced a carbon tax on January 1, 2026. It imposes a tax of $9 per ton on the power and manufacturing sectors, with the first payments expected in May 2026 (Source).
- India formally notified emission intensity targets for key industries under its Carbon Credit Trading Scheme (CCTS) (Source).
- In Europe, while a German court ordered stricter measures towards the 2030 target, leaders from Slovakia and other countries called for a temporary suspension of the ETS (Source), indicating ongoing debates over the balance between climate policy and economic burden.
NDC and International Finance
- Nepal signed a contract to receive $55 million from the LEAF Coalition (Lowering Emissions by Accelerating Forest finance) as payment for forest conservation (Source). The Credits generated from this will be "Corresponding Adjustment (CA)"-ed, making them eligible for use in Singapore's carbon tax and CORSIA.
Non-State Actor Initiatives
SBTi and the Market Focus on Quality
In the updated SBTi Corporate Net Zero Standard (CNZS V2), the use of Carbon Credits during the Net Zero transition process will be evaluated within a new framework called Ongoing Emissions Responsibility (OER), established in CNZS V2, across two tiers: Recognised and Leadership, depending on the requirements. Carbon Pulse covered this development (Source). The clearer positioning of Credit utilization as Beyond Value Chain Mitigation (BVCM), an area where corporate activity has been slow, within the SBTi framework will be a significant tailwind for Voluntary Carbon Market (VCM) demand.
On the other hand, investors have voiced opinions to SBTi, suggesting that it should prioritize the "integrity" of Credits themselves, rather than focusing solely on Removal.
UNFCCC Registry Updates
Submissions were received from JCM partner countries Palau (NDC 3.0) (Source) and Papua New Guinea (First BTR) (Source). Additionally, there was a concentration of submissions from Small Island Developing States (SIDS), which are heavily affected by climate change, confirming these countries' strong interest in leveraging Paris Agreement Article 6 (market mechanisms) for financing.
Palau (PLW) - NDC 3.0 Submission
Palau aims for Emission Reductions of 12% (unconditional) and 44% (conditional) relative to BAU by 2035. It explicitly states participation in JCM projects as a use of Article 6.2, with four rooftop solar systems already registered. It indicates an intention to strengthen implementation going forward. Furthermore, mitigation outcomes from registered JCM projects will be accounted for in the NDC, with a clear policy to avoid Double Counting.
With most of its land area covered by forests and mangroves, Palau is a "Net Negative" country, having recorded Sequestration equivalent to 6.5 times its national emissions (-734.1 ktCO2e) in 2022. It is considering the Afforestation, Reforestation and Revegetation (ARR) of 500ha by 2040, as well as additional Removal increases from mangrove areas.
Papua New Guinea (PNG) - First BTR Submission
Papua New Guinea (PNG) aims for 50% carbon neutrality by 2030 and full carbon neutrality by 2050, but these goals are 100% dependent on international support. It clearly demonstrates an eagerness to leverage Internationally Transferred Mitigation Outcomes (ITMOs), i.e., the sale of Credits, as a means of financing for NDC achievement. While it has currently signed bilateral agreements with three countries, there is no record of ITMOs approvals yet.
In 2022, it recorded a net Sequestration of approximately -14.27 million tCO2eq, with the LULUCF (Land Use, Land-Use Change and Forestry) sector playing an overwhelming role as a sink. The "National REDD+ Strategy (2017–2027)" is operational, with key measures including strengthening timber legality monitoring, sustainable land-use planning, and Afforestation, Reforestation and Revegetation (ARR) (targeting 220,000 ha by 2030). The potential for REDD+ projects under the JCM is high. However, governance issues (e.g., combating illegal logging) and the domestic capacity building for Measurement, Reporting and Verification (MRV) are cited as challenges, suggesting that an approach combining technical assistance would be effective.
This month, there were no submissions of reports specifically for the Article 6.2 mechanism, such as "Initial Report."
Analysis Article: Brazil's Critical Minerals and Decarbonization: The Paradox of Energy Transition and Risks to the Amazon
Introduction
The global Green Energy Transition, ironically, requires the extraction of vast quantities of mineral resources. This is because "Critical and Strategic Minerals (CSMs)" such as lithium, cobalt, and rare earths are indispensable for manufacturing electric vehicles (EVs), wind turbines, and solar panels. According to the World Bank's predictions, over 3 billion tons of minerals will be needed for green technology sectors alone by 2050.
Based on a report by the Igarapé Institute (Source), this article analyzes Brazil's position as a resource-rich nation in the supply of these "critical minerals" and how their development could conflict with the forest conservation of the Amazon, a cornerstone of climate change countermeasures. This "paradox," where mineral extraction necessary for decarbonization destroys forests that act as carbon sinks, is a risk factor that cannot be overlooked by companies interested in the Voluntary Carbon Market (VCM) and Biodiversity conservation.
Brazil is one of the most prominent regions in the carbon market. In our newsletter (December 2025 VCM Updates: Section A), we introduced a large-scale nature regeneration project by Nestlé to plant 11 million trees in Brazil, and a $100 million investment in forest restoration by IKEA Group and BTG Pactual. These initiatives regenerate degraded land, restore Biodiversity, and generate Carbon Credits, demonstrating Brazil's position as a hub for Nature-based Solutions (NbS). Furthermore, in our January 2024 newsletter, our team visited Amazonas and Bahia states in Brazil, reporting on the industry's evolution from monoculture commercial plantations to forest regeneration using native species that are closer to the ecosystem (Source). In this way, "restoring and protecting forests" is becoming an established new industry in Brazil, serving as a critical partner for companies in achieving Scope 3 (Supply Chain emissions) reductions and Net Zero targets.
However, Brazil also has the face of a "major resource extraction nation." Currently, Western countries are promoting "friend-shoring" to reduce dependence on China in critical mineral Supply Chains due to geopolitical reasons, leading to a rapid increase in expectations for Brazil. On the other hand, many mineral resources are buried in environmentally sensitive areas, and extraction development is a powerful driver of Deforestation. This can directly conflict with the forest conservation and restoration efforts mentioned above. The presence or absence of mining development plans significantly influences Deforestation risk when setting the Baseline (reference scenario) for forest conservation projects, and thus cannot be ignored when evaluating the quality of Carbon Credits.