New Carbon Market Watch analysis reveals the first batch of Article 6.4 international carbon credits could be overestimated by a factor of 27 – highlighting the risks of using them towards the EU’s 2040 climate target

As the EU troublingly considers if it will allow international carbon credits to count towards its 2040 climate target, new research from Carbon Market Watch comes with a stark warning: using these credits threatens to increase global greenhouse gas emissions. 

Our assessment of the first batch of credits planned to be released under the Paris Agreement’s Article 6.4 carbon crediting mechanism reveals that less than one of every 27 credits is likely to represent real emission reductions.

This finding reinforces longstanding concern that relying on international carbon credits to achieve climate targets waters down effective climate action. In fact, using such flawed credits will increase emissions overall since, as envisaged by the EU, they would substitute domestic action.

Climate impact claims, up in flames

The analysis focuses on a CDM-era cookstove project, which is the first recognised carbon crediting project under the Article 6.4 framework. So far, the project seeks to issue at least 468,860 carbon credits – purportedly representing avoided emissions. 

However, Carbon Market Watch’s analysis finds the actual climate impact to be likely only ~17,094 tCO₂e, suggesting the project is on course to issue 27.4 times more credits than it should.

“These credits are essentially hot air. If the EU relies on international carbon credits under the guise of introducing ‘flexibility’ to achieve its 2040 climate target, it risks increasing global emissions,” said Sam Van den plas, Policy Director at Carbon Market Watch. “EU policymakers must get real with what the science informs them. The EU climate target must be met without relying on international carbon offsets.”

Methodology cooking up too many credits

The credits set to be assigned to the project are based on CDM methodology AMS-II.G, identified as one of the most problematic cookstove methodologies, according to the peer reviewed Gill-Wiehl et al. (2024) study. This research found that key factors affecting emissions reductions, including actual stove usage, drop-outs, fuel consumption patterns, and more, are calculated based on obsolete and unrealistic assumptions. 

Importantly, AMS-II.G has not received approval by the Integrity Council for the Voluntary Carbon Market (ICVCM) – an initiative established to set a quality benchmark for carbon credit methodologies. This further underscores the need to refrain from using credits generated through AMS-II.G and similar CDM legacy approaches. 

“Improved cookstove projects can deliver real social and climate benefits. But the way their impact is measured matters,” said Benja Faecks, expert on global carbon markets at Carbon Market Watch. “Unfortunately, the methodology used in this case, is the least reliable of all cookstove crediting methods, according to independent research. This sets a worrying precedent for the Paris Agreement’s Article 6.4 carbon market at a moment when quality and credibility are more important than ever.”

No to international credits

The inclusion of flawed carbon credits in any compliance or voluntary market – particularly within the EU’s 2040 climate architecture – would pose a serious risk to environmental integrity. If the EU allows these credits to count towards its legally binding climate targets, it will effectively undermine real domestic mitigation by replacing it with credits that exist only on paper.

“Many legacy CDM projects are set to flood the Paris Agreement’s carbon market with credits based on outdated and unrealistic assumptions,” explained Isa Mulder, expert on Article 6 at Carbon Market Watch. “These credits should never be allowed to offset emissions in the EU or any jurisdiction with serious climate ambition.”

To safeguard climate integrity, Carbon Market Watch urges the strict exclusion of international credits from EU compliance systems, including the EU’s 2040 climate target. To align with up-to-date science and avoid systemic over-crediting, Carbon Market Watch calls for the independent re-evaluation of any legacy CDM project applying to transition under Article 6.4 and the reform of all CDM methodologies used under Article 6.4.

Notes

Methodology

To estimate the degree of over-crediting, Carbon Market Watch has formulated its analysis based on the publicly available project documents of PoA 10415 (from 1 January 2021 to 31 December 2022), as well as the methods and code from the peer-reviewed Gill-Wiehl et al. (2024) study.

Using literature-backed values for key project assumptions – e.g. the fraction of non-renewable biomass (fNRB) – Carbon Market Watch has quantified how much of the project’s claimed emission reductions are unlikely to be accurate. 

The analysis includes both an aggregate estimate and separate scenario analyses to isolate the effects of individual factors driving over-crediting. All adjustments are based on the best available scientific evidence stipulated in the Gill-Wiehl study, given that direct measurements are not possible for historical emissions.