Risks and Challenges
Will Some Projects and CDM CERs Become Trapped or Written Off?
The UNFCCC Clean Development Mechanism (CDM) Registry began operations on October 22, 2003. Established by the CDM Executive Board, it was designed to manage the issuance, holding, and transfer of Certified Emission Reductions (CERs). It soon connected with European Union national registries, later consolidated into the EU Master Registry with multiple national sub-registries.
Countries outside the EU, including Australia, the UK, and Switzerland, developed their own registries. Together with the EU, they relied on the International Transaction Log (ITL) to facilitate CER movements from the CDM. In practice, this was a one-way process: credits were cancelled in the host registry and re-issued in the receiving registry following ITL confirmation.
As national compliance schemes phased out CER eligibility in emissions trading systems, many projects transitioned to standards such as Verra VCS and Gold Standard using similar mechanisms. During this period, large brokers purchased CERs at very low prices (around $0.20 -$0.30 each) and converted them into voluntary credits, generating substantial margins. However, as the voluntary carbon market contracted in 2023–2024, these margins declined and by 2025 became unsustainable. This was compounded by guidance from ICVCM suggesting that older credits had limited value, despite years of prior use and verification.
In November 2025, the UNFCCC announced that the CDM Registry will close on December 31, 2026. Subsequently, the ITL was disconnected, meaning CERs can no longer be transferred to national carbon registries after March 31, 2026. Direct transfers into voluntary registries were never permitted. CTX has traded CDM CERs via its unique partnership with the UNFCCC CDM Registry using a CTX Reserve Account in the CDM Registry.
The UNFCCC has since confirmed plans to launch a new ‘Article 6 Registry’ in 2026. This will allow eligible projects, with appropriate national authorization (Letter of Authorisation or LoA) and issued credits to transition as Article 6.4 Credits before the CDM closure deadline. According to the FAQs on the CDM Registry website (links below), Project Owners must apply and obtain Article 6 approval ‘LoA’ from their Host Nation by June 30th, 2026, and pay the SOP Fees ($0.20 cents per credit) by Sept 30th to then have their CERs re-issued into the New Registry. The process will require significant documentation, and credits will be cancelled in the CDM Registry and re-issued in the new registry. A similar process to the one for our ITMO Registry.
CER Credits that remain unissued or pending after December 31st 2026, are to be cancelled in 2027, while the future of non-qualifying projects remains uncertain, and they may become ‘stranded’.
Carbon Trade Exchange (CTX) has been the only exchange partner connected to the UNFCCC CDM Registry since 2017 and has told the UNFCCC CDM Registry that we wish to continue this Relationship to trade Article 6.4 Credits in future.
To ensure environmental integrity, regulatory compliance, and transparency, the accepted approach is to permanently cancel (retire) CERs in the original registry, secure verifiable proof of cancellation, and then issue equivalent credits in a destination registry such as the Global Carbon Registry (GCR). This process eliminates double-counting, maintains full traceability, preserves the climate benefit associated with the original credits, and is the same one used previously by the ITL Transfers and into the new Article 6.4 Registry.
The UNFCCC CDM Registry has also begun publishing a set of Frequently Asked Questions (FAQs) on its website to provide further guidance.
https://cdm.unfccc.int/Registry/registry_FAQ.html
GEM launched its ITMO Registry® at COP25 in Madrid in December 2019.
Despite many agreements with multiple nations, the combination of the massive global interruption caused by Covid-19 and most Nations being unwilling to pay for Registry technology meant that in 2025 GEM hibernated the platform.
It has now been relaunched with the latest upgraded version of the GCR Technology and fully interfaced with Carbon Trade Exchange (CTX) – and capable of creating for Nations a Sub-Registry solution as well.
Global Environmental Markets (GEM) is the parent of the GEM CTX GCR Group – launching its M&A Growth Capital round in June 2026.
The New Home for Article 6.2 and Voluntary Credits ITMO Registry ®
An ITMO (Internationally Transferred Mitigation Outcome) is a UN-backed carbon credit representing one metric tonne of CO₂ (or CO₂ equivalent) reduced or removed. These credits are authorized for transfer between countries under Article 6.2 of the Paris Agreement and are used to help nations meet their Nationally Determined Contributions (NDCs). A key feature is the use of “corresponding adjustments,” which safeguard environmental integrity by preventing double-counting.
Article 6.2 and 6.4 of the Paris Agreement facilitate international carbon trading to meet NDC targets, with 6.2 allowing flexible, decentralized bilateral trading of ITMOs, while 6.4 establishes a centralized, UN-supervised mechanism for high-quality credits. Key differences involve Article 6.2 (Decentralized Cooperative Approaches)
Definition: Provides a flexible, decentralized framework for countries to trade emission reductions, known as Internationally Transferred Mitigation Outcomes (ITMOs), via bilateral or multilateral agreements.
Governance: Country-led; participants are responsible for reporting and ensuring authorized, high-quality units.
Article 6.4 (Centralized UN Mechanism)
Definition: Establishes a new UN-supervised mechanism (similar to the Clean Development Mechanism/CDM) to generate verified emission reduction credits (6.4ERs).
Governance: Centrally overseen by a UN Supervisory Body, requiring standardized validation, verification, and registration of projects.
Usage: Credits can be used for NDCs, authorized voluntary market uses, or CORSIA.
Requirements: Mandates a share of proceeds for adaptation and overall mitigation in global emissions (OMGE)
Key Aspects of ITMO Credits
Definition: ITMOs are internationally transferred emission reductions or removals authorized under Article 6.2 of the Paris Agreement.
Core Function: They enable countries to meet their NDCs more efficiently by purchasing verified emission reductions from other nations.
Prevention of Double Counting: The selling country applies a corresponding adjustment by adding the transferred amount back to its emissions balance, while the purchasing country subtracts it.
Difference from Voluntary Credits: Unlike traditional voluntary carbon credits, ITMOs require formal authorization from the host country’s government.
