Delegates at the UNFCCC COP29 that formally operationalised the Paris Agreement Crediting Mechanism (PACM) under Article 6.4 (Photo: UNFCCC)
At the close of 2025, the Clean
Development Mechanism (CDM) will officially give way to the Paris Agreement
Crediting Mechanism (PACM, under Article 6.4). For Africa — a region that
hosted hundreds of CDM projects but also faced barriers in attracting climate
finance — this transition marks both an opportunity and a test of readiness. How ready is Africa for this transition?
What is working now and what is not? What can be done to offset the challenges?
Where
Africa Stands Today
The good news is that the
transition pathway is clear. The UNFCCC has defined procedures for CDM projects
and Programmes of Activities (PoAs) to request migration to PACM before the
deadline (UNFCCC, 2023). This gives developers of renewable energy,
afforestation and efficiency projects the ability to preserve their investments
rather than start from scratch.
At the same time, initiatives
like the African Carbon Markets Initiative and support from UNECA, the NDC
Partnership and bilateral donors are helping governments strengthen their
Designated National Authorities (DNAs), build national registries and train
staff. Countries with stronger CDM legacies — South Africa, Kenya, Morocco and
a few others — are already piloting Article 6 projects and drafting bilateral
agreements (NDC Partnership, 2024).
South Africa: With one of the largest CDM portfolios in Africa,
particularly in renewable energy and industrial energy efficiency, South Africa
has leveraged this base to prepare for Article 6 transactions. Its Designated
National Authority (DNA) has been active in clarifying approval processes,
while South Africa has also engaged in bilateral discussions on Article 6
cooperation, particularly with European buyers (World Bank, 2023). Pilot
projects in sectors like renewable hydrogen and carbon capture are being structured
to test how corresponding adjustments and reporting will work under Paris
rules.
Kenya: Known for its geothermal and clean energy projects under
the CDM, Kenya is emerging as a regional innovator in carbon markets. The
government has enacted legal frameworks that clarify carbon rights and
revenue-sharing with local communities (Government of Kenya, 2023). Kenya is
also part of international initiatives exploring Article 6 pilots, including
discussions with Switzerland, which has been one of the most active Article 6
buyers globally. These pilots are designed not only to secure international
demand but also to feed directly into Kenya’s climate strategies.
Morocco: Morocco’s extensive CDM portfolio in wind and solar
energy provides a strong foundation for Article 6 activities. The country is
actively exploring bilateral agreements with European partners, leveraging its
role as a key energy exporter in the region. Morocco’s Ministry of Energy
Transition has signaled its intent to align carbon markets with its broader
green hydrogen roadmap, which is central to its industrial decarbonization
strategy (UNECA, 2024).
Many of these Article 6 pilots
are small-scale, early-stage, or focused on readiness (capacity building). Few
are yet generating large volumes of carbon credits with clear buyer demand
under Article 6.4 or with robust registry/corresponding-adjustment systems. Even
with pilots, some countries still lack fully operational rules on how Internationally Transferred Mitigation
Outcomes (ITMOs) are authorised, how they interact with Nationally
Determined Contributions (NDCs), how corresponding adjustments are managed,
what legal contracts look like, and how property rights, etc., operate.
In addition, the pilot nature
means higher risk, and many investors are cautious until they see stable market
participation and clear demand. Transparency around methodologies, accounting,
price risks, etc., remains a concern. Similarly, these Article 6 pilots are
experimenting with different approaches; convergence on best practices
(baseline methods, additionality, leakage, permanence, etc.) is still underway. Furthermore,
differences across countries/sectors complicate a standardised rollout.
Nevertheless, these early movers
are not just benefiting themselves — they are creating templates for other
African countries. By testing registry systems, piloting corresponding
adjustments, and negotiating bilateral deals, South Africa, Kenya, and Morocco
are ironing out the legal and technical kinks. Their progress could help establish
regional standards or even inspire shared registry platforms, reducing costs
for less-prepared countries.
What
are the ‘Early Wins’?
The existing CDM infrastructure
offers a base to build on, reducing transaction costs. The UNFCCC decisions and
CDM guidance enable eligible projects to transition rather than restart,
preserving investment certainty for many renewables, Afforestation and Reforestation (A/R) and efficiency Programmes of Activities (PoAs). That
has already unlocked interest in submitting transition requests.
In addition, targeted donor
support is creating “early mover” countries that can demonstrate success. For
example, regional reports show active private sector and donor financing for
readiness and registry work, enabling an “early mover” cohort of projects to
convert quickly.
Also, developers and buyers are
showing an appetite for new Article 6 credits, especially where governments signal
openness.
These are important confidence
signals — they prove the transition is possible, not just theoretical.
The
Challenges Ahead
Despite the above optimism,
Africa’s readiness is uneven. Many DNAs remain understaffed and underfunded,
struggling to develop robust approval systems or connect registries to
international platforms (World Bank, 2023). The quality of credits is also
under scrutiny: older Carbon Emission Reductions (CERs) face questions about
additionality and whether they align with tougher Paris-era integrity
standards.
Perhaps the biggest challenge
lies in policy clarity. Host countries must decide how transitioned credits
interact with their own NDC targets and whether to allow their use
internationally. Without this, project owners face uncertainty over market
demand and credit pricing.
Finally, technical hurdles
persist. Linking registries, applying corresponding adjustments, and ensuring
transparent accounting require digital infrastructure that many countries have
yet to establish (UNFCCC, 2023).
Looking
Forward
Africa’s transition to PACM will
likely happen in waves. The first successes will emerge from better-prepared
countries and projects. But unless governance systems, financing and technical
tools are scaled rapidly, many others risk being left behind.
The pathway is there. The early
wins are encouraging. The real question is whether Africa can convert them into
a continent-wide success story — one that ensures not just participation, but
leadership in the next era of global carbon markets
References
· UNFCCC
(2023). Decisions on the transition of CDM activities to the Article 6.4
mechanism. Available at: https://unfccc.int
· World
Bank (2023). State and Trends of Carbon Pricing 2023. Washington, DC:
World Bank.
· NDC
Partnership (2024). Africa Article 6 Readiness Support Initiatives.
Available at: https://ndcpartnership.org
· Conservation
Rising (2025). Kenya and Switzerland Sign Carbon Credit Trade Deal.
Available at: https://www.conservation-rising.com/p/kenya-and-switzerland-sign-carbon-credit-trade-deal
· Hespress
(2020). Morocco, Germany Sign Green Hydrogen Cooperation Agreement.
Available at: https://en.hespress.com/17129-morocco-germany-sign-green-hydrogen-cooperation-agreement.html
· Hiba
Press (2024). Morocco and Germany Strengthen Climate and Energy Alliance.
Available at: https://en.hibapress.com/7703.html
· Department
of Forestry, Fisheries and the Environment (DFFE), South Africa (2023). Draft
South Africa Article 6 Framework. Pretoria: Government of South Africa.
Available at: https://www.dffe.gov.za/sites/default/files/docs/draftsa_article6_framework.pdf
· South
African Revenue Service (SARS) (2024). Phase Two of the Carbon Tax –
Discussion Paper. Available at: https://www.sars.gov.za/wp-content/uploads/Legal/DiscPapers/Legal-LPrep-DP-2024-03-Phase-two-of-the-carbon-tax.pdf