Article 6 of the Paris Agreement assists governments in implementing their NDCs(nationally determined contributions) through voluntary international cooperation. Under this mechanism, countries with low emissions would be allowed to sell their exceeding allowance to larger emitters. However, there will be an overall cap of greenhouse gas (GHG) emissions, ensuring their net reduction.
Thus, Article 6 of the Paris Agreement introduces provisions for using international carbon markets to facilitate fulfilment of Nationally Determined Contributions (NDCs) by countries.
Article 6.2 provides an accounting framework for international cooperation, such as linking the emissions-trading schemes of two or more countries.
Article 6.4 establishes a central UN mechanism to trade credits from emissions reductions generated through specific projects. For example, country A could pay for country B to build a wind farm instead of a coal plant. Emissions are reduced, country B benefits from the clean energy and country A gets credit for the reductions.
Article 6.8 establishes a work program for non-market approaches, such as applying taxes to discourage emissions.