Don’t fall into the trap: Why credits with government approval aren’t automatically higher quality

There’s a growing narrative in the carbon market that government-authorized credits those backed by Corresponding Adjustments (CAs) under Article 6 are inherently more credible than traditional voluntary credits. At first glance, this seems logical: government involvement should mean stronger integrity. But this assumption is misleading and risky.

Historically, voluntary credits were developed by private actors, verified by independent standards, and used by companies to meet their climate goals. Article 6 changes that. Governments are now required to authorize credits and adjust their national emissions accounts when those credits are transferred internationally.

Corresponding Adjustments (CAs): Accounting rules under Article 6 of the Paris Agreement to prevent double counting. When a country authorizes a carbon credit for international use, it must deduct the associated emission reduction from its own climate targets, ensuring only the buyer can claim the impact.

While this aims to prevent double counting, it also creates new layers of complexity and politicization.

For project developers and buyers, these changes introduce real risks. Authorizing a credit means the host country forfeits its ability to count that emission reduction toward its own targets. Unsurprisingly, many governments are hesitant. Some delay authorizations, add fees, demand revenue-sharing, or reserve the right to revoke approval especially if more lucrative opportunities arise later. These dynamics are already causing multi-year delays in some countries.

Kenya is a case in point. Despite having one of the most advanced legal frameworks for Article 6, it has been cautious in granting CAs. The reason is simple: Kenya is trying to balance the need for international finance with the obligation to meet its own climate targets. That tension exists in almost every host country—and it adds significant uncertainty for market participants.

Even when authorization is granted, it doesn’t guarantee environmental integrity. Two projects using the same methodology can deliver vastly different outcomes depending on how that methodology is applied. That’s because methodologies are designed to be flexible across geographies, ecosystems, and data conditions. Developers must make key decisions about baselines, data sources, and assumptions. These choices shape the credit’s quality.

That’s why selecting the “right” methodology is only the beginning. What really matters is how that methodology is implemented. Did the developer make conservative choices or push the boundaries to maximize volume? Without understanding these implementation decisions, buyers risk overestimating quality and facing reputational or financial fallout. Let’s be honest: most governments don’t have the capacity to rigorously review these technical aspects. Authorization is not a quality filter it’s an administrative step.

Independent rating agencies are now stepping in to fill this gap. Consider the Ghana cookstoves project, one of the first to be authorized under Article 6. Although government-approved, its rating flagged familiar concerns around usage rates, emissions assumptions, and monitoring reliability. These issues don’t disappear with a stamp of approval. The growing demand for ratings shows what the market is really looking for: confidence in outcomes, not just compliance with procedures.

Some stakeholders now propose extending Article 6-style authorization requirements to the voluntary carbon market, under the assumption that government involvement guarantees quality. But this is a flawed approach. Many companies use voluntary credits to contribute directly to a host country’s climate goal not for compliance obligation abroad. In these cases, the credits remain domestic, and the company claims a “contribution” to the national decarbonization plan, avoiding any double counting.

It’s important to clarify a common misconception: Corresponding Adjustments are not necessary for voluntary corporate GHG targets. Corporate emissions inventories are built from estimated data across multiple countries, sites, and activities often covering dozens or even hundreds of jurisdictions. These inventories are not formally linked to national GHG accounts, and no credit retired voluntarily by a company is claimed by another country. When both a company and a host country refer to the same reduction one as a voluntary contribution, the other as part of an NDC, the atmosphere is no worse off. The country where the company operates is still accountable under the Paris Agreement, and the mitigation stays within the host country. This approach aligns private finance with national climate goals, without requiring an international transfer or a CA. While CAs may enhance ambition and transparency, they are not a precondition for high-integrity voluntary action.

What’s more important is clarity from governments. Updated NDCs should clearly identify which parts of their climate plans require international support—and could therefore involve CAs and which activities can be financed through the VCM without transfer. This transparency would allow developers and investors to channel efforts where they’re most impactful, without unnecessary bureaucratic hurdles.

To address growing concerns around CAs, new insurance mechanisms are emerging. The World Bank’s MIGA has issued a policy to protect against host country backtracking. Gold Standard is developing a framework for accrediting private insurers to offer similar guarantees. These are promising steps, but still early-stage.

In the end, what matters is whether a credit delivers real, measurable, and lasting climate impact. Government authorization can be an important step especially for compliance markets but it should not be mistaken for proof of quality. A credit’s value lies in the credibility of the emission reduction it represents, not in the administrative process it has passed through. Authorization ensures accounting alignment, not environmental integrity. That still depends on the project’s design, implementation, and monitoring. We must avoid confusing process with impact, or paperwork with proof. Robust due diligence on baseline assumptions, additionality, permanence, and community outcomes remains essential, regardless of whether a government stamp is attached.

As the boundaries between compliance and voluntary markets blur, we must stay focused on the core purpose of carbon markets: enabling climate action that wouldn’t otherwise happen. Quality isn’t about stamps or signatures. It’s about the credibility of the outcome. That’s what buyers, regulators, and civil society should demand and what will define the future of this market.

This article is also published on the Climate Playbook. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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