ARR and Peatland PACM Drafts Put Downward Pressure on the Downward Adjustment

The UN has published three new draft methodologies under the Paris Agreement Crediting Mechanism (PACM): a coal quality improvement proposal, plus afforestation, reforestation and revegetation (ARR) and peatland options, Carbon Pulse reports. For developers and buyers of Article 6.4 credits, the news matters on two levels: the mechanism’s methodology pipeline is widening, and the design of the nature drafts goes straight to how many credits future projects could issue.

Three drafts, one layered idea

All three texts are proposals, not approved rules. According to Carbon Pulse, the ARR and peatland drafts take an unusual, layered baselining approach that puts downward pressure on the mechanism’s downward adjustment. The coal text takes a different route, targeting verified emission reductions from improving the quality of exported coal.

The downward adjustment is the PACM’s built-in conservatism: baselines are set so that credited reductions sit below a business-as-usual trajectory, and the size of that deduction directly determines issuance volumes. Downward pressure on the adjustment means a smaller deduction and, all else equal, more credits per project. That is why a baselining design choice inside a draft methodology is a market variable, not a technical footnote.

A coal methodology with an Australian proponent

The coal proposal has a traceable history. The methodology titled Emission reduction through coal quality improvement was first lodged with the UNFCCC Article 6.4 Team on 10 April 2026 by iPUT Technologies, an Australian engineering company based in the Newcastle Area, NSW, according to the company’s project page. It is now numbered A6.4-PMM013 and is proceeding through the formal assessment process managed by the Methodological Expert Panel and the Supervisory Body.

Source: CarbonMeld — independent carbon credit market intelligence. Document-based quality scores and assessments across all major registries: carbonmeld.com. Original article: https://carbonmeld.com/en/articles/pacm-draft-methodologies-arr-peatland-coal/

The concept credits independently verified greenhouse gas reductions achieved through physical beneficiation, reducing ash and moisture so that less CO2 is emitted for each unit of electricity or steel produced. It applies to both thermal coal and metallurgical coal under a Programme of Activities structure. iPUT describes it as the first methodology submitted under the Article 6.4 mechanism addressing Scope 3 export commodity emissions, and its own projections suggest about 130 Mtpa of CO2e credited worldwide by 2046 on the IEA demand outlook, with an Australian programme potential of about 20 Mtpa at full conversion of today’s export tonnage. Those figures are the proponent’s own, published on its website, not a UN assessment, and a coal related crediting route is likely to draw close scrutiny during the assessment process.

Why the downward adjustment is the fault line

For ARR and peatland activities, the tension is familiar: larger credited volumes improve project economics, while conservative baselines protect environmental integrity. A layered baselining design that softens the deduction will be read by supporters as a fix for overcautious defaults and by critics as a weakening of the mechanism’s core safeguard. The draft status of both texts means the final baselining logic is still open.

Buyers with Article 6.4 exposure should treat the publication as an early signal on future supply volume and quality, not as an investable rule change. No credits can be issued under a draft methodology.

Demand routes are already forming

The drafts land as demand channels for PACM credits multiply. On 6 November 2026, ICAO added four standards to the second phase of CORSIA, with the PACM approved conditionally, Quantum Commodity Intelligence reported. The same outlet reported that Uzbekistan has transferred 7.78 million international carbon credits under Article 6.2 of the Paris Agreement, generated by a methane project.

Neither development involves the new drafts, but both show where future PACM supply could clear: aviation compliance and government to government transfers. Methodology design decided now will shape what that supply looks like.

What to watch

First, the assessment track: the coal text illustrates the route, from lodging through the Methodological Expert Panel to the Supervisory Body, and the ARR and peatland drafts will face the same gatekeeping. Second, the baselining detail: whether the layered approach survives review intact, and how the final texts calibrate the downward adjustment, will determine issuance economics for nature based developers. Third, the demand side: a conditional CORSIA approval means airlines could become buyers of Article 6.4 credits, which raises the stakes on integrity.

Until the drafts are adopted, every figure attached to them, including the proponent’s coal projections, is a plan, not a pipeline.