Flexibility without supply: from Kyoto to Paris

The EU’s 2040 climate law allows up to 5% of its 2040 target to be met with international credits, implying potential demand of hundreds of millions of units. However, we find that the often‑invoked “wave” of legacy CDM supply largely disappears once Article 6.4 rules and plausible EU quality filters are applied: a gross technical potential of around 900 million credits from transitioning projects in 2021–2025 shrinks to at most about 36 million credits, with effectively zero usable volume from already approved transitions under stricter assumptions. Additional supply from new PACM projects is still at a very early stage: 1,152 prior‑consideration notifications across more than 100 host countries signal developer interest, but they are far from guaranteed issuance.