akar.earthLetters of Authorisation and What They Change
What an Article 6 letter of authorisation is, what it contains, how it changes credit use and price, and what Indonesian projects should check first.
A letter of authorisation (LoA) is a host government’s formal approval for specific mitigation outcomes to be used internationally, for example towards another country’s NDC or CORSIA. It commits the host to apply a corresponding adjustment, which turns an ordinary carbon credit into an authorised unit that can be claimed abroad without double counting.
The letter changes who can buy a credit, what claims it supports, and often its price. It also adds a regulatory dependency: the project now relies on the host government’s accounting and reporting.
What a letter of authorisation typically contains
| Element | Why it matters |
|---|---|
| Activity or programme covered | Ties authorisation to specific projects and registry IDs |
| Authorised uses | NDC use, other international mitigation purposes (such as CORSIA), or both |
| Quantity or method | A cap, a vintage range, or a rule for determining volume |
| Definition of first transfer | Triggers the corresponding adjustment for non-NDC uses |
| Duration | Vintages or crediting periods covered |
| Conditions | Reporting duties, share of proceeds, benefit sharing, data access |
| Change or revocation terms | What happens if the host changes its position |
| Registry arrangements | How units are tracked and labelled as authorised |
What changes once a credit is authorised
- Eligible buyers widen. Governments, airlines under CORSIA and some compliance schemes can use the units.
- Claims become stronger. Buyers can claim the tonne without overlapping with the host country’s own target.
- Price can rise. Sovereign and compliance buyers may pay more for units that meet their criteria.
- Host reporting becomes part of the product. If the host does not report adjustments correctly, the units’ status can be questioned.
- Registry labels apply. Standards such as Verra and Gold Standard tag authorised units, and ICVCM’s tagging rules recognise attributes such as authorisation.
Step-by-step: getting and using an authorisation
- Check host country rules. Which ministry issues letters, which sectors are eligible, and whether any caps or fees apply.
- Check buyer requirements. CORSIA, sovereign programmes and compliance schemes each specify what a letter must say. See CORSIA eligible units.
- Prepare the application with project documents, volumes and the proposed use.
- Negotiate conditions, including benefit sharing and data reporting.
- Register the letter with your standard’s registry so units are labelled.
- Monitor host reporting in Article 6 reports, since the adjustment shows up there.
- Reflect it in contracts. See carbon offtake agreements.
Indonesia context (check current rules)
Indonesia lists Article 6 among its carbon economic value instruments under Perpres 110/2025. Exchange-traded units must be recorded in SRUK, and international trading has taken place through IDXCarbon since January 2025. The detailed procedure for ITMO authorisation, including timelines and any limits for forestry, was not fully documented in the public sources we reviewed. Because forestry is central to Indonesia’s own NDC, expect the government to weigh each forestry authorisation carefully. Read corresponding adjustments in Indonesia and confirm the current position with the responsible ministry.
Risks to manage
- Delay: authorisation may take longer than a buyer’s procurement window.
- Change in policy: host positions on exports can change. Contracts need change-in-law terms.
- Reporting failure: if the host’s Article 6 reports are late or inconsistent, buyers may treat units as unadjusted.
- Partial authorisation: a letter may cover only some vintages or volumes.
Some insurers and buyers now look specifically at authorisation risk, so document your process carefully.
Authorised and non-authorised units side by side
| Feature | Non-authorised credit | Authorised unit |
|---|---|---|
| Corresponding adjustment | No | Yes, applied by host |
| Host can count the tonne | Yes, towards its NDC | No, for the authorised use |
| Typical buyers | Voluntary buyers making contribution claims | Governments, CORSIA operators, some compliance users, voluntary buyers wanting offset claims |
| Regulatory dependency | Domestic rules and standard | Domestic rules, standard and host Article 6 reporting |
| Price | Set by quality and type | Quality and type, plus authorisation value |
Many projects will sell both: some vintages or volumes with authorisation, the rest without. Keep the registry labels and contracts clear so each unit is sold for what it is.
Communities should understand this split too. If authorised units sell for more, benefit-sharing agreements should say whether the community share applies to the higher price, and how any extra costs of authorisation are covered.
Common mistakes
- Marketing credits as “authorised” on the strength of a draft or a bilateral agreement only.
- Assuming a letter covers all future vintages.
- Ignoring benefit-sharing conditions that come with authorisation.
- Not linking the letter to registry labels.
See the Article 6 hub and Article 6.2 ITMOs, or ask about our Indonesia regulatory navigation service.
Frequently asked questions
What is a letter of authorisation under Article 6?
It is a host government document authorising specific mitigation outcomes for international use, such as another country's NDC or CORSIA. It commits the host to apply corresponding adjustments, so the units can be claimed abroad without double counting.
Does every carbon credit need a letter of authorisation?
No. Credits used for voluntary contribution claims, or credits that stay in the host country's accounting, do not need one. Authorisation is needed for ITMOs, CORSIA eligible units and some compliance uses.
Can an authorisation be withdrawn?
UN guidance addresses changes to authorisations, and a well-drafted letter states the conditions for any change. Check the letter's terms and current guidance, and allocate this risk in your contracts.
Do authorised credits sell for more?
They can. Authorised, adjusted units meet the needs of sovereign and compliance buyers and support stronger claims. The premium depends on the buyer, and on how much each user values the adjustment.