When Do Carbon Markets Reduce Inequality? Article 6 Transfers Under Alternative Futures

We assess whether Article 6 carbon market transfers reduce between-region income inequality. Using GCAM, we model internationally transferred mitigation outcomes (ITMOs) across 32 regions under three socioeconomic baselines and a more ambitious net-zero 2050 pathway. A maximalist implementation of Article 6 reduces inequality under most scenarios, with Gini reductions of 0.5 to 0.9 points by 2050 under SSP1, SSP2, and net-zero pathways. Under SSP4, where income divergence erodes developing regions' comparative advantage in low-cost mitigation, the progressive effect weakens to near-neutral. The financial transfer effect dominates the policy burden effect across scenarios, operating primarily through the between-region channel. Africa's position as net seller or buyer serves as a diagnostic: swinging between favorable and unfavorable development pathways. These findings suggest Article 6 can reduce global inequality, but outcomes depend on development trajectories rather than the market mechanism itself. Ensuring broadly progressive outcomes requires complementary policies that preserve developing regions' comparative advantage, including technology transfer and access to clean energy finance.