ARTICLE 6 OF THE PARIS
AGREEMENT
Introduction to Paris Agreement
The Paris Agreement, which is by far the most ambitious effort to
enhance the global response to meet the issues of climate change, was
approved by the Parties to the UN Framework Convention on Climate
Change in 2015.
The Paris Agreement, which took effect on 4 November 2016, has
certainly revived interest in market processes and raised prospects for
the re-emergence of carbon markets.
The Paris Agreement's Article 6 provides a fresh window of opportunity
for market-based systems and establishes the rules for the regional and
global carbon markets after 2020.
SWIPE
Article 6- Summary
Article 6 of the Paris Agreement is the "Markets Article."
It contains specific provisions that establish a framework for
developing an international carbon market, which aims to align
domestic carbon pricing mechanisms, including carbon markets,
across nations.
The Paris Agreement's Article 6 lays out three methods for Parties to
cooperate:
1. "Cooperative Approaches" under Article 6.2;
2. New mechanism to support
development (Articles 6.4–6.7); and
mitigation
and
sustainable
3. Framework for nonmarket alternatives (Articles 6.8–6.9).
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Scope of Paris Agreement’s Article 6
1. Paragraph 6.1
The broader concept that Parties may decide to work together
voluntarily to implement their NDCs is covered in paragraph 6.1.
This supports the Paris Agreement governance's decentralized,
bottom-up character and ethos.
2. Transfers of mitigation outcomes
These paragraphs discuss the idea that Parties must follow the
accounting recommendations of the Conference of the Parties
acting as the meeting of the Parties to the Paris Agreement (CMA)
when they participate in cooperative approaches that involve the
transfer of mitigation outcomes internationally.
The paragraphs describe a framework for accounting for transfers
between Parties, not markets.
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3. Mechanism to contribute to mitigation and
support sustainable development
(paragraphs 6.4–6.7)
The following phrases in the paragraph 6.4-6.7, discuss the creation of a
system that functions under the control of the COP and aims to create
mitigation results and support sustainable development.
It generates mitigation results that may subsequently be applied to
meet another Party's NDC.
4. Framework for non-market approaches
Article 6.8 describes creating a framework for non-market strategies
that will try to address the established concerns and challenges.
What will be covered by this section of Article 6 is still entirely unknown,
but some clarity is beginning to develop.
Coordination of various non-market cooperative initiatives is one area.
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Scope of Article 6.2
Countries are permitted to exchange emission reductions and
removals through bilateral or multilateral agreements under Article
6.2.
ITMOs or internationally transferred mitigation outcomes, are the
name given to these tradable credits.
Kilowatt-hours (KWh) of renewable energy or other metrics, such as
carbon dioxide equivalent (CO2e), can be used to measure them.
Scope of Article 6.4
Article 6.4 introducing the global carbon market, will be regulated by
the "Article 6.4 Supervisory Body" (6.4SB) of the UN.
The Supervisory Body will receive requests from project developers
to register their projects.
Before a project may begin issuing UN-recognized credits, it must
have approval from both the nation in which it will be implemented
and the Supervisory Body.
These credits, known as A6.4ERs, can be purchased by nations,
businesses, or even individual people.
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Comparing Markets under Paris Agreement and Kyoto Protocol
Category
Compliance
Kyoto Protocol
Paris Agreement
A compliance committee is in
charge of monitoring the rigorous
compliance system and legally
enforceable objectives under the
Kyoto Protocol for developed
countries.
In the Paris Agreement, a crucial
component
of
compliance
is
Transparency,
where
Parties
demonstrate what they want to do and
how they have already done.
The entire system is centralized
and top-down.
Mechanisms
Flexible
mechanisms
were
introduced in the Kyoto Protocol,
such as
CDM
(Clean
Development
Mechanism),
JI (Joint Implementation) and
IET
(International
Emissions
Trading).
Governance
The Kyoto Protocol's mechanisms
were regulated by the UNFCCC
Compliance Committee, CDM
Executive
Board,
and
JI
Supervisory Committee for IET,
CDM and JI respectively.
An essential component of this system
is a global stocktake when Parties
evaluate their collective efforts toward
the shared goal.
Countries may engage in the carbon
market under the Paris Agreement and
may sell or purchase the outcomes from
mitigation efforts.
Depending on a country's choices, it
may opt for either a less centralized
approach (Article 6.2), in which nations
define techniques or processes, but
how less centralized is still up for
debate, or a more centralized approach
employing a centrally supervised
system (Article 6.4).
Under the Paris Agreement, there is no
dedicated governing body for Article
6.2, and the designation of a body for
Article 6.4 is yet to be designated.
Abbreviations
Nationally Determined Contributions (NDC)
Nationally Determined Contributions (NDCs) are a country's self-defined climate action
pledges in the global effort to combat climate change.
CMA
CMA in the context of the Paris Agreement stands for the "Conference of the Parties
serving as the Meeting of the Parties to the Paris Agreement."
The governing body oversees the Paris Agreement's implementation, adopted at the
21st Conference of the Parties to the United Nations Framework Convention on Climate
Change (COP21) in Paris in 2015.
CDM (Clean Development Mechanism)
The Clean Development Mechanism (CDM), defined in Article 12 of the Protocol, allows
a country with an emission-reduction or emission-limitation commitment under the
Kyoto Protocol (Annex B Party) to implement an emission-reduction project in
developing countries.
JI (Joint Implementation)
JI is the project-based mechanism referred to in Article 6 of the Kyoto Protocol. JI
stimulates investment in emission reduction projects while giving industrialized
countries and economies in transition some flexibility in how they meet their emission
reduction or limitation targets.
IET (International Emissions Trading)
Emissions trading is a market-based approach to controlling pollution by providing
economic incentives for reducing the emissions of pollutants. The concept is also known
as cap and trade (CAT) or emissions trading scheme (ETS).
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Resources
https://carbonmarketwatch.org/2022/11/02/cop27-faq-article-6-of-theparis-agreement-explained/
https://www.adb.org/sites/default/files/publication/418831/article6-parisagreement.pdf
https://unfccc.int/process-and-meetings/the-paris-agreement
https://www.worldbank.org/en/news/feature/2022/05/17/what-you-need-toknow-about-article-6-of-the-paris-agreement
https://www.iisd.org/articles/paris-agreement-article-6-rules
https://unfccc.int/sites/default/files/resource/cp2021_09S.pdf
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