Robust Accounting of International Transfers under Article 6 of the Paris Agreement

The OECD and IEA report examines various options for partial transmission. These include a `vintage restriction`, which allows the use of units produced only after a given date in accordance with Article 6(4), or a geographical restriction allowing the transfer only of the relatively small number of units produced in the group of least developed countries. The transactions referred to in Article 6.2 are subject to “rigorous accounting to ensure that . avoidance of double counting”, i.e. each OMMI can only be taken into account in the objectives of a country`s “Nationally Determined Contribution” (NDC or climate pledge). The other two carbon markets established under the Kyoto Protocol are known as international emissions trading and joint implementation and deal with trade between rich countries. A recent World Bank report indicates that nearly 8,000 CDM projects are registered, some of which could be operational for many years to come. With regard to the trade referred to in Article 6.4, another question arises as to whether appropriate adjustments should be made for the sale of credits to be used under the Corsia compensation scheme for aviation. This can only apply to reductions under the host country`s NDC or savings within or outside the host country`s NDC. Such a system already exists under the Kyoto Protocol`s Clean Development Mechanism, with 2 per cent of the “certified emission reductions” (CERs) it grants being used for administrative costs and the Adaptation Fund. The CDM is widely regarded as a failure.

Instead of achieving more ambitious targets, analysts believe that most cdm emission reductions would have occurred anyway, either because they made financial sense without credits or because they were required by law. If there is no agreement by the end of COP25, the issue will be forwarded to COP26 in Glasgow in December 2020, so the UK will have to push diplomatically to get it through. This underscores a reason for disagreement over Article 6(4), namely that cdm hosts did not have their own Kyoto emission reduction targets, meaning that it was impossible to “double” savings to achieve more than one target. CO2 equivalent reductions are likely to be eligible to offset aviation emissions under the International Civil Aviation Authority`s (ICAO) Corsia system, although they are not directly mentioned in the Paris text. (Corsia is the United Nations system for offsetting airline emissions.) Somewhat enigmatically, the proposed regulations in Article 6.4 instead refer to “purposes other than contributions to NDCs” and use language that could cover Corsia or other future systems. (The model results presented above include only the trading of emission reductions from fossil fuel use and industry. The buy-sell divide depends on the relative prosperity of countries, as well as the ambition of their climate goals and the carbon intensity of their energy and industrial systems. For example, if coal-fired power generation in India is supposed to be cheaper than low-carbon alternatives, then a carbon market could encourage people to switch to renewables or nuclear power. In an upcoming study, the same team is also modeling trade in “natural climate solutions” to reduce emissions, such as . B forest rehabilitation. These results show that Brazil and other South American countries are becoming major sellers of carbon credits under an Article 6 model system. In particular, Dufrasne told Carbon Brief that Brazil is “strongly opposed to the use” of forests under Article 6 mechanisms, despite its potential to benefit from their inclusion.) “There can be no double counting of emission reductions and there can be no hot air production.

In this context, we cannot support a transfer of credits or quotas prior to the Kyoto Protocol before 2020, which would undermine what we are trying to achieve with the Paris Agreement. Given the limited number of countries that have confirmed that they will use international credits and the fact that they are currently not allowed to be satisfied in most national and regional carbon markets, it is currently unclear what the demand for these credits will be. This is a classic example of bargaining, which characterizes international negotiations. But the stakes are high ahead of crucial 2020 negotiations, in which countries are expected to increase their currently insufficient ambitions for the twin targets of 1.5°C and “well below 2°C” of the Paris Agreement. A related option in the draft text of article 6, paragraph 2, states that the general requirements to avoid double counting already set out in paragraph 77 (d) of the Paris Regulation would be “supecede[d]” by the rules of article 6. This is essentially an attempt to reopen the debate. According to Article 6.6, a “still too decisive share of the proceeds” of the trade referred to in Article 6.4 must be set aside and paid into the Adaptation Fund, which supports adaptation and resilience in developing countries. .