Ahead of the UN climate meeting later this year, we provide an explanation for some of the major issues under discussion between participating nations. Here we address the challenges around Article 6.
Article 6 of the Paris climate agreement is designed to enable voluntary international co-operation on climate action. It presents the possibility of trading emissions reductions between countries and could provide the foundations for an international carbon market.
But disagreements on how to govern the practice have as yet prevented a deal being reached on the relevant rules, and finding a resolution to this will be one of the key aspects of this year’s UN Cop 26 climate summit in Glasgow in November.
Article 6 contains three methods for climate co-operation between parties that would contribute towards meeting targets and increasing ambition under the Paris deal, two of which are market-based. The third, Article 6.8, revolves around non-market mechanisms.
Article 6.2 provides for bilateral co-operation through country-to-country trading, allowing a country that has overachieved on its climate targets under its nationally determined contribution (NDC) to sell its “spare” achievements, “internationally traded mitigation outcomes”, to a country not meeting its goals.
And Article 6.4 provides for the establishment of a global mechanism through which public and private-sector participants can trade carbon credits generated from emissions-saving projects to count towards meeting their Paris pledges. This would be a standardised mechanism governed by a supervisory body.
Agreeing an Article 6 rulebook
Coming to an agreement on Article 6 has proved difficult, and failed negotiations at Cop 25 in Madrid in 2019 pushed all decisions on the matter to Cop 26.
The main stumbling blocks were the same as at 2018’s Cop 24 in Katowice, Poland — whether the text would contain rules to avoid "double counting", and whether countries would be allowed to use years-old emissions reduction credits to meet their national climate pledges under the Paris agreement. Both issues sit inside Article 6.4.
At Cop 25, the final text for Article 6.4 would have applied a "corresponding adjustment" to trades under the mechanism, to avoid them being counted towards more than one country's climate target. But it also said the UN could decide to allow an "opt-out" period under which these rules would not apply. For some countries, the final text was too restrictive, while for others it was too weak on environmental integrity.
The final Cop 25 text would also have allowed countries to use credits representing emissions reductions achieved before 31 December 2020 towards future climate pledges. This would have applied until the end of 2025, after which only post-2020 credits could have been used to meet Paris pledges, an outcome some parties — particularly those with a significant number of unsold existing credits — were unwilling to accept.
Three weeks of virtual, informal pre-Cop 26 talks in May-June failed to advance negotiations on the matter significantly. And while G7 environment ministers had earlier in the year affirmed the need to avoid double counting of carbon offsets, G7 leaders in June backed away from any clarification on their approach to the issue.
The future of Article 6
According to the UN’s initial NDC synthesis report, published in February, 65pc of countries party to the Paris agreement intend to use at least one of Article 6’s scopes of use, while a further 23pc consider it a possibility.
But while Article 6 rules remain undecided, moves towards international co-operation on climate action outside the UN framework are gathering pace. Article 6 pilot programmes have been set up in a number of countries, some nations have implemented domestic carbon offsetting programmes, and voluntary carbon offset markets have been growing rapidly, alongside corporate climate pledges.
These developments could help push Article 6 negotiations to a conclusion. But they also make an agreement on the rulebook increasingly urgent, if unilateral systems that could hinder global progress are to be avoided.
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