While the focus of this article and the press as a whole was mainly on the "market side" of Article 6, it is also worth noting the dissolution of the rules related to Article 6.8 of Paris, the "non-market approaches" (MPAs). The Glasgow decision on Article 6.8 states that MPAs may include social inclusion, tax policies and measures, circular economy, blue carbon, just labour transition and the adjustment performance mechanism. The decision also states that more than one party should be involved in these approaches. However, NMAs are not "transactions" and would not be "regulated" under the rules of Article 6.2 or Mechanism 6.4. Although the conclusion of the Article 6 negotiations in Glasgow is an important step in clarifying crucial details to end the double counting of loans and limit the transfer of existing loans, thus promising to improve existing mechanisms, administrative measures to put in place Article 6(2) and (4), are as follows: complex and will take time. At this early stage, it seems that those who want to adopt cooperative approaches may find it easier to adopt an approach under 6.2, which appears to be a more streamlined and less prescriptive system than 6.4. On the other hand, the possibility of increased scrutiny of an approach under Article 6.4 may reassure other Article 6 participants, in particular developing countries that do not have much experience with such operations and want to be assured that part of the proceeds will be used to finance the adjustment. It is precisely these differences between the two articles that increase the risk of creating two different international carbon markets. It should be noted, however, that the term "double counting" does not appear in Article 6(4).
Instead, it has a provision "considered key" by Brazil, according to a report on the emergence of the Article 6 text published in 2018 by the European Capacity Building Initiative (ECBI). Avoid double counting: countries were clearly concerned about double counting at COP21 in Paris; the need to avoid them is mentioned at least seven times in the Paris Agreement and the accompanying cop decision (decision 1/CP.21). The Paris COP decision states that double counting in Article 6 must be avoided on the basis of an "appropriate adjustment" – a term that will often be heard at COP25. A corresponding adjustment means that if one country sells emission reductions to another, it must adjust its own emission figures accordingly. In other words, it must increase its level of emission reductions in its NDC to compensate for the fact that it has sold some emission reductions to another country. Conversely, the country that bought the loan corrects its own emission reductions downwards. About 96 countries` climate commitments – about half of all NDCs – relate to the use of carbon pricing initiatives, according to a World Bank report. It is suggested that the cost of complying with current NDCs could be reduced by up to 50%, "in principle. with a completely global and frictionless carbon market." Despite the seemingly simple arithmetic behind the corresponding adjustments for traded emission reductions, the ambiguity regarding Article 6.4 has allowed some parties to push for options that most other countries believe would give the green light to double counting.
Article 6 is one of the least accessible and complex concepts of the global agreement. This complexity was one of the main reasons why Article 6 was only adopted on the last morning of the Paris negotiations in 2015 and was not resolved during last year`s climate negotiations in Katowice. Proper enforcement of these rules is essential to combat climate change: depending on how structured they are structured, Article 6 could help the world avoid dangerous amounts of global warming or discourage countries from making significant emission reductions. The integrity of the Paris Agreement and countries` climate commitments are at stake. More substantially, the implementation of Article 6 has the potential to make or break the Paris regime, according to its respective supporters and critics. The approval of Article 6 of the Paris Agreement aims to stimulate the development of the voluntary carbon market FOR VCM in order to gain credibility after the adoption of the article by the United Nations Climate Change Conference Other measures under consideration are considered important, but it is unlikely that they will produce OMGE alone, indicates the report. Voluntary cancellation of credits, for example, is excluded as unrealistic because, although it is welcome, it is optional and therefore unreliable. Dufrasne notes that while Brazil has been labeled "bad guy," other countries have also been "very pleased with this position." He cites as an example the UNFCCC negotiating bloc, known as the Arab Group. Other countries, including India, have also occasionally provided support on this issue, according to several observers of the negotiations who spoke to Carbon Brief. On the contrary, according to the IETA forrister, the existence of Article 6 trade mechanisms could actually help developing countries expand the scope of their NDCs.
IETA`s starting position is that all CDNs should be economically scaled as soon as possible, Forrister says. According to the ECBI report, this wording was "fully negotiated between the parties until the final phase of COP21 [in Paris]". It also appears to be at the heart of the dispute over double counting, with Brazil arguing, on the basis of this provision, that host countries do not need to make appropriate adjustments after the sale of carbon credits, while the EU is in deep disagreement, among other things. The Article 6 negotiations in Glasgow concluded three important sub-articles through "decisions" of the Parties to the UNFCCC and the Paris Agreement, namely CMA 12a, CMA 12b and CMA 12c. CMA refers to the Conference of the Parties, which serves as the meeting of the Parties to the Paris Agreement – in other words, the forum in which countries meet, monitor the implementation of the Paris Agreement. There are also annexes on consultation (6.2), rules (6.4) and a work programme (6.8). Article 6 is the latest article to be implemented by the 29 separate articles of the 2015 Paris Climate Agreement and sets out the carbon credit mechanism used by governments to meet their reduction targets under the nationally set contribution system. Paragraph 6.4 designates the United Nations as the certifier of carbon projects that can generate credits for governments to achieve these NDCs. An alternative, according to the C2ES, would be to ask participating parties to report on how the revenues of the adjustment support mechanism are used in developing countries, unless a fixed levy is collected. On 1 January 2020, a new international climate regime will enter into force under the 2015 Paris Agreement, in line with the detailed rules agreed at the COP24 climate summit in December 2018. A widely discussed alternative to automatic cancellation is called "conservative baselines" and is to establish baselines for artificially high emission reduction projects.
For example, if a project involves a reduction of 100 tCO2e, only 80 credits will be released. One observer of the negotiations, who asked not to be named due to the sensitive political nature of this dispute, told Carbon Brief that the justification for Brazil`s position is unclear: Although the rules of Article 6 of Glasgow show a significant improvement over previous approaches to the Kyoto Protocol, there are potential pitfalls from which governments and private actors should learn. One of the European Union`s main concerns is how the emission reductions achieved through carbon markets are taken into account. "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. Whatever the outcome, EDF`s Kizzier argues that there is nothing to prevent parties interested in "high integrity results" from setting additional national restrictions on the use of trade under Article 6. These projects have already issued "certified emission reductions" (CERs) equivalent to about 2 GtCO2e, according to a June 2019 report by the OECD`s Group of Developed Countries and the International Energy Agency. This supports the idea discussed at COP21 but not included in the Paris text that emission reductions should go "beyond the host country`s NDC" in accordance with Article 6.4. Some argue that the use of strict reference values would ensure the `OMGE`, the net mitigation benefit required by Article 6(4). There is also concern that if fewer emission reductions are traded, there may be fewer sales to finance the adaptation fund through the "revenue share" (see below). .
In this section, Carbon Brief summarizes the most important topics at stake. Article 6(2) states that whenever an International Trade Mitigation Result (ITMO) is issued under Credit Facility 6.4 and transferred abroad instead of being used by the host country against its NDCs, an appropriate adjustment must be made. MJ Mace, a negotiator with the Alliance of Small Island States (AOSIS) group, told Carbon Brief: "We absolutely cannot afford to allow markets to undermine mitigation ambitions." She continues: "I guess over time, the market will only move [only] towards adjusted loans, because they are – rightly – considered environmentally friendly," Brander said. .
