Dear respected colleague,

Ahead of COP25, Carbon Market Watch is pleased to share our recommendations and recent publications.

Strong rules to avoid double-counting of emission reductions

There is a significant risk that emission reductions under the Paris Agreement could be counted towards two or more climate commitments which would water down efforts to stop the climate crisis.

It is, therefore, imperative to put in place strong accounting rules in order to efficiently track emission reductions and to prevent that they are counted multiple times such as both towards countries’ national mitigation objectives (NDCs) and offsetting obligations of airlines under the future aviation offsetting scheme CORSIA.

Markets need to go beyond zero-sum offsetting

Increasing ambition over time is at the core of the Paris Agreement and must be reflected in the implementation of Article 6. In this spirit, any perverse incentives undermining climate action, such as allowing countries to sell credits from sectors or gases that are not covered by their nationally determined contributions, must be avoided or corrected. 

Furthermore, if we are to meet our global climate objectives, it is of paramount importance that the market provisions of the Paris Agreement reduce overall emissions instead of merely shifting them from one place to another or worse, increasing them. 

Pure offsetting is fundamentally incompatible with the Paris Agreement and Article 6 must be set up to gradually phase it out. This starts by requiring the automatic partial cancellation of all credits to go beyond the zero-sum game of offsetting under Article 6. 

Learning from past mistakes

Allowing old credits from the Kyoto Protocol mechanisms to be used after 2020 would seriously undermine global progress towards meeting the Paris Agreement’s objective as countries would be able to rely on extremely cheap credits with questionable environmental and social integrity.

Furthermore, rules should be adopted to avoid similar problems in the future.  This implies that countries should limit the transfer of emission reduction units within a given NDC period and that the carry-over of units should be limited in time or prevented altogether.

Finally, it is crucial to learn from past mistakes and the serious violations of human rights that have taken place under the Clean Development Mechanism (CDM). All climate mitigation projects should involve local stakeholders into the decision-making process before and during their implementation. Local communities must also be given access to a grievance mechanism that is governed by an independent body. Article 6 projects should go beyond “doing no harm”: they should actively contribute to promoting sustainable development and improving the lives of local communities.  

For COP25, Carbon Market Watch makes the following recommendations:

Key recommendations:

• Avoid double counting by requiring the application of corresponding adjustments for the transfer of every credit/unit under Article 6, and by establishing comprehensive transparency rules to connect Article 6 with the Transparency Framework.
• Do not allow any pre-2020 units for use towards NDCs, and re-assess all pre-2020 projects against stringent quality criteria.
• Establish a grievance mechanism governed by an independent body and require that stakeholders be consulted before and during the implementation of any Article 6 project.
• Adopt a partial cancellation rate for application to each Article 6 credit/unit.
• Do not allow the issuance of credits/units from sectors or gases not covered by the host country’s NDC.
• Adopt conservative baselines, at a minimum in line with a host country’s NDC, and which prevent the issuance of any hot air credit.
• Set a cap on the transfer of ITMOs generated under article 6.2 in any NDC period
• Prevent the banking across NDC periods of ITMOs generated under article 6.2
• Limit the lifetime and/or banking of A6.4ERs

READ FULL RECOMMENDATIONS FOR ARTICLE 6 HERE