The Paris Agreement represents a new era for international climate action, including for international carbon markets. Humans have emitted so much into the atmosphere that even if compensated, very little can still be emitted to limit serious consequences of climate change. 2°C of warming would have very negative effects, which is why it is important to swiftly work towards the Paris goal of the 1.5°C limit. If carbon markets are to help work towards this goal, they must work to rapidly increase ambition and guarantee high environmental integrity.
The Paris Agreement’s Article 6 on international cooperation and markets, was vague enough to offer something to everyone. The chapeau in the first paragraph sets the overall scene and lays out the general provisions of higher ambition, sustainable development and environmental integrity. Parties wanting less international oversight negotiated for their efforts to be “recognized” and that such efforts be “consistent with” multilateral “guidance” when engaging in cooperative approaches. Parties looking for a multilateral approach got a “mechanism to contribute to the mitigation of greenhouse gas (GHG) emissions and support sustainable development”, in short the Sustainable Development Mechanism (SDM), as an heir to the Clean Development Mechanism (CDM) and Joint Implementation (JI). Parties resistant to a commoditized approach got recognition of the importance of non-market approaches and a “framework for non-market approaches to sustainable development”.
Now the task is to interpret the vague language in the article and the corresponding COP decision. This will not be easy as the diverging viewpoints have not suddenly converged about what the Article as a whole should do or what the various bits actually mean. Further, the elaboration of each provision is almost certainly co-dependent on progress made in the others.
This briefing provides a starting point to interpret what Cooperative Approaches and the Sustainable Development Mechanism are, how they differ, and where the pitfalls lie in moving forward. It also highlights recommendations on how they could play a constructive role in global climate action while fostering sustainable development and protecting human rights.