Prepared for the Bonn Climate Change Conference 30 April – 10 May 2018

In elaborating the rules, modalities, and procedures for Article 6.4, it is imperative that Parties learn from past experiences with the Kyoto Protocol’s carbon offsetting mechanisms Clean Development Mechanism (CDM) and Joint Implementation (JI), and integrate provisions to ensure environmental integrity, foster sustainable development, and protect human rights in the future international market regime.

The Paris Agreement serves as a way to increase ambition while promoting sustainable development, which requires a transition away from the concept of offsetting, notably through a fresh start with the Sustainable Development Mechanism (SDM), coinciding with the end of the Clean Development Mechanism (CDM).

The challenge is now to create a framework for the SDM that moves away from the concept of offsetting and incentivises mitigation activities through results based climate finance. In doing so, the rules and modalities of the SDM should benefit from existing structures while learning from the failures of the CDM. This document provides an overview about key issues – a shift away from offsetting, governance requirements and social considerations to be considered in the process of defining the rules, modalities and procedures of the SDM and refers to the Informal note as prepared by the SBSTA chair.

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