COP29: Balancing Ambition and Implementation for Article 6

The 28th edition of the Conference of Parties or COP28 - one of the most anticipated editions of the annual climate conference was held in Dubai, UAE, amid skepticisms about how much a traditionally 'oil-wealth' nation would be willing to do about the phasing out of fossil fuels.? The stakes were high, particularly for Article 6 of the Paris Agreement. This article was the linchpin for establishing a global carbon market, a mechanism that has the potential to revolutionize the fight against climate change.

Diplomats, environmentalists, and business leaders alike were eager to see the final shape of Article 6. Would it provide the clarity and guidance needed to unleash the full potential of carbon markets? Or would it be bogged down by bureaucratic hurdles and political infighting? The world watched in anticipation as the conference unfolded. And the anticipation ended in disappointment.

The recently-concluded Bonn Climate Change Conference made only modest strides in addressing unresolved matters tied to Article 6 of the Paris Agreement. This crucial section focuses on fostering global collaboration through carbon credit markets and non-market mechanisms to combat climate change. As COP29 looms in November 2024, many key issues still remain up in the air. Naturally, a conclusion to the framework of Article 6 of the Paris Agreement, particularly 6.2 and 6.4 sections of the Article, remain one of the most important expectations from the upcoming 29th edition of COP to be held in Baku, Azerbaijan.

Article 6 of the Paris Agreement

Article 6 of the Paris Agreement enables international cooperation to reduce greenhouse gas emissions, allowing countries to meet their climate goals collectively. It means countries can meet their carbon neutrality targets by buying of carbon credits from carbon avoidance or removal projects in from other countries willing to transfer their achievements.

It includes two key mechanisms:

●?????? Article 6.2: Governs cooperative approaches where countries can trade emission reductions, using internationally transferred mitigation outcomes (ITMOs) to meet their targets.

●?????? Article 6.4: Establishes a centralized, global carbon market mechanism overseen by the UN. It enables private and public entities to engage in emissions trading by supporting sustainable development projects that generate certified emission reductions, duly approved by country of origin; equivalent to ITMOs.

Both aim to enhance flexibility and ambition in mitigating climate change globally, at least cost pathway.

A Timeline

After being adopted along with the Paris Agreement in 2015, Article 6 has undergone a lot of updates. Despite that, it is yet to come to a conclusion. In the following years, negotiations on the operationalization of Article 6 take place at various climate conferences, including COP23, COP24, and COP25.

It changed with COP26 in Glasgow, which delivered a breakthrough agreement on Article 6, establishing rules for international emissions trading, cooperative activities, and sustainable development mechanisms. The work continued on the implementation of the Article 6 rules, including the establishment of the Article 6.4 Supervisory Body and the development of technical guidance. COP28 in Dubai further clarified Article 6 rules and addresses outstanding issues, such as double counting and sustainable development and yet, failed to come to a conclusion.

In the latest share of discussions on the Article 6; despite multiple negotiations, the Bonn Climate Change Conference 2024 failed to reach consensus on key aspects of the Article, including the role of emission avoidance in generating carbon credits and the extent of centralization in the international carbon credit market.

Roadmap to COP29 Baku

At the Bonn conference, the foundation for implementing Article 6 of the Paris Agreement was established, with COP29 lead negotiator Yalchin Rafiyev stressing its full functionality as a critical focus for upcoming talks in Baku. However, consensus on key issues, particularly market-based approaches for achieving NDCs, remained out of reach due to ongoing disputes over centralized versus decentralized systems. Despite this, discussions on the NMA Platform gained traction, offering hope for progress in advancing non-market solutions soon.

The finalization of the operationalization of Article 6, COP29 includes developing clear rules and guidelines for international emissions trading, cooperated activities, and sustainable development mechanisms to avoid fluctuations and confusions over market rules. It is important to smoothen and rationalise the fluctuating regulations of the market while ensuring the environmental integrity of carbon markets, to prevent double counting of emissions reductions. COP29 is expected to make significant progress in establishing robust mechanisms to safeguard against this issue. Transparency and accountability are essential for building trust in carbon markets. COP29 is likely to discuss ways to improve reporting requirements, verification processes, and public access to information.

COP29 must not forget the core thought process behind the establishment of Article 6 - i.e., to be used to support sustainable development, particularly in developing countries. COP29 is anticipated to focus on how carbon markets can contribute to poverty reduction, green job creation, and climate resilience.

There are several challenges and concerns associated with Article 6, such as the potential for market manipulation and the risk of undermining domestic climate action. COP29 will need to address these issues to ensure the effective, uniform, and equitable implementation of the agreement, without hiccups for genuine project developers.

Beyond COP29

COP29 presents a critical opportunity to advance the implementation of Article 6 and strengthen the global response to climate change. By finalizing operational rules, addressing environmental integrity concerns, and promoting sustainable development, nations can create a robust and effective framework for international cooperation on carbon markets. The outcomes of COP29 will have far-reaching implications for the future of climate action and the transition to a low-carbon economy.