Article 6 of the Paris Agreement sets out how parties can use voluntary cooperation internationally to achieve their climate mitigation targets (NDCs). However, civil society identifies significant risks, including failed climate action and adverse social and environmental consequences in host countries.
At the Bonn climate conference in June, national delegations reconvened formal negotiations on the design of UNFCCC carbon markets (Article 6) for the first time since talks collapsed at COP28 . Three parts are under scrutiny – in simplified terms they can be described as:
- 6.2 bilateral approach;
- 6.4 a central UN mechanism to trade;
- and 6.8 a non-market based approach.
Article 6 is set to raise the global climate ambition – It enables international cooperation to tackle climate change and unlock financial support for developing countries[1]. The idea is that one country (A) or entity, ‘the buyer’ can finance emission reductions in another country (B). ‘the host country’ and then count these emission reductions towards its own mitigation target. Country A gets the emission reductions and country B the investment, so is this a win-win?
It sounds easy, but has proven to be one of the most complex articles of the agreement, and the most difficult to agree on in the climate negotiations[2]. It is still unresolved as parties struggle to agree on rules for transparency and environmental and social integrity. COP29 in Azerbaijan is set to focus largely on this along with the New collective quantified goal on climate finance[3].
There are many similarities between Article 6 and the flexible mechanisms under the Kyoto Protocol, the latter of which largely failed to meet its intended goals. Numerous concerns arose regarding the additionality of the projects, their environmental integrity, transparency, and the actual impact on emissions reduction[4].
A large part of Swedish civil society and international partners see Article 6 as problematic. Given the many risks related to carbon markets and Article 6, as well as historic failures, this is not an ambitious road to take. They also point out that it is problematic that countries sign bilateral agreements under Article 6.2 without finalised negotiations, as this risks undermining the negotiations.
The Swedish Society for Nature Conservation (SSNC) [5], Svenska Kyrkan (Church of Sweden)[6] and Oxfam [7] point to some of the following risks[8]: Double counting, additionality, failing to deliver increased ambition, making it more expensive for the host country to reach its emission reduction targets, inflicting adverse environmental, social, and economic impacts on the local communities involved, and delayed climate action.
Significant investments are needed to achieve the necessary transition, however carbon trading and markets have over and over again proved flawed. There are already reports of worrying projects under Article 6, including the purchase by the UAE company Blue Carbon of large tracts of forested land across Africa with plans to sell credits under Article 6[9]. Are local communities and Indigenous Peoples advised before governments sign away these areas? Who is the winner here?
Article 6.2 and 6.4 are market mechanisms designed to fit within a global capitalist framework. While the buying country can export its green technology – part of the technology and capacity transfer outlined in the Paris Agreement, which is a positive development – there are risks tied to the incentives and who ultimately benefits from these projects. This could reinforce existing inequalities between the Global South and the Global North, as high-income countries are likely to benefit the most, securing cheap reduction units while also exporting their industries
SSNC also highlights that interest in energy projects under Article 6 is high among countries in Asia and Africa. However, this interest must be considered in light of the current funding landscape, where the capital costs for renewable energy in the Global South are two to three times higher than in the Global North. Many of the countries most impacted by the climate crisis are also grappling with debt crises, further complicating their access to favourable loans. This may make Article 6 agreements one of the few attractive sources of funding. SSNC and Oxfam strongly emphasise that this funding must come in addition to the aid budget, as required by Article 9 of the
Paris Agreement, along with the reallocation of financial flows (Article 2.1c) and other innovative financing mechanisms[10].
In theory, Article 6 presents an interesting concept, but the history of the Kyoto Protocol and the voluntary carbon market has shown us that it is deeply flawed and extremely challenging to implement effectively. While energy projects are preferable to conservation projects, governments should adopt a cautious approach rather than an experimental one when dealing with issues as critical as climate change.
The author is a Senior Climate Policy Advisor at Naturskyddsföreningens (SSNC’s) International Department, but currently on leave.The views expressed in this article are her own.
1 Paris Agreement text English https://unfccc.int/files/essential_background/convention/application/pdf...
2 World Resources Institute https://www.wri.org/insights/what-you-need-know-about-article-6-paris-ag...
3 COP29 Azerbaijan - United Nations Climate Change Conference https://www.cop29.az/en/news/bonn-climate-change-conference-cop29-presid...
4 SEI-WP-2015-07-JI-lessons-for-carbon-mechs.pdf, clean_dev_mechanism_en.pdf (europa.eu) https://climate.ec.europa.eu/system/files/2017-04/clean_dev_mechanism_en...
5 https://www.regeringen.se/contentassets/99c3602e26d74b02b53ebb3ca2cae054...
6 https://www.regeringen.se/contentassets/99c3602e26d74b02b53ebb3ca2cae054...
7 https://www.regeringen.se/contentassets/99c3602e26d74b02b53ebb3ca2cae054...
8 Opinion on the memorandum Regulation changes to enable international climate cooperation in accordance with Article 6 of the Paris Agreement
9 https://edition.cnn.com/2023/11/22/climate/uae-cop28-adnoc-fossil-fuels-...
10 https://www.regeringen.se/contentassets/99c3602e26d74b02b53ebb3ca2cae054...
