The Paris Agreement: A Focus on Article 6

by Phoebe Hanson

The 21st Conference of the Parties, held in Paris in 2015, (COP21) was a major event for climate policy: namely, it marked the formulation of the Paris Agreement, an internationally agreed document committing governments to act on the climate crisis. While most of the sections of the Paris Agreement have already been agreed upon, Article 6, which details mechanisms for ‘voluntary cooperation’ towards climate goals, has not [1]. It details how countries can work across borders to meet their Nationally Determined Contributions (NDCs), introducing concepts such as an international ‘carbon market’, as well as including the potential contributions to be made by the private sector. 

What does Article 6 say?

Article 6 lists three mechanisms, all centered around the voluntary cooperation of different countries, as well as public and private entities, to meet the climate ambitions outlined by the Paris Agreement.

Article 6.2

The first mechanism hinges on the participating countries’ NDCs. When a country has fallen short of its climate goals (outlined in its NDC), it may buy the overachievement of another country that has exceeded its goals [1]. It ‘provides an accounting framework for international cooperation’: allowing for countries to work together to accomplish emissions-reduction goals [2]. As long as each country maintains transparency — and the overachievement which is traded promotes sustainable development — countries could pay to fulfil their emissions targets, as well as their targets in other areas, such as tree-planting. Supporters say that this will enable countries to raise their climate goals, as reducing emissions would be cheaper and easier [2]. In 2020, the United Nations Environment Programme (UNEP) reported that the world was still heading for a temperature rise in excess of 3°C by the end of the century, far beyond the Paris Agreement goals of limiting global warming to below 2°C, and aiming for 1.5°C; proponents of Article 6 argue that the international cooperation it would facilitate is key to reaching the Paris Agreement goals [3].

Article 6.4

The second mechanism would create a global carbon market that would allow public and private bodies to trade their emissions reductions [1]. This would allow companies to meet their climate goals by buying carbon credits across the world which could be materialised, for example, in building a new, sustainable factory in another country. The concept of carbon credits is not new: this mechanism of Article 6 would replace the Clean Development Mechanism (CDM), which operated under the predecessor to the Paris Agreement, the Kyoto Protocol, which allows countries to earn credits for emissions reductions, and then trade and sell them [4]. Many countries are concerned about whether they can continue to use the credits generated under the Kyoto Protocol, in trade under Article 6 of the Paris Agreement [2].

Article 6.8

The final mechanism of Article 6 is the only one not centered around markets: it incorporates all international voluntary cooperation that doesn’t involve the buying and selling of carbon dioxide savings. It creates a ‘formal framework for climate cooperation between countries’ which doesn’t involve trade, such as aid to ‘developing’ countries to contribute to local climate-resilient adaptation measures [5]. It’s still largely unclear what would be covered under this framework, but some have suggested applying taxes to discourage emissions, among other options [2]. One view is that the framework should provide a way for countries to share their experiences and best practices, while the other view says that it should provide enhanced support to ‘developing’ countries, through finance and capacity-building, to implement non-market-based approaches (NMAs) [6].

Why is Article 6 of the Paris Agreement controversial?

Supporters of Article 6 say that its mechanisms give the private sector a rare opportunity to work as a collective with governments to achieve climate goals [7]. They say that it provides the tools needed to encourage countries to meet, and exceed their commitments – tools that are needed to aim to limit global warming to 1.5°C. Conversely, critics worry that Article 6 could topple the Paris Agreement and collaborative climate action altogether [2]. 

The first concern is ‘double-counting’: wherein emissions cuts sold within a carbon market would count towards both the country selling them as well as the country buying them. In practice, this could look like, for example, a country building a wind farm and selling those carbon reduction credits to another country, and then both countries counting the wind farm emissions reductions [2]. UNFCCC Executive Secretary, Patricia Espinosa, emphasises the need to maintain ‘environmental integrity’ within international carbon markets to maintain transparency, and ensure that double-counting cannot undermine climate ambition [8]. A suggested solution to this is to establish a central authority to regulate the carbon market, and supervise all transactions, as well as to mandate the clear tracking and communication of data on all carbon emissions and transactions [6].

Another concern is that without guidance ensuring the ‘additionality’ of emissions reductions, Article 6 could weaken NDCs. Using the World Resources Institute’s example, if a country was already planning to build a wind farm rather than a coal mine, then countries can claim carbon credits without increasing their ambition from what it already was [2]. There is a concern that Article 6 could hinder increased progression, and stop countries from increasing the coverage of their NDCs over time [2]. 

Campaigners have also raised concerns that bought emissions-cutting projects could be harmful to Indigenous communities, focusing on the Article’s lack of reference to human rights. This, they say, would give the implementation of Article 6 ‘extremely weak commitments to the rights and protection of those most affected by such markets’ [9]. The Executive Director of Indigenous Climate Action, Eriel Deranger from the Athabasca Chipewyan First Nation, said of Article 6 at COP25 ‘there are no human or Indigenous rights safeguards…as Indigenous Peoples this puts us at risk’ [10].

COP26 and Article 6 of the Paris Agreement

At COP25, there were no agreements on the rule for carbon markets, so the issue has been pushed forward to COP26 [11]. With countries preparing for these negotiations, set to be held in Glasgow later this year, Article 6 is once again at the forefront of everybody’s minds. Many commentators say that COP26 must go beyond its predecessors in facilitating intercountry dialogues to finally resolve Article 6 [12]. 

Brazil, for example, has disagreed with other countries on double-counting at previous COPs – an issue that could be resolved if the UK COP26 Presidency prioritises informal intercountry consultations. China, additionally, has remained ambivalent about Article 6 – their engagement could revitalise negotiations, and provide a new dynamic. 

The upcoming COP26 discussions have the potential to change Article 6 negotiations dramatically and could determine the level of international cooperation under the Paris Agreement for years to come.

See our other articles to learn more about the Paris Agreement, and unresolved issues that will be considered in Glasgow.

References:

[1] Paris Agreement, UNFCCC (2015), URL: https://unfccc.int/files/meetings/paris_nov_2015/application/pdf/paris_agreement_english_.pdf (last accessed 27 April 2021)
[2] WRI (2019), URL: https://www.wri.org/insights/what-you-need-know-about-article-6-paris-agreement (last accessed 5 May 2021)
[3] UNEP (2020), URL: https://www.unep.org/emissions-gap-report-2020 (last accessed 2 May 2021)
[4] UNFCCC (2021), URL: https://cdm.unfccc.int/about/index.html (last accessed 5 May 2021)
[5] Carbon Brief (2019), URL: https://www.carbonbrief.org/in-depth-q-and-a-how-article-6-carbon-markets-could-make-or-break-the-paris-agreement (last accessed 27 April 2021)
[6] ADB (2018), URL: https://www.adb.org/sites/default/files/publication/418831/article6-paris-agreement.pdf (last accessed 2 May 2021)
[7] DEHSt (2019), URL: https://www.dehst.de/SharedDocs/downloads/EN/project-mechanisms/discussion-papers/climate-conference-2019_1.pdf?__blob=publicationFile&v=4 (last accessed 5 May 2021)
[8] UNFCCC (2019), URL: https://unfccc.int/news/carbon-markets-that-put-a-price-on-carbon-are-crucial-for-climate-action (last accessed 27 April 2021)
[9] Gabrielle Lipton, Landscape News (2019), URL: https://news.globallandscapesforum.org/42222/in-a-day-of-unprecedented-demonstrations-youth-and-indigenous-activism-align-with-concerns-over-article-6/ (last accessed 27 April 2021)
[10] Laura Simpson Reeves, Cultural Survival (2019), URL: https://www.culturalsurvival.org/news/indigenous-delegates-cop25-focus-article-six (last accessed 2 May 2021)
[11] WRI (201), URL: https://www.wri.org/insights/cop25-what-we-needed-what-we-got-whats-next (last accessed 5 May 2021)
[12] Asgeir Barlaup, Climate Policy Lab (2020), URL: https://www.climatepolicylab.org/communityvoices/2020/8/25/article-6-stocktaking-and-lessons-learned-ahead-of-cop-26 (last accessed 5 May 2021)