per Article 6 of the Paris Agreement, countries have options to achieve the emission reduction targets set out in their Nationally Determined Contributions (NDCs) via the transfer of carbon credits between them and Article 6 sets out two market mechanisms and one non-market mechanism.
Explained: How Global Carbon Market Will Replace CDM in 2024?
New Delhi (ABC Live): The COP28 is approaching its conclusion on December 12, 2023, and the stage is set to take crucial agenda on board.
On 11 December 2023, Parties to the Kyoto Protocol (CMP18) all set to decide on Matters relating to the clean development mechanism, which is an important decision to be taken before the next COP29 meeting as a new mechanism under Article 6 of the Paris Agreement has to come into existence from 11/2024.
The ABC Research team working on COP28 reports that as per the Kyoto Protocol, countries have to meet their respective Nationally Determined Contributions (NDCs) via the transfer of carbon credits under Clean Development Mechanism (CDM), wherein now onwards (11/2024) as per Article 6 of Paris agreement, countries have options to achieve the emission reduction targets set out in their Nationally Determined Contributions (NDCs) via the transfer of carbon credits between them and Article 6 sets out two market mechanisms and one non-market mechanism.
Article 6.2 (A6.2): Allows for bilateral trading of carbon credits between countries to meet NDC targets. Credits traded under A6.2 are called Internationally Transferred Mitigation Outcomes (ITMOs) and can already be traded among countries. This is a decentralized approach, as countries decide on their guidelines for trading credits.
Article 6.4 (A6.4): Creates a new global carbon market overseen by a UNFCCC entity, referred to as the Supervisory Body (SB). This will likely begin operating in 2024 and will replace the old Clean Development Mechanism (CDM) that enabled carbon trading under the Kyoto Protocol. These credits are called A6.4ERs and can be bought by countries, companies or individuals. Unlike ITMOs, A6.4ER credits must be authorized according to UNFCCC guidelines. As well as helping countries achieve their NDCs, A6.4 is designed to support sustainable development and mobilize the private sector to participate in climate change mitigation beyond emission reductions.
Article 6.8 (A6.8): Provides a formal framework for non-market approaches (NMA) for climate cooperation between countries, where no trading of emissions is involved. For example, technology transfer, capacity building, development aid, or taxes to discourage emissions. It is less well-defined than A6.2 and A6.4.
CMP18 has released a draft decision that says, “Recalling Articles 3 and 12 of the Kyoto Protocol,
Also recalling that participation in a clean development mechanism project activity is voluntary,1
Further recalling decision 3/CMP.1 and subsequent guidance provided by the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol relating to the clean development mechanism.
CMP18 acknowledged the contribution to global efforts to address climate change of the clean development mechanism, which as of 10 December 2023 was responsible for 7,8402 project activities being registered, 3533 programs of activities being registered, and more than 2.42 billion certified emission reductions being issued, of which more than 389 million had been voluntarily canceled either in national registries or in the clean development mechanism registry.
To read the complete draft decision on CMP18 click here