Cooperative Mechanisms

WHAT ARE COOPERATIVE MECHANISMS?

The Paris Agreement is based on the individual commitment of Parties to mitigate their emissions, through their Nationally Determined Contributions (NDCs) and their National Adaptation Plan (NAP). But since climate action is a global effort, the Paris Agreement offers Parties the opportunity to cooperate with one another when implementing their NDCs, through cooperation mechanisms, designed to assist this process. Not only should they make it easier to achieve existing reduction targets, but also to raise ambition in future efforts. The cooperation mechanisms are enshrined in Article 6 of the Paris Agreement. They form the legal framework to allow the use of market-based climate change mitigation mechanisms - which will be explained in this section - and non-market based approaches.

WHAT IS A MARKET-BASED APPROACH TO MITIGATION?

It is a trading mechanism made to ensure a faster climate transition at a lower monetary cost. Mitigation targets are global: there is a unique cap in cumulative carbon emissions that defines the 2°C target. Each country, through its mitigation plans (their NDCs) commits to certain mitigation outcomes: for example, each country will commit to reduce their CO2 emissions by a certain level, by a certain time. However, it is likely that with time, some countries manage to mitigate more than what they had promised, and therefore accumulate carbon credit, and that some countries fail at achieving their promised targets, and therefore have a carbon debt. A market-based mechanism allows these countries to trade their mitigation outcomes: the countries with a carbon credit will sell their allowances to the countries with carbon debt.

WHAT ARE EXAMPLE OF MARKET-BASED APPROACHES?

At the international level, an example of a market-based approach is the European Union Emission Trading Scheme (EU ETS). It is a carbon market, which allows the European polluting  companies to trade their emissions. 

Within the UNFCCC, the Kyoto Protocol included a market-based approach, called the Clean Development Mechanism (CDM). Under the Kyoto Protocol, only developed economy countries had to reduce their emissions, by a target fixed by the Protocol. In order to accelerate the climate transition of the Global South, the Clean Development Mechanism allows Global North countries to invest in mitigation projects in the Global South, and to deduct from their emissions the outcomes of these investments. However, the implementation of the CDM was controversial. It failed to reach most vulnerable countries, especially in Africa, and some projects emerging from the mechanism were criticised for breaching sustainability and human rights principles. 

COOPERATIVE MECHANISM IN THE PARIS AGREEMENT

     Cooperative mechanisms are included in Article 6 of the Paris Agreement. It includes three approaches for cooperation between Parties: 
  

  • Article 6.2 and 6.3 introduces cooperative approaches for direct bilateral cooperation

  • Articles 6.4 to 6.7 includes a new mechanism to promote mitigation and sustainable development 

  • Articles 6.8 and 6.9 covers non-market approaches 

While the Paris Agreement sets the general principles and mechanisms for cooperation, it does not detail the rules that regulate these provisions. These rules were to be defined by the Katowice climate package - released at COP24 in 2018. However, Article 6 remains a contentious topic of negotiation, and no agreement has been found so far. 

ARTICLES 6.2-6.3 ON BILATERAL COOPERATION

These paragraphs give the possibility for Parties to cooperate directly with one another. Only a transparent process and very strict accounting of what has been emitted by each Party, and what has been transferred to other Parties can guarantee an efficient mechanism. Weak rules open loopholes opportunities such as double counting - meaning emission reductions being counted more than once in the emissions inventory of the country in which the reduction activities are conducted and also in the country to which the resulting emission reductions are transferred. 

Article 6.2 also enables national and regional pre-existing mechanisms such as the EU Emissions Trading Scheme to be recognised by the Paris Agreement.

ARTICLE 6.4-6.7 ON NEW SUSTAINABLE DEVELOPMENT MECHANISM

These paragraphs establish a mechanism to contribute to the mitigation of greenhouse gases and support sustainable development, under the authority of the COP. The Paris Agreement specifies here that the mechanism established by these paragraphs result in raised ambition or “overall mitigation in global emission”: contribution to this mechanism should incentive Parties to mitigate more than they already are, and the mechanism should not be a simple offsetting scheme.

ARTICLE 6.8-6.9 ON NON-MARKET-BASED APPROACHES

These paragraphs cover non-market-based approaches. It is not clear yet what is meant by “non-market based”, and should be negotiated in the future.

WHAT HAPPENED BETWEEN COP 21 AND COP 25?

No agreement was found on the Katowice climate package rules for Article 6. Negotiations were quickly blocked as Brazil attempted to push for rules that would allow double-counting. As it has been said in the different summits, “the Article 6 will make or break the Paris Agreement”. A strong and tight cooperation mechanism will enable effective and fairer mitigation actions, while a weak one opens the door to delayed action and ambition. Many countries, including small island states prefer seeing negotiations delayed rather than compromising the integrity of the Paris Agreement. 

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The key issues with the Article 6 are:
 

  • How to avoid double-counting

  • How to account for mitigation outcomes resulting from projects that are not part of one country’s NDCs, versus other outcomes

  • How to account correctly for different types of mitigation outcomes (for example, number of trees planted) in terms of CO2 emissions reductions. 

  • How to ensure an “overall mitigation in global emissions” and whether they should be applied to Article 6.2 and Article 6.4

  • If the Kyoto Protocol outcomes should be transferable to the Paris Agreement and how

  • The inclusion of human rights, indigenous rights and environmental integrity in Article 6

At COP25, parties almost reached an agreement, but eventually decided to finalize the draft text to COP26.

TO GO FURTHER

IISD (2019). Current Status of Article 6 of the Paris Agreement: Internationally Transferred Mitigation Outcomes (ITMOs). Available here.

K. Kizzier, K. Levin and M. Rambharos (2019) “What You Need to Know About Article 6 of the Paris Agreement”, World Resource Institute. (online). Available here.

SOURCES

UNFCCC (2015). The Paris Agreement. Available at: https://unfccc.int/files/essential_background/convention/application/pdf/english_paris_agreement.pdf 

 

Asian Development Bank (2018). Decoding Article 6 of the Paris Agreement. Available at: https://www.adb.org/sites/default/files/publication/418831/article6-paris-agreement.pdf

 

The Guardian (2011). What is the Clean Development Mechanism (CDM)? (online). Available at: https://www.adb.org/sites/default/files/publication/418831/article6-paris-agreement.pdf

GIZ (?). Cooperative Action under Article 6. (online). Available at: https://www.carbon-mechanisms.de/en/introduction/the-paris-agreement-and-article-6/

 

Carbon Brief (2019). COP25: Key outcomes agreed at the UN Climate talks in Madrid. (online) Available at: https://www.carbonbrief.org/cop25-key-outcomes-agreed-at-the-un-climate-talks-in-madrid