By Olivia Oldham
What is Article 6?
Article 6 allows cooperation in order for states to achieve their Nationally Determined Contributions (NDCs) under the Paris Agreement (art 6.1). Article 6 sets up three mechanisms for cooperation:
The important thing to understand is that although the Paris Agreement briefly sets out the existence of these cooperation mechanisms, it doesn't detail the rules of how they will operate. Negotiations on these rules were meant to have concluded at COP24 in Poland in 2018, but they were carried over to COP25 in Madrid last December.
How do carbon markets work?
Carbon markets represent the idea that if an entity (a state, or sometimes a corporation) reduces its carbon/greenhouse gas emissions, it can claim a credit. It can then sell that credit at an agreed rate to another entity, enabling it to continue to emit at a higher rate.
Carbon markets are said to have several advantages. For example, they are argued to make global emissions reductions cheaper, theoretically enabling higher ambition/faster reductions. This is said to be because wealthier countries can pay less wealthy countries to implement mitigation measures which are cheaper to carry out in that country. One study showed that carbon markets can be used to achieve nearly double the emissions reductions aimed for in countries' current NDCs at no additional cost.
Whether or not carbon markets actually achieve their potential, they're pragmatically important because they are included in the emissions reduction plans of most countries – though the UK has stated that it doesn't plan to use carbon credits to reach its net zero goal.
Potential pitfalls of carbon trading?
What happened in Madrid in December at COP25?
Matters on the table included:
No decision was reached despite COP25 going 44 hours overtime, a new record. In large part, this was because a few key countries dragged their feet on some of the key issues under discussion, in particular about the ability to use 'carry-over' Kyoto credits (Brazil & Australia in particular), and the inclusion of loopholes enabling double-counting (particularly Brazil).
In the end, all that was decided was that negotiations will more or less start again at an intersessional meeting in June, and at COP26 in Glasgow in November 2020, under 'Rule 16' of the UN climate process.
How drastic is the failure to negotiate Article 6?
The lack of agreement is deeply frustrating, yes, and it stymies the initiation of a new global carbon credit trading mechanism. But there is still some hope:
Overall, it's very important that a functioning set of rules which achieves the purpose of article 6 to enable "higher ambition in [countries'] mitigation and adaptation actions and to promote sustainable development and environmental integrity" (art 6.1) is agreed upon at COP26. However, the lack of agreed rules doesn't actually prevent ambitious, committed entities from using cooperation strategies to reduce their emissions already.
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