POLICY, LEGAL AND REGULATORY CONSIDERATIONS FOR UTILIZING ARTICLE 6 OF THE PARIS AGREEMENT AS A TOOL FOR REDUCING GREENHOUSE GAS EMISSIONS
INTRODUCTION
In 1994, a treaty titled the United Nations Framework Convention on Climate Change (UNFCCC) was signed and ratified. A year following its inception, the first conference of parties (COP) was held in Berlin, Germany, with members of the states that signed the treaty.[i] Multiple COPs have been arranged and hosted in different countries since then. At COP 21 held in Paris, France, a treaty named the Paris Agreement was signed and adopted by 196 parties on December 12, 2015, and came into force on November 4, 2016.[ii] The treaty was aimed at tackling climate change and remains legally binding on member states.
ARTICLE 6 OF THE PARIS AGREEMENT
One notable article in the Paris Agreement is Article 6., which acknowledges that countries can pursue voluntary cooperation in the implementation of their Nationally Determined Contributions (NDCs) to allow for higher mitigation ambitions and to promote sustainable development.[i] Article 6.2 outlines the possibility of cooperative approaches and the transfer of internationally transferrable mitigation outcomes (ITMOs) between different actors, including countries and private sector companies, through bilateral agreements. ITMOs use a carbon dioxide equivalent (CO2e) metric for a new set of market provisions or other greenhouse gas mitigation outcomes that are defined under Article 6.2 of the Paris Agreement.[ii]
It also establishes three approaches for parties to voluntarily cooperate in achieving their emission reduction targets and adaptation aims set out in their national climate action plans under the Paris Agreement[iii]. One of the articles entrenched in the Paris Agreement allows and creates a mechanism where countries are to voluntarily cooperate to achieve emission reduction targets set out in their NDCs.[iv] This means that, under Article 6, a country (or countries) will be able to transfer carbon credits earned from the reduction of GHG emissions to help one or more countries meet climate targets.[v] Since the inception of this treaty, multiple member countries have utilized this article. An example is an MoU signed between the Government of Ghana and the Swiss Federal Council to strengthen the mode of cooperation between the two countries under Article 6 of the Paris Agreement on climate action.[vi] The bilateral agreement facilitated Ghana’s National Clean Energy Access Programme, enabling the country to receive international financial support to implement projects to fulfil its climate commitments.[vii] Another recent example is the newly signed memorandum of understanding between Morocco and Norway, which Involves the purchase and sale of greenhouse gas emission allowances between both countries.[viii]
But despite the sturdy provisions of this article, it also presents several challenges. One of the main challenges is developing robust accounting rules that ensures the accurate tracking and accounting of emission reductions, in addition to establishing transparent and reliable accounting methodologies that are acceptable to all parties.[i] Indeed, countries have different capacities, historical responsibilities, and development priorities, which must be considered to ensure a just distribution of benefits and burdens. Balancing the interests of developed and developing countries in terms of access to market mechanisms, financial support, and technology transfer is another key challenge in the negotiations.[ii]
POLICY, LEGAL AND REGULATORY CONSIDERATIONS
If an efficient and long-lasting reduction of GHG emissions is the ultimate goal of Article 6 of the Paris Agreement, a detour from the regular mechanisms employed by this agreement has to be considered. Countries should take the necessary steps towards the aim of establishing different and effective policy, legal and regulatory frameworks influenced by Article 6, while also implementing structural changes in the sector. Some of the policy, legal and regulatory considerations are itemised below;
Evaluation of country readiness: evaluating the readiness of countries to engage with Article 6 can be undertaken by assessing countries' enabling conditions, such as the actual availability and technical capacity of the country-specific actors and stakeholders responsible for the operation and regulation of carbon markets, in addition to countries’ plans to develop such markets. By evaluating and tracking readiness, it will be easier for countries with like-minded goals to collaborate towards the purchase and sale of GHG emission allowances. [iii]
Integrating Article 6 into National Legislation: Embedding the provisions of Article 6 within a country's legal framework will aid in strategically structuring such framework to reflect a country's policy objectives and economic reality. Such integration ensures that national laws are aligned with the goals and mechanisms of the Paris Agreement, providing a solid foundation for effective implementation.
Selection of Targeted Sectors: Identifying and prioritizing specific sectors for emission reduction efforts is essential, as it enables implementation of policies where they are needed. This targeted approach allows for a more focused and impactful allocation of resources, while also encouraging efficiency in the overall reduction of GHG emissions.[iv]
Financial Support: Adequate financial assistance is imperative for the successful implementation of emission reduction initiatives in some select countries under Article 6.[v] Countries can establish regulatory mechanisms to secure funding to meet their NDCs in line with the Paris Agreement, through domestic sources or international partnerships, to support the transition to cleaner technologies and practices, and the reduction in GHG emissions.[vi]
Risk Factor Mitigation: Acknowledging and mitigating potential risks is vital for the resilience of emission reduction efforts. One notable risk is the issue of double counting, where the same emission reduction is counted by both the buyer and the seller. One way that this can be tackled is by implementing robust accounting practices and processes geared towards accurate tracking of mitigation transfers, ensuring that the NDC targets are expressed in quantitative terms and NDC targets and emission reductions are appropriately accounted for.[vii] Robust risk assessment frameworks should also be established to identify and address challenges that may impede progress, ensuring the sustainability of the implemented measures.[viii]
Attribution of Mitigation Outcomes to Policies: It is evident that linking policy successes to their objectives increases participation. For example, if a nation works together to meet or exceed its NDC, this success can be used to link successful mitigation efforts to Article 6 provisions, which will be crucial for accountability and openness.[ix] This makes it possible for governments and other stakeholders to evaluate the success of actions taken and modify policies as necessary.[x]
CONCLUSION
Article 6 of the Paris Agreement has made notable contributions geared towards the reduction of greenhouse gas emissions, by fostering voluntary collaboration between member countries. Nevertheless, to attain the successful implementation of this provision in the agreement, some policy, legal and regulatory factors have to be taken into consideration; such as integrating the provisions of the articles into country legislation(s) and fostering robust accounting in order to eliminate double counting, etc. If the proposed structural changes are effected, Article 6 of the Paris Agreement will be a useful tool in reducing GHG emissions globally.
[i] Igini, Martina, ‘What Is Article 6 of the Paris Agreement and Why Is It a Key Topic at COP28?’ (2023) Earth.Org (11 december) https://earth.org/explainer-what-is-article-6-of-the-paris-agreement-and-why-is-it-a-key-topic-cop28/ Accessed 11 January 2024
[ii]Igini, Martina, ‘What Is Article 6 of the Paris Agreement and Why Is It a Key Topic at COP28?’ (2023) Earth.Org (11 december) https://earth.org/explainer-what-is-article-6-of-the-paris-agreement-and-why-is-it-a-key-topic-cop28/ Accessed 11 January 2024
[iii] Marz, Marian ’Identifying potential policy approaches under Article 6 of the Paris agreement (2021) GGGI https://gggi.org/wp-content/uploads/2021/01/Policy-Approaches-under-PA-Article-6210121.pdf Accessed 11 January 2024
[iv] Marz, Marian ’Identifying potential policy approaches under Article 6 of the Paris agreement (2021) GGGI https://gggi.org/wp-content/uploads/2021/01/Policy-Approaches-under-PA-Article-6210121.pdf Accessed 11 January 2024
[v] Marz, Marian ’Identifying potential policy approaches under Article 6 of the Paris agreement (2021) GGGI https://gggi.org/wp-content/uploads/2021/01/Policy-Approaches-under-PA-Article-6210121.pdf Accessed 11 January 2024
[vi]Marz, Marian ’Identifying potential policy approaches under Article 6 of the Paris agreement (2021) GGGI https://gggi.org/wp-content/uploads/2021/01/Policy-Approaches-under-PA-Article-6210121.pdf Accessed 11 January 2024
[vii] Lambert ,Schneider, Jürg ,Füssler, Stephanie ,La Hoz Theuer, Anik, Kohli, Jakob, Graichen, Sean, Healy, Derik ,Broekhoff, ‘Environmental Integrity under Article 6 of the Paris Agreement’ (2017) (German Emissions trading authority (DEHSt) at the German environment agency 2017) https://www.dehst.de/SharedDocs/downloads/EN/project-mechanisms/discussion-papers/Environmental_integrity.pdf?__blob=publicationFile&v=3 Accessed 11 January 2024
[viii] Lambert ,Schneider, Jürg ,Füssler, Stephanie ,La Hoz Theuer, Anik, Kohli, Jakob, Graichen, Sean, Healy, Derik ,Broekhoff, ‘Environmental Integrity under Article 6 of the Paris Agreement’ (2017) (German Emissions trading authority (DEHSt) at the German environment agency 2017) https://www.dehst.de/SharedDocs/downloads/EN/project-mechanisms/discussion-papers/Environmental_integrity.pdf?__blob=publicationFile&v=3 Accessed 11 January 2024
[ix] Lambert ,Schneider, Jürg ,Füssler, Stephanie ,La Hoz Theuer, Anik, Kohli, Jakob, Graichen, Sean, Healy, Derik ,Broekhoff, ‘Environmental Integrity under Article 6 of the Paris Agreement’ (2017) (German Emissions trading authority (DEHSt) at the German environment agency 2017) https://www.dehst.de/SharedDocs/downloads/EN/project-mechanisms/discussion-papers/Environmental_integrity.pdf?__blob=publicationFile&v=3 Accessed 11 January 2024
[x]Marz, Marian ’Identifying Potential Policy Approaches Under Article 6 of the Paris Agreement (2021) GGGI https://gggi.org/wp-content/uploads/2021/01/Policy-Approaches-under-PA-Article-6210121.pdf Accessed 11 January 2024
[i]‘What You need to know about Article 6 of the Paris agreement’ (2022) The World Bank (22 May) https://www.worldbank.org/en/news/feature/2022/05/17/what-you-need-to-know-about-article-6-of-the-paris-agreement Accessed 11,January 2024
[ii] Ibid n4
[iii]What you need to know about Article 6 of the Paris Agreement (2022) The world bank (22 May) https://www.worldbank.org/en/news/feature/2022/05/17/what-you-need-to-know-about-article-6-of-the-paris-agreement Accessed 11,January 2024
[iv] ‘What you need to know about Article 6 of the Paris Agreement (2022) The world bank (22 May) https://www.worldbank.org/en/news/feature/2022/05/17/what-you-need-to-know-about-article-6-of-the-paris-agreement Accessed 11,January 2024
[v] Ibid n6
[vi]‘Switzerland and Ghana sign MoU to take action on Climate Commitment (2020) UNDP (28 Febuary) https://www.undp.org/geneva/press-releases/switzerland-and-ghana-sign-mou-take-action-climate-commitments Accessed 11 january 2024
[vii] ‘Switzerland and Ghana sign MoU to take action on Climate Commitment (2020) UNDP (28 Febuary) https://www.undp.org/geneva/press-releases/switzerland-and-ghana-sign-mou-take-action-climate-commitments Accessed 11 january 2024
[viii] Ivan wansi, Binot ’Morroco and Norway Cooperate on Article 6 of the paris Climate Agreement (2024) afrik21.afrika (8 january) https://www.afrik21.africa/en/morocco-and-norway-cooperate-on-article-6-of-the-paris-climate-agreement/ Accessed 11 January 2024
[i] ‘History of the Convention’ United Nations Climate Change https://unfccc.int/process/the-convention/history-of-the-convention#Essential-background Accessed January 11 2024
[ii] ’The Paris Agreement. What is the Paris Agreement’ United Nations Climate Change https://unfccc.int/process-and-meetings/the-paris-agreement Accessed January 11 2024