Article 6.2 & 6.4 Negotiations

 6.2 and 6.4 Negotiations

The word ‘markets’ doesn’t appear in Paris Agreement Article 6.  Rather, market-based approaches are put forward as a form of ‘international cooperation’, in Article 6.2 and 6.4 negotiating contexts. 

The main purpose of Article 6.2 is to figure out how countries can trade ‘mitigation obligations’ with one another, and who gets what credit from these ‘cooperative approaches’.

The main undertaking in Article 6.4 is to create rules for a global carbon market. 

The negotiations on Article 6.2 and 6.4 are technical.  Carbon Market Watch comments that “The level of technicality will leave many without the capacity to follow, let alone understand.” 

There’s some concern that, in the effort to develop market-based approaches, Parties could lose sight of the Paris Agreement temperature goal, and the needs of developing countries with respect to their own NDC ambitions. 

Negotiations must lead to real, additional, permanent, verifiable emissions reductions and must not weaken ambition. 

Article 6.2 at SB60 and COP29 in 2024

Negotiations to finalize the rules governing international carbon markets collapsed amidst acrimonious finger-pointing at COP28 in December 2023. Still to be worked out are technical issues pertaining to how ‘Internationally Trading Mitigation Obligations’ (ITMOs) are identified, authorized, and reported.  Negotiators are also still talking about what ‘activity types’ would qualify as the basis for a traded ‘ITMO’.   A small number of countries are arguing that ‘avoided emissions’ should be eligible as an ‘activity type’.

Perhaps the key issue for civil society, however – and particularly for groups concerned with rights – is the level of transparency associated with ITMOs.   Some countries want more supervision of these trades and more accountability for the reported mitigation benefits.  They expect 6.2 to align strongly with the Paris Agreement’s requirements on transparency. 

Others want less supervision and accountability.  Some Parties do not want Observers or other non-State actors to have access to information in whatever registry for trades is set up.  Others argue for a very expansive definition of what is ‘confidential information.’  Draft text going into COP28 suggested that negotiators may simply delay decisions on levels of transparency for a future gathering.  But clearly this is problematic if at the same time negotiators were coming to agreement about activity types and activity authorization!

Article 6.4 SB60 and COP29 in 2024

Just before the opening of COP28, the Article 6.4 Supervisory Body finalized two texts for consideration.  One is concerned with ‘Methodologies’ – how to count, and what’s counted, in a carbon trade.  Right now, the text would require Parties to show that the carbon trade would ‘not constrain’ the country in its attempt to fulfill its own Nationally Determined Contribution.  The ‘proposed mitigation activity’ should also be above and beyond what’s already required under national law. 

The other paper specifies what would qualify as a ‘Removal’ under the Article 6.4 mechanism.  A ‘removal’ means a removal of carbon dioxide, or other greenhouse gases, from the atmosphere.  Qualifying for the market mechanism means that the activity leading to the ‘removal’ would be allowed for carbon trading.  CLARA members are concerned by the long and vague list of potentially qualifying ‘removals’.   For example, carbon in ‘products’ could be counted.  That would be a windfall for the global timber industry.

The final set of issues in these negotiations is how the mitigation benefit is recorded.  If the carbon trade is between a national or subnational government on the one hand, and a company on the other hand – who gets to count what part of the mitigation benefit?  Does the company get to apply all of the mitigation benefit towards its ‘net zero’ target? If so, the host country loses out on the mitigation benefit.  It can’t apply that benefit toward achieving its own NDC.

But the 6.4 text goes further in allowing the country hosting a Removal activity to choose whether to apply the mitigation benefit to its own NDC, or to “other international mitigation purposes.”  It is clear to CLARA members, and others, that the ‘other international mitigation purpose’ mentioned here is actually for offsetting emissions associated with international air travel.  The CORSIA mechanism, set up under the International Civil Aviation Organization (ICAO), is specifically designed to allow airlines to offset ongoing emissions by purchasing carbon credits.  Since Article 6.4 negotiations collapsed at COP 28, these two texts will be further considered by the Article 6.4 Supervisory Body in 2024.