Article 6 of the Paris Agreement
Article 6 of the Paris Agreement regulates mechanisms for cooperation between countries and global trading with emissions.
Article 6 of the Paris Agreement allows for countries to voluntarily cooperate to reach their respective mitigation targets. By working together, countries can achieve larger emission reductions than what they otherwise would have been able to do with their own resources. The emission reductions can then be distributed between the cooperating participants and transferred between countries.
According to the reporting requirements to the UNFCCC secretariat, countries who wish to transfer emission reductions internationally – so called Internationally Transferred Mitigation Outcomes (ITMOs) – must report on and adjust for these. Such adjustment is called corresponding adjustment and is crucial to prevent double counting of emission reductions between countries.
Three forms of cooperation within Article 6
Article 6 includes three different forms of cooperation. These are described by Articles 6.2, 6.4, and 6.8
- Article 6.2 states that countries can cooperate and transfer mitigation outcomes between each other to achieve the objectives of their climate plans (so-called Nationally Determined Contributions, NDCs).
- Article 6.4 outlines the framework of a market mechanism for global trade with emission outcomes. An officialsupervisory body shall monitor the market mechanism and have the mandate to review and approve emission outcomes which can be transferred and used in emissions trading.
- Article 6.8 deals with non-market approaches to assist in the implementation of their NDCs, in the context of sustainable development and poverty eradication. Such non market approaches can include activities within for example mitigation, adaptation, finance, technology development and transfer and capacity building.
The Swedish Energy Agency is focusing on establishing collaborations under Article 6.2.
What is the purpose of Article 6?
Under the Paris Agreement, ratifying countries have committed to reduce their greenhouse gas emissions. All countries must express the highest possible ambition in their respective NDCs. However, there are great differences between countries when it comes to the conditions for reducing emissions.
Under Article 6, cooperation between two countries should be based on voluntary participation and should contribute to globally reduced emissions and increased climate ambition. A global increase in climate ambition is necessary to meet the Paris Agreement's goal of keeping global warming well below 2 °C, aiming at 1.5 °C. With the current level of ambition, warming is estimated to reach beyond 3 °C.
Extensive emission reductions must be met to accomplish the 2-degree or, even better, 1.5-degree target. As the figure shows, countries' current ambition level is insufficient to achieve any of these targets.
An Article 6 collaboration is an opportunity to reduce emissions in a cost-effective way, since mitigation can be performed where costs are lower. In a comprehensive study from the University of Maryland, researchers find that a well-functioning trade in emission reductions under Article 6 of the Paris Agreement could save the world’s countries $ 250 billion per year. When costs for reaching national targets are reduced, countries can afford to reduce emissions even further, thus increasing ambition. According to the study, Article 6 could bring about further emission reductions of around five billion tonnes of carbon dioxide per year on a global scale. That equals one hundred times more carbon dioxide than what Sweden emits annually.
In addition to reducing greenhouse gas emissions, Article 6 collaborations can facilitate capacity-building and the transfer of mitigation technology, assisting participating countries to accelerate a green transition. Further, cooperation within Article 6 shall promote sustainable development. The Swedish Energy Agency is currently working on developing methods to measure and follow up the contribution to sustainable development in its upcoming Article 6 collaborations.