Introduction:

The UK COP Presidency has planned informal ministerial consultations on July 7 and July 12, in order to make progress on Article 6, which is still in stalemate despite recent technical discussions. Ministers have been asked to discuss a set of framing questions on three key sticking points: double counting of emissions, possible transition of Kyoto Protocol units, adaptation finance.

Given that this ministerial could close the gaps on these important issues and that progress in negotiations must not come at the expense of environmental integrity, Carbon Market Watch has prepared a briefing for ministers and their teams to guide their reflections and propose solutions.

Key recommendations:

1) Double counting of emission reductions under Article 6:

• Double counting (includes double claiming) is expressly forbidden under Article 6 since any form of it would undermine the Paris Agreement.
• Countries and decision makers in favour of allowing double counting are eroding the environmental integrity of Article 6.
• To avoid double counting, corresponding adjustments must apply to all Article 6 mitigation activities, whether for domestic compliance or international transfer.

2) Use of pre-2020 Kyoto Protocol units to achieve Paris Agreement NDCs:

• The Paris Agreement is not a continuation of the Kyoto Protocol (KP). It is a unique international agreement without any mandate to transfer KP market mechanisms.
• Carrying over KP units would increase emissions overall, which is simply unacceptable and even untenable in the Paris Agreement text.
• A carry-over would also flood the new 6.4 market with junk credits. This would erode confidence and market activity, ultimately stifling new business development.

3) Finance for adaptation under Article 6:

• Article 6 requires adaptation finance to be delivered to developing country Parties, through a share of proceeds (SOP) on credits.
• SOP for adaptation should be an in-kind and monetary contribution to generate stable revenue. The “in-kind only” model of the CDM produced poor results.
• SOP must apply to Article 6.4 but should also apply to 6.2. If Parties cannot find agreement, then a clear mechanism is needed for developed countries to channel adaptation finance to developing countries.
• Failing to guarantee stable adaptation finance flows will continue to harm trust between developed & developing countries. This will bar progress on a deal, today and in the future.