Article 6 (carbon markets) will be a huge focus at COP25 in December. This webinar will explain the basics of Article 6, its importance, status of negotiations and more.

1. ARTICLE 6:
WHAT’S AT STAKE
KELLY LEVIN, KELLEY KIZZIER, MANDY RAMBHAROS, AND YAMIDE DAGNET

2. • Join audio:
– Preferred method: through Computer
Audio
– Back-up: choose Telephone and dial-
in using the phone numbers listed in
the webinar confirmation email
• Attendees remain in listen-only mode
• Please select “Q&A” at the bottom of your
screen for any questions or comments
during the webinar
• Today’s presentation will be recorded and
made available in 24 hours
Matt
INTRODUCTION
Attendee Participation
If you experience technical problems during the webinar, please submit
questions in the Q&A section or to Beth.Elliott@wri.org
ARTICLE 6: WHAT’S AT STAKE

3. Today’s Speakers (in the order of presentation):
• Yamide Dagnet, Senior Associate, WRI
• Kelly Levin, Senior Associate, WRI
• Kelley Kizzier, Associate VP for International Climate, EDF
• Mandy Rambharos, Article 6 Negotiator, South Africa
INTRODUCTION
ARTICLE 6: WHAT’S AT STAKE

4. Kelly Levin
Senior Associate, WRI
ARTICLE 6: WHAT’S AT STAKE

5. THE POTENTIAL OF ARTICLE 6
• 51% of NDCs constituting 31% of GHG
emissions include the use of carbon markets
• Potential cost savings of $250 billion per year
in 2030
• 50% more abatement by 2030 at no additional
cost If these savings are translated into
enhanced ambition (source: IETA)
Climate Watch, IETA

6. BUT MANY ISSUES AT STAKE
• Double
counting
• Additionality
• Delivering
increased
ambition and
progression
• Financing for
Article 6
activities and
adaptation

7. RULEBOOK FOR ARTICLE 6
• For Article 6.2, Parties are requested to develop
guidance for robust accounting to be applied where
cooperative approaches involve the use of internationally
transferred mitigation outcomes (ITMOs) towards
achieving NDCs.
• For Article 6, paragraph 4 (6.4), Parties are to adopt
rules, modalities, and procedures for an Article 6.4
mechanism to contribute to GHG mitigation and to
support sustainable development.
• Parties are to undertake a work programme under the
framework for non-market approaches defined in Article
6.8.

8. 1. Avoiding Double Counting on the basis of
Corresponding Adjustments
• For non-GHG targets
• For single- and multi-year targets
• Accounting for sectors and GHGs not covered by the NDC
• Accounting for non-UNFCCC compliance schemes (e.g., CORSIA)
• Avoiding double use of emissions reductions from the Article 6.4
Mechanism
2. Baselines and additionality in Article 6.4
3. Transition of Kyoto Protocol Mechanisms and their
methodologies, activities and units
4. Share of proceeds
5. Overall mitigation in global emissions
6. Governance of Article 6
7. Reporting of Article 6 and Link with Reporting under
the Article 13

9. 1. Avoiding Double Counting on the basis of
Corresponding Adjustments
• For non-GHG targets
• For single- and multi-year targets
• Accounting for sectors and GHGs not covered by the NDC
• Accounting for non-UNFCCC compliance schemes (e.g., CORSIA)
• Avoiding double use of emissions reductions from the Article 6.4
Mechanism
2. Baselines and additionality in Article 6.4
3. Transition of Kyoto Protocol Mechanisms and their
methodologies, activities and units
4. Share of proceeds
5. Overall mitigation in global emissions
6. Governance of Article 6
7. Reporting of Article 6 and Link with Reporting under
the Article 13

10. CORRESPONDING ADJUSTMENT
• Double counting: when a carbon credit created in one country is
transferred to another country and both count the results towards their
NDCs – also called double claiming.
• Expressly prohibited in Article 6.2
– leads to an increase in global emissions,
– undermines the price signal
– and can seriously weaken the integrity of the Paris Agreement.
• Decision 1/CP.21 - double counting in Article 6.2 is avoided on the basis of a
“corresponding adjustment.”
• Both Parties to the cooperation make an adjustment (e.g. to their emissions
totals derived from their GHG inventory)
• Double counting is avoided because the adjustments correspond (one
addition and one subtraction).
• In practice, implementing these corresponding adjustments is more
complicated.

11. 1. CORRESPONDING ADJUSTMENT TO AVOID
DOUBLE COUNTING
Schneider et al. 2017

19. 1. Avoiding Double Counting on the basis of
Corresponding Adjustments
• For non-GHG targets
• For single- and multi-year targets
• Accounting for sectors and GHGs not covered by the NDC
• Accounting for non-UNFCCC compliance schemes (e.g., CORSIA)
• Avoiding double use of emissions reductions from the Article 6.4
Mechanism
2. Baselines and additionality in Article 6.4
3. Transition of Kyoto Protocol Mechanisms and their
methodologies, activities and units
4. Share of proceeds
5. Overall mitigation in global emissions
6. Governance of Article 6
7. Reporting of Article 6 and Link with Reporting under
the Article 13

20. HOW TO MAKE A CORRESPONDING ADJUSTMENT
FOR NON-GHG TARGETS
• Many headline NDC or NDC components are
framed in non-GHG terms(e.g. committing to
install kwh of renewable electricity)?
• Should these countries be limited in their
access to Article 6?
• Yet to be determined whether, and how, a
country with a non-GHG NDC target would
convert the mitigation outcome or the target
itself into CO2e

21. 1. Avoiding Double Counting on the basis of
Corresponding Adjustments
• For non-GHG targets
• For single- and multi-year targets
• Accounting for sectors and GHGs not covered by the NDC
• Accounting for non-UNFCCC compliance schemes (e.g., CORSIA)
• Avoiding double use of emissions reductions from the Article 6.4
Mechanism
2. Baselines and additionality in Article 6.4
3. Transition of Kyoto Protocol Mechanisms and their
methodologies, activities and units
4. Share of proceeds
5. Overall mitigation in global emissions
6. Governance of Article 6
7. Reporting of Article 6 and Link with Reporting under
the Article 13

22. HOW TO MAKE A CORRESPONDING ADJUSTMENT
FOR SINGLE- AND MULTI-YEAR TARGETS
• Several approaches being considered to address this
issue.
• Should all Parties must pick the same approach or can
they choose?
• Single-year targets
pose a particular
challenge because
buying Parties could
count many years of
accumulated mitigation
outcomes towards
target.

23. 1. Avoiding Double Counting on the basis of
Corresponding Adjustments
• For non-GHG targets
• For single- and multi-year targets
• Accounting for sectors and GHGs not covered by the NDC
• Accounting for non-UNFCCC compliance schemes (e.g., CORSIA)
• Avoiding double use of emissions reductions from the Article 6.4
Mechanism
2. Baselines and additionality in Article 6.4
3. Transition of Kyoto Protocol Mechanisms and their
methodologies, activities and units
4. Share of proceeds
5. Overall mitigation in global emissions
6. Governance of Article 6
7. Reporting of Article 6 and Link with Reporting under
the Article 13

24. ACCOUNTING FOR SECTORS AND GREENHOUSE
GASES NOT COVERED BY THE NDC
• Whether, and if so for how long, Parties
can transfer emissions reductions that
they achieve outside of sectors and
gases covered in their NDCs.
• Can be perverse incentive for countries to
avoid expanding the scope of their NDCs
• Subject to corresponding adjustment?

25. 1. Avoiding Double Counting on the basis of
Corresponding Adjustments
• For non-GHG targets
• For single- and multi-year targets
• Accounting for sectors and GHGs not covered by the NDC
• Accounting for non-UNFCCC compliance schemes (e.g., CORSIA)
• Avoiding double use of emissions reductions from the Article 6.4
Mechanism
2. Baselines and additionality in Article 6.4
3. Transition of Kyoto Protocol Mechanisms and their
methodologies, activities and units
4. Share of proceeds
5. Overall mitigation in global emissions
6. Governance of Article 6
7. Reporting of Article 6 and Link with Reporting under the
Article 13

26. ACCOUNTING FOR NON-UNFCCC COMPLIANCE
SCHEMES
The discussion to date has
focused on CORSIA, an
international agreement on
reducing emissions from
international aviation.
Key remaining issue is whether non-NDC uses are
covered by Article 6 rules and how in practice to avoid
double, including how to apply a corresponding
adjustments.

27. 1. Avoiding Double Counting on the basis of
Corresponding Adjustments
• For non-GHG targets
• For single- and multi-year targets
• Accounting for sectors and GHGs not covered by the NDC
• Accounting for non-UNFCCC compliance schemes (e.g., CORSIA)
• Avoiding double use of emissions reductions from the Article
6.4 Mechanism
2. Baselines and additionality in Article 6.4
3. Transition of Kyoto Protocol Mechanisms and their
methodologies, activities and units
4. Share of proceeds
5. Overall mitigation in global emissions
6. Governance of Article 6
7. Reporting of Article 6 and Link with Reporting under
the Article 13

28. Kelley Kizzier
Associate Vice President for International
Climate, Environmental Defense Fund
ARTICLE 6: WHAT’S AT STAKE

29. AVOIDING DOUBLE USE OF EMISSIONS
REDUCTIONS FROM THE ARTICLE 6.4 MECHANISMS
• Double Counting is explicitly referenced for Article 6.2, but not in 6.4
• Parties can’t agree whether double counting apply to Article 6.4 credits when
transferred internationally for use towards NDC or for other purposes
• The vast majority of Parties believe that double counting needs to be avoided
for Article 6.4
• a corresponding adjustment must be applied by the host Party to avoid double
counting of the underlying emissions reduction.
• the integrity of the Paris Agreement is significantly undermined if double counting is
not prohibited for Article 6.4.
• A few other Parties argue that double counting does not apply to Article 6.4:
• the additionality requirement in Article 6.4; the activity is necessarily additional to what
would have otherwise occurred so, there is no double counting;
• The NDC is in essence the actions or activities included. If Article 6.4 activities are
outside of this scope, they are additional to the NDC and the avoidance of double
counting is unnecessary.
• The fundamental question of double counting - are the emissions
reductions counted twice ?

30. 1. Avoiding Double Counting on the basis of
Corresponding Adjustments
• For non-GHG targets
• For single- and multi-year targets
• Accounting for sectors and GHGs not covered by the NDC
• Accounting for non-UNFCCC compliance schemes (e.g., CORSIA)
• Avoiding double use of emissions reductions from the Article 6.4
Mechanism
2. Baselines and additionality in Article 6.4
3. Transition of Kyoto Protocol Mechanisms and their
methodologies, activities and units
4. Share of proceeds
5. Overall mitigation in global emissions
6. Governance of Article 6
7. Reporting of Article 6 and Link with Reporting under
the Article 13

31. 2. SETTING BASELINES AND AN APPROACH TO
ADDITIONALITY IN ARTICLE 6.4
• The Paris Agreement, in which all Parties have
NDCs, creates new challenges for the Article 6.4
mechanism related to:
– the role of the host Party in the 6.4 mechanism including in the
approach to determining baselines and additionality;
– important that the mechanism does not put a host Party at risk
of not achieving their NDC or of transferring their low cost
emission reductions abroad.
– Whether and how NDCs and related policies are taken into
account

32. 2. SETTING BASELINES AND AN APPROACH TO
ADDITIONALITY IN ARTICLE 6.4 (CONT.)
• Many Parties support baselines
– set conservatively and below
business as usual emissions;
– which are standardized by setting
them according to benchmarks using
regionally appropriate best available
technology thresholds or similar;
– which are dynamic – updated to
reflect new policy or changes to
underlying parameters;This Photo by Unknown Author is licensed under CC BY
• Other Parties continue to support baselines
-- Set at business-as-usual emissions levels or historical emission
levels, as they were in the CDM
-- Without the crediting constraints implied by other options

33. 1. Avoiding Double Counting on the basis of
Corresponding Adjustments
• For non-GHG targets
• For single- and multi-year targets
• Accounting for sectors and GHGs not covered by the NDC
• Accounting for non-UNFCCC compliance schemes (e.g., CORSIA)
• Avoiding double use of emissions reductions from the Article 6.4
Mechanism
2. Baselines and additionality in Article 6.4
3. Transition of Kyoto Protocol Mechanisms and
their methodologies, activities and units
4. Share of proceeds
5. Overall mitigation in global emissions
6. Governance of Article 6
7. Reporting of Article 6 and Link with Reporting under
the Article 13

34. 3. TRANSITION OF KYOTO PROTOCOL MECHANISMS
AND THEIR METHODOLOGIES, ACTIVITIES AND
UNITS
Transition is about rules, activities and units
• Methodologies and Rules:
– some of the KP rules might be relevant for Article 6.4; 1/CP.21 explicitly calls
for the rules, modalities and procedures to take into account the lessons
learned under Kyoto;
• Activities:
– some Parties argue for automatic registration under Article 6.4 without
constraint;
– others argue for registration to the extent that activities meet or are updated to
reflect the new context (incl for baselines and additionality);
– Concern that this perpetuates regional distribution imbalances;
• Units:
– Potentially 4 billion tonnes of surplus;
– Many worry that the use of these will significantly water down ambition of
already insufficient NDCs and crowd out all demand for new and additional
projects in CORSIA;
– Many also point out that many of these credits were issued in the absence of
a price signal – questions about their additionality.

44. 1. Avoiding Double Counting on the basis of
Corresponding Adjustments
• For non-GHG targets
• For single- and multi-year targets
• Accounting for sectors and GHGs not covered by the NDC
• Accounting for non-UNFCCC compliance schemes (e.g., CORSIA)
• Avoiding double use of emissions reductions from the Article 6.4
Mechanism
2. Baselines and additionality in Article 6.4
3. Transition of Kyoto Protocol Mechanisms and their
methodologies, activities and units
4. Share of proceeds
5. Overall mitigation in global emissions
6. Governance of Article 6
7. Reporting of Article 6 and Link with Reporting under
the Article 13

45. Mandy Rambharos
Article 6 Negotiator, South Africa
ARTICLE 6: WHAT’S AT STAKE

46. 4. SHARE OF PROCEEDS
an amount levied
on transactions
and used towards
a particular
purpose.
Article 6 paras. 4 and 6 state that a “share of proceeds” from the Article
6.4 mechanism is to cover administrative expenses as well as to assist
vulnerable developing countries to meet the costs of adaptation.
Parties have not come to an agreement on whether a share of proceeds
should also apply to Article 6.2 activities.

47. 1. Avoiding Double Counting on the basis of
Corresponding Adjustments
• For non-GHG targets
• For single- and multi-year targets
• Accounting for sectors and GHGs not covered by the NDC
• Accounting for non-UNFCCC compliance schemes (e.g., CORSIA)
• Avoiding double use of emissions reductions from the Article 6.4
Mechanism
2. Baselines and additionality in Article 6.4
3. Transition of Kyoto Protocol Mechanisms and their
methodologies, activities and units
4. Share of proceeds
5. Overall mitigation in global emissions
6. Governance of Article 6
7. Reporting of Article 6 and Link with Reporting under
the Article 13

48. 5. OVERALL MITIGATION IN GLOBAL EMISSIONS
• Article 6.4 stipulates that the Article 6.4
mechanism is to deliver an “overall
mitigation in global emissions” (often
referenced as OMGE).
• The definition of OMGE is contested.
• Art 6.2 has no reference to OMGE.
• Yet to be determined how OMGE will be
operationalized.

49. 1. Avoiding Double Counting on the basis of
Corresponding Adjustments
• For non-GHG targets
• For single- and multi-year targets
• Accounting for sectors and GHGs not covered by the NDC
• Accounting for non-UNFCCC compliance schemes (e.g., CORSIA)
• Avoiding double use of emissions reductions from the Article 6.4
Mechanism
2. Baselines and additionality in Article 6.4
3. Transition of Kyoto Protocol Mechanisms and their
methodologies, activities and units
4. Share of proceeds
5. Overall mitigation in global emissions
6. Governance of Article 6
7. Reporting of Article 6 and Link with Reporting under
the Article 13

50. 6. GOVERNANCE OF ARTICLE 6
• Parties still have yet to agree on the
governance of Article 6.2.
• Under 6.4 there are still issues left to
negotiate, for example the composition of the
supervisory body and its rules of procedure
• In addition, Parties have not yet agreed on
the role of the Article 6 review team vis-à-vis
the Article 13 review team or the coordination
between these teams, and the timing of
reviews

51. 1. Avoiding Double Counting on the basis of
Corresponding Adjustments
• For non-GHG targets
• For single- and multi-year targets
• Accounting for sectors and GHGs not covered by the NDC
• Accounting for non-UNFCCC compliance schemes (e.g., CORSIA)
• Avoiding double use of emissions reductions from the Article 6.4
Mechanism
2. Baselines and additionality in Article 6.4
3. Transition of Kyoto Protocol Mechanisms and their
methodologies, activities and units
4. Share of proceeds
5. Overall mitigation in global emissions
6. Governance of Article 6
7. Reporting of Article 6 and Link with Reporting
under the Article 13

52. 7. REPORTING OF ARTICLE 6 AND LINKAGE TO
ARTICLE 13 ENHANCED TRANSPARENCY
FRAMEWORK
• Para 77(d) of the Annex to 18/CMA.1: each Party
must provide information in a structured
summary including on the use of ITMOs.
• The CMA noted that information provided in
paragraph 77(d) is “without prejudice” to the
outcomes on Article 6 matters.
• Some say more info is needed; others say
sufficient.
• Question about applicability: specifically focuses
on ITMOs. Apply to Art. 6.4?
• Given the “without prejudice,” disagreement
whether can be reopened and renegotiated.

53. “MAKING SENSE OF ARTICLE 6: KEY ISSUES AND
WHAT’S AT STAKE” SOON TO BE PUBLISHED.
STAY TUNED.

54. Any Questions?
ARTICLE 6: WHAT’S AT STAKE

55. Thank you for your time.
Contact Beth.Elliott@wri.org with any further
questions
ARTICLE 6: WHAT’S AT STAKE