Pathways to Operationalising the Paris Agreement’s Article 6.2: Time to Act
After what many experts consider to be a very disappointing 25th meeting of the Conference of the Parties (COP), expectations for how to operationalise many aspects of the Paris Agreement are being recalibrated. Expectations fell particularly short on the negotiation of the ‘Paris Rulebook’ which would guide many aspects of the Paris Agreement - but in particular, how Article 6 is operationalised.
As a refresher of Article 6 of the Paris Agreement, let’s just review:
Article 6.2 would allow for collaborative approaches between
countries in pursuit of their Nationally Determined
Contributions (NDCs). It is not specified how, but what is clear
is this is a bilateral approach with an agreement between two
countries – not the UN.
Article 6.4 would allow for countries to use a marketplace
administered by the UNFCCC to exchange emissions
reductions or removals (known as International Transferred
Mitigation Outcomes or ‘ITMOs’) via a central system of sorts.
Article 6.8 describes the potential for non-market
mechanisms which would also generate climate benefits.
Envisioning Article 6.2
Much of the discussion at COP25 revolved around the language, design and operation of the global carbon market described in Article 6.4 of the Paris Agreement with little emphasis on bilateral cooperative approaches described in Article 6.2. Without the rulebook, it is difficult to imagine countries wanting to wade into the uncertainty around international trading through a mechanism that has not even been set up yet under Article 6.4. However, conversely, it is not that difficult for countries to consider bilateral approaches, and in fact, in other sectors this is the status quo. Thus, the argument for operationalising Article 6.2 in the immediate future is not subject to the same barriers as Article 6.4. This is particularly relevant in the land sector which represents not only a massive source of emissions globally, but also a quarter of potential mitigation activities, particularly in developing nations with low overall emissions from other sectors such as transport and industrial processes.
How would Article 6.2 work?
When we envision two countries collaborating on Article 6.2, it only makes sense to think about the fact that one country would need the emissions outcomes (reductions, removals, etc.) in order to either meet their existing, or increased ambition in their Nationally Determined Contributions (NDCs) to the Paris Agreement. Presumably, the other country would have a surplus of emissions outcomes, i.e. they sequester more emissions than they have committed to addressing in their NDC. The overshoot of one country could be mitigated through the transfer of emissions reductions or removals from the other country, known as an Internationally Transferred Mitigation Outcome (ITMO).
Let’s look at tropical forest countries for an example. In many cases carbon cycling and other ecosystem services provided by the tropical forests significantly offset, and even outweigh, the emissions from industrial processes, transport, and other sectors combined. In this case, the tropical forest country is likely to achieve emissions reductions which are in excess of its NDC commitments, through a suite of actions involving conservation, avoided conversion, and sustainable forest management - all known as natural climate solutions. However, in those same tropical forest countries, conserving, maintaining, and sustainably managing these forests represent significant challenges – particularly from a financial and opportunity cost point of view.
Addressing emissions from the land sector in tropical countries represents a key area for intervention in meeting global climate goals. With up to a quarter of global mitigation potential coming from activities addressing forests and land conversion, natural climate solutions can generate significant climate benefits, at affordable costs. Griscom et al, (2020) estimate that nature based solutions can provide up to 6.5 PgCO2e in mitigation potential at less than $100 US per tonne1. In the meantime, countries with a shortfall of mitigation outcomes will need to meet their shortfall in some manner. Paradoxically, many of the same countries facing shortfalls are also pumping millions of dollars into Official Development Assistance (ODA) in tropical forest countries to meet the sustainable development goals.
Why are we not integrating Article 6.2 into our existing ODA agreements? Unlike technological transfer, or dedicated funding, using existing ODA to achieve emissions outcomes would not represent new and additional capital leaving countries, but rather existing financial resources, already dedicated to assisting countries that are the most likely candidates for generating surpluses of emissions reductions or removals. Additionally, governance, reporting, and accountability frameworks for ODA already exist and are regularly audited.
Now, detractors will often say “If two countries work together, without oversight, how will anybody enforce the need for ensuring social safeguards are adhered to? How will we ensure there is transparency and no double-counting?”; and “Won’t collaborating with other countries impact ambition at home?”.
These concerns are legitimate. However, they are broadly based on the concept of addressing confidence, that is, confidence the emissions mitigation are real and verifiable. But the fact is, addressing confidence is not without precedent, and processes for ensuring transparency, reporting, and accountability are often already built into ODA programs.
In GHG accounting, confidence comes from the certainty that one has in the GHG estimates being presented. The Transparency, Accuracy, Consistency, Completeness, and Comparability (TACCC) principles are the primary means countries use to ensure the estimates included in their GHG inventories, for example, are legitimate and therefore, certain. Confidence or certainty is affected by the ambiguity around the methods used to compile the estimates and whether they adhered to the TACCC principles.
When it comes to trading ITMOs between two countries, the obvious question is how do we address that confidence, and ensure the other country has adhered to the TACCC principles? Addressing confidence requires demonstrating certainty, and how two countries - often with drastically different national circumstances - adhere to the TACCC principles, through robust national-level monitoring, reporting and verification (MRV) system.
Advances in Monitoring, Reporting and Verification Systems and the case for a generic approach
Over the past decade, major advances in monitoring technology have allowed us to view every corner of the globe. An abundance of regular, high-resolution imagery, combined with GIS tools and improved emissions estimates, allow us not only to understand historic land-use change and the emissions associated with it, but also to, when combined with models, simulate future emissions scenarios. All of these advances allow us to report on greenhouse gases at greater frequency, with lower bias, higher accuracy, and to verify these results with greater transparency than ever before. Advances in MRV represent a massive step forward in addressing confidence in emissions estimates and overall performance.
When thinking about operationalising systems for trading ITMOs through bilateral collaboration, addressing double-counting is essential to ensuring environmental integrity. Traditionally, accounting systems vary greatly from country to country, and are subject to errors in calculation. Many are based on simple spreadsheets, tracking emissions and emissions reductions in simple terms, but not always using the same methods. It also does not allow the spatially-explicit verification of the results. This can lead to legitimate and serious concerns about the veracity of the emission reductions estimates, and consequently high levels of uncertainty.
To address this, we need systems based on the same TACCC principles but which are also able to interface and ensure issues like double-counting do not occur. In short, we need systems that can speak to each other. A push towards bespoke MRV systems in each jurisdiction does not accomplish this, as these systems can’t speak the same language, nor are they necessarily constructed with the same purpose or methods.
However, generic and robust MRV systems that can communicate with each other using the same language, same calculation frameworks, and same integration methods, and they do allow us to track emissions reductions over space and time, and from account to account. This dramatically increases confidence in the veracity of emissions estimates and tracks emissions through time, addressing the risk of double counting and reversals.
Thankfully, these generic systems already exist and are developed explicitly to meet TACCC principles. For instance, the Full Lands Integration Tool (FLINT) has been built explicitly for this purpose and is operationalised by Kenya, Indonesia, and through the moja global platform. The Mullion Group’s Software-as-a-Service platform FLINTpro is also built on top of this platform.
The FLINT framework makes it possible for all countries to implement spatially- and temporally-explicit estimates of emissions fluxes (both emissions and reductions/removals), as well as improve confidence. Furthermore, adding these generic systems to the reporting terms of ODA, for example, represents a relatively simple way to pilot Article 6.2 activities and collaborative approaches, while addressing the concerns of confidence and certainty.
Although the Rulebook for the Paris Agreement was not finalised in COP25, and there is no guarantee it will be in COP26 - which limits the ability of countries to advance Article 6.4 - there are no prohibitions against operationalising collaborative approaches bilaterally, as envisioned in Article 6.2.
Furthermore, the concerns highlighted by observers, such as the need for addressing double-counting, environmental integrity and overall uncertainty, can be addressed by existing tools such as ODA and the recent developments in MRV systems. With this, it is important to advance, cautiously, and begin piloting activities under bilateral approaches envisioned in Article 6.2.
Considering the toolbox already exists to do this, we no longer have the time for excuses.
1 Griscom, BW et al. (2020) National mitigation potential from natural climate solution in the tropics. Philosophical Transactions of the Royal Society B, 375, 20190126. https://doi.org/10.1098/rstb.2019.0126
Senior Consultant, The Mullion Group