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Decoding Article 6 of the Paris Agreement—Version II Article 6 of the Paris Agreement enables countries to utilize market and nonmarket approaches to achieve their nationally determined contributions. Yet, international negotiations on Article 6 are complex and ongoing. The Parties of the Paris Agreement have made progress on many issues, but contentious matters on political and technical aspects remain unresolved. This publication presents the latest developments in negotiations, discusses the key outcomes, and highlights the remaining unresolved issues leading up to the 26th United Nations Climate Change Conference of the Parties in Glasgow. About the Asian Development Bank ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members —49 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance. DECODING ARticle 6 OF THE PARIS AGREEMENT VERSION II DECEMBER 2020 ASIAN DEVELOPMENT BANK 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines ASIAN DEVELOPMENT BANK www.adb.org DECODING ARticle 6 OF THE PARIS AGREEMENT VERSION II DECEMBER 2020 ASIAN DEVELOPMENT BANK Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) © 2020 Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines Tel +63 2 8632 4444; Fax +63 2 8636 2444 www.adb.org Some rights reserved. Published in 2020. ISBN 978-92-9262-619-8 (print); 978-92-9262-620-4 (electronic); 978-92-9262-621-1 (ebook) Publication Stock No. TCS200411-2 DOI: http://dx.doi.org/10.22617/TCS200411-2 The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. The mention of specific companies or products of manufacturers does not imply that they are endorsed or recommended by ADB in preference to others of a similar nature that are not mentioned. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) https://creativecommons.org/licenses/by/3.0/igo/. By using the content of this publication, you agree to be bound by the terms of this license. For attribution, translations, adaptations, and permissions, please read the provisions and terms of use at https://www.adb.org/terms-use#openaccess. This CC license does not apply to non-ADB copyright materials in this publication. If the material is attributed to another source, please contact the copyright owner or publisher of that source for permission to reproduce it. ADB cannot be held liable for any claims that arise as a result of your use of the material. Please contact [email protected] if you have questions or comments with respect to content, or if you wish to obtain copyright permission for your intended use that does not fall within these terms, or for permission to use the ADB logo. Corrigenda to ADB publications may be found at http://www.adb.org/publications/corrigenda. Notes: In this publication, “$” refers to United States dollars. ADB recognizes “Korea” as the Republic of Korea. Printed on recycled paper Contents iii F igures and Boxes v Foreword vi Preface viii Acknowledgments x Abbreviations xi 1. Introduction 1 1.1. Overview of the Paris Agreement 1 1.2. Scope of Article 6 3 1.3. Draft Negotiating text 6 1.4. A Brief History of Negotiations Since the 21st Session of 7 the Conference of the Parties 1.4.1. Outcomes of Article 6 from the 24th Session of the Conference 9 of the Parties 1.4.2. After Katowice: The Road to Santiago/Madrid 11 1.4.3. Outcome from the 25th Session of the Conference of the Parties 12 1.5. Key Concepts of the Article 6 Rulebook 13 1.5.1. Nationally Determined Contribution Definition in Relation 13 to Article 6 1.5.2. Governance 13 1.5.3. Environmental Integrity 14 1.5.4. Sustainable Development 15 1.5.5. Double Counting 17 1.5.6. Relationship between Articles 6.2 and 6.4 19 2. Articles 6.2 and 6.3: Negotiation Issues 20 2.1. Definitions 20 2.2. Participation 24 2.3. Corresponding Adjustments 25 2.3.1. Application of Corresponding Adjustment 25 2.4. Sectors and Gases 30 2.5. Other International Mitigation Purposes 31 2.6. Limits to the Transfer and Use of Internationally Transferred 31 Mitigation Outcomes 2.7. Reporting and Review under Article 6 32 2.7.1. Initial Report Requirements 32 2.7.2. Annual Information Requirements 33 2.7.3. Regular Information Requirements 33 iv Contents 2.8. Infrastructure: Recording and Tracking of Internationally 35 Transferred Mitigation Outcomes 2.8.1. Article 6 National Registries 36 2.8.2. Article 6 Database 38 2.8.3. Centralized Accounting and Reporting Platform 38 2.9. Ambition in Mitigation and Adaptation Actions 39 3. Article 6.4: Negotiation Issues 41 3.1. Definitions 41 3.2. Supervisory Body 41 3.2.1. Rules of Procedure 42 3.2.2. Governance and Functions 42 3.3. Participation Responsibilities 42 3.4. Article 6.4 Activity Cycle 43 3.4.1. Activity Design 43 3.4.2. Methodologies 44 3.4.3. Approval and Authorization 45 3.4.4. Issuance 45 3.4.5. First Transfer from the Mechanism Registry 46 3.4.6. Delivering Overall Mitigation in Global Emissions 46 3.4.7. Avoiding the Use of Emissions Reductions 47 by More Than One Country 3.4.8. Use of Emissions Reductions for Other 48 International Mitigation Purposes 3.4.9. Transition of Clean Development Mechanism 48 Activities and Certified Emission Reductions 4. Article 6.8: Negotiation Issues 51 4.1. Nonmarket Approaches under the Framework 52 4.2. Governance of the Framework 52 4.3. Work Program of the Framework 52 5. Relation with Other Issues 54 5.1. Brief Introduction to Monitoring, Reporting, and 54 Verification under the Paris Agreement 5.2. Links between Article 6 and the Enhanced Transparency Framework 56 5.2.1. Corresponding Adjustments Guidance 56 5.2.2. Reporting and Review under Article 6 58 6. Road to the 26th Session of the Conference of the Parties 59 Glossary of Climate Change Acronyms and Terms 61 References 64 Figures and Boxes v FIGURES 1 Overview of Negotiations and Key UNFCCC Events 8 B3.1 Corresponding Adjustment against a Multiyear Trajectory 26 of Seller Country B3.2 Corresponding Adjustment against a Multiyear Trajectory 26 of Buyer Country B3.3 Averaging Corresponding Adjustments by Seller Country 27 B3.4 Averaging Corresponding Adjustments by Buyer Country 27 2 Article 13 of the Paris Agreement—Transparency 54 of Action and Support BOXES 1 Article 6 of the Paris Agreement 3 2 Eligibility Criteria for the Kyoto Protocol 24 3 Corresponding Adjustments: Methods for Single-Year Targets 26 vi Foreword The pandemic caused by the coronavirus disease (COVID-19) has disrupted billions of lives and livelihoods across the world in 2020. The Asian Development Bank (ADB) estimates the global economic impact of the COVID-19 pandemic to reach $4.8–$7.4 trillion, equivalent to 5.5%–8.7% of the world’s cumulative gross domestic product (GDP) in 2020, and an additional $3.1–$5.4 trillion in 2021 (or 3.6%–6.3% of GDP). The Asia and Pacific region* is expected to account for 28% of the overall decline in the global output due to the pandemic, with a loss of 6.0%–9.5% of regional GDP in 2020 and 3.6%–6.3% in 2021. As governments adopt response and recovery measures to mitigate the impacts of the pandemic, it is important that long-term solutions are taken into consideration. Fortunately, committing to long-term measures is nothing new to many countries, as 189 out of 197 Parties to the United Nations Framework Convention on Climate Change (UNFCCC) are also Parties to the Paris Agreement—a landmark framework that sets out long-term goals to strengthen the global response to address climate change and limit global warming by the end of the 21st century. There is now an opportunity to align COVID-19 recovery plans to countries’ climate actions as there is an increasing recognition at the political and grassroots levels for the recovery to “build back better.” It is through this momentum on “green recovery” that there is hope in putting the world on a more sustainable path toward economic recovery from the pandemic. Addressing climate change is a key part of the more sustainable path. The Asia and Pacific region plays a key role in implementing climate actions to limit global warming to well below 2°C. In 2018, the region generated about 46% of global carbon dioxide (CO2) emissions. This is worrying since the overall concentration of CO2 in the atmosphere is still rising and the collective ambition expressed by the sum of nationally determined contributions (NDCs) is largely insufficient to meet the Paris Agreement goals. Even though there has been a momentary dip in greenhouse gas emissions during the lockdowns instituted to control the increase of COVID-19 cases, emissions will bounce back to pre-pandemic levels once countries start to ease restrictions, if no green recovery measures are put in place.
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