Country Processes and Institutional Arrangements for Article 6 Transactions
Unlike the Kyoto protocol’s clean development mechanism (CDM), Article 6.2 of the Paris Agreement is designed to allow for international cooperation in carbon markets through decentralized governance. Under this article, bilateral or plurilateral c...
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| Language: | English |
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/en/769021617687870613/Country-Processes-and-Institutional-Arrangements-for-Article-6-Transactions http://hdl.handle.net/10986/35392 |
| Summary: | Unlike the Kyoto protocol’s clean
development mechanism (CDM), Article 6.2 of the Paris
Agreement is designed to allow for international cooperation
in carbon markets through decentralized governance. Under
this article, bilateral or plurilateral cooperation between
participating parties can be established through a mutually
agreed policy and governance framework and reflected in the
agreement between the parties involved. This decentralized
architecture requires considerably higher levels of
engagement and oversight from participating parties. The
context for setting institutions and approval procedures at
the domestic level is fundamentally rooted in the country’s
national climate strategy and their nationally determined
contribution (NDC). A host country will need to establish a
detailed Article 6 strategy that guides, but is not limited
to, how its participation in Article 6 will help the country
achieve its target. This paper forms the starting point,
focusing on the institutional requirements to establish the
policy and regulatory process that defines and supports the
implementation of the potential activity cycle for Article
6.2 activities and transactions; identifies functions
required at the national level from the host country’s
perspective; and discusses different options to allocate
these functions to existing or new institutions. The Article
6.2 activity cycle can build on project cycles under the
Kyoto protocol, with an added requirement for the
authorization and transfer of mitigation outcomes (MOs).
While the entire process can be developed domestically, host
countries can also choose to use international crediting
programs to register projects and issue units. However, the
host country will still be responsible for the Article 6.2
process of authorizing and transferring ITMOs, as well as
applying corresponding adjustments. The type of arrangement
that a country chooses to adopt affects the type of
institutional arrangement and functions of the different
bodies involved. |
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