The adoption of Article 6 of the Paris Agreement has once again triggered a debate on the introduction of generating emission reduction credits on the basis of national policies. National policies were not eligible as project activities under the flexible mechanisms of the Kyoto Protocol. The Paris Agreement opens up the possibility of such policy recognition, but also offers a completely new context: Universal participation, ambitious long-term targets and nationally defined contributions to be strengthened over time. The JIKO Policy Paper 04/2018 "Challenges and Opportunities of Policy-based Cooperation under Article 6 of the Paris Agreement" shows that these changes add complexity to the framework conditions for policy-based cooperation.
Nicolas Kreibich, Research Fellow, and Wolfgang Obergassel, Project Co-ordinator in the Division Energy, Transport and Climate Policy at the Wuppertal Institute, examine the potential of policy-based forms of cooperation in this paper. First, the authors present the legal basis created by the Paris Agreement. They then outline a prototypical model for policy-based cooperation and highlight its challenges.
These are then examined in more detail in an analysis of the implementation of three policy instruments: feed-in tariffs for renewable energies, trading systems for energy efficiency credits and building standards combined with a fund. In addressing the challenges identified, the authors propose a number of measures, including limiting support to the policy implementation phase and using Article 6 as a vehicle for public climate finance. The authors also recommend the study of input-based transfers, where the amount of emission reductions transferred is determined not on the basis of the results achieved but on the basis of the support provided.
The JIKO Policy Paper 04/2018 is available under the following link.