Design Options for the New International Market Mechanism

Publication of the final report from the project "Article 6 Design Options" on behalf of the German Environment Agency

  • News 26.11.2020

Article 6 of the Paris Agreement establishes three approaches for Parties to cooperate in achieving their nationally determined contributions (NDCs). One of these approaches is a new mechanism "to contribute to the mitigation of greenhouse gas emissions and support sustainable development" (Art. 6.4 (a)). This mechanism is to succeed the Kyoto Protocol's Clean Development Mechanism (CDM) from 2021 onwards. It will contain decisive improvements, especially with regard to a robust accounting of emission reductions and better integration into the national climate policy of the host country.

Governments are currently negotiating detailed rules for the implementation of this mechanism. The aim of this project has been to contribute to the development of these rules by analysing a range of design questions such as:

  • What are options for achieving an overall mitigation of global emissions, as required by Art. 6.4(d) of the Paris Agreement? This requirement is a key innovation of the new mechanism, to go beyond pure offsetting and promote the achievement of more emission reductions than would be achieved in the absence of the mechanism.
  • In how far can baselines be established on the basis of best available technology (BAT) values? Robust baselines are a key precondition for safeguarding the environmental integrity of the mechanism.
  • How can the new mechanism be used to raise the ambition of NDCs, as mandated by Art. 6.1 of the Paris Agreement? The NDCs countries have so far pledged fall far short of what would be required to achieve the objectives of the Paris Agreement.
  • What role can the voluntary carbon market play in raising ambition?
  • Which incentives can be created for private companies to participate in the new mechanism?
  • What role can Article 6 play to accelerate the transition towards a (net) zero emission world?

The current report "Design Options for the New International Market Mechanism under Article 6.4 of the Paris Agreement" published in the Climate Change series of the German Environment Agency (Umweltbundesamt, UBA) develops specific recommendations for each of these questions. It is addressed to the international experts and in particular to the delegates and observes at the United Nations climate conferences.

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