Article 6 of the Paris Agreement- the centre of the debate at Glasgow - Daily Current Affair Article

Why in news?

As UNFCCC CoP26 is going to be held at Glasgow, Article 6 of the Paris agreement would be the most contentious issue as it has remained unresolved since the agreement was signed. Despite several rounds of high-level meetings, it remains highly technical and crucial issue that needs to come to a conclusion at the upcoming CoP26.

Paris Climate Agreement : Daily Current Affairs | Dhyeya IAS ...

Article 6 of Paris Agreement

  • Article 6 of the Paris agreement introduces provisions for using international carbon markets to facilitate fulfillment of Nationally Determined Contributions (NDCs) by countries.

Few provisions of Article 6

  1. Article 6.2 gives an accounting framework for international cooperation and allows for the transfer of carbon credits between countries internationally.
  2. Article 6.4 provides for establishment of a central UN mechanism to trade credit from emission reduction generated through specific projects.
  3. Article 6.8 provide setting up of a work program for non-market approaches, such as imposing taxes to discourage emissions.

Clean Development Mechanism

  • The clean development mechanism defined in Article 12 of the Kyoto Protocol, allows a country with an emission- reduction or emission limitation commitment, if a country is an Annex B country , then it has to implement an emission reduction project in developing countries.
  • Such kinds of projects can earn saleable certified emission reduction (CER) credits, each equivalent to one tonne of CO2.
  • It is the first global, environmental investment and credit scheme of its kind, providing a standardized emission offset instrument, CERs.
  • A CDM project can involve a rural electrification project using solar panels, green energy projects, controlling of pollution projects etc.
  • The projects must qualify through a rigorous public registration and issuance process and approval is given by Designated National Authorities.
  • The mechanism is overseen by the CDM Executive Board.
  • The Kyoto flexible market protocol mechanisms are of 3 types.
  1. Clean Development Mechanism
  2. Emission trading
  3. Joint implementation
  • Carbon credit also called as carbon offset is a tradable certificate or permit and one carbon credit is equal to 1 tonne of carbon dioxide.
  • Joint implementation allows a country with an emission reduction commitment under the Kyoto Protocol (Annex B country) to earn Emission reduction units (ERUs) by investing in an emission reduction project in another Annex B country.

Article 6 a sensitive issue

  • India registered 1703 projects under the CDM which is the second highest in the world and total certified emission reductions issued for these projects are 255 million which accounts for an overall inflow of approximately US$2.55 billion in the country but at a conservation price of US $ 10 per CER. So, India has a lot to gain from thriving carbon market.
  • Developing countries are also required to have mitigation targets so, development countries are facing dilemma of either selling their carbon credits in return for lucrative foreign investment flows or use these credits to achieve their own mitigation targets.

Role of market mechanisms for developing and developed countries

  • For a developing country, the carbon market mechanism is much more a tool for fulfilling its mitigation targets under the NDCS.
  • The new market mechanism must also promote sustainable development and assist in climate change adaptation in the developing countries to achieve the SDG targets.
  • Private sector participation and foreign investment should be encouraged under the new mechanism to support low carbon development in the developing country.
  • For developed countries, the market mechanism should make them achieve their climate targets as they would be comparatively low cost options.

Debatable issues related to Article 6

  • CDM transition- As CDM projects have gone through due diligence and credits so the Article 6 mechanism allow for a smooth transition of there projects to ensure not only viability of these projects but also to build trust for private sector. If the decision regarding transition of CDM is not favorable then it could lead to a loss of billions of dollars.
  • Accounting rules- The mechanism under article 6.4 is meant for incentivising the private sector and public entities for undertaking mitigation activities.
  • So, a country can purchase emission reductions from public and private entities of host country to meet its NDC targets but this does not automatically implies for emission reduction units to be transferred from host country to other country for meeting NDC targets.
  • Also, under article 6.5, the host country is not required to undertake corresponding adjustment for the projects outside its NDC.

Share of Proceeds (SoP) to the Adaptation Fund

  • This is one of the major issue which needs to be addressed properly. Adaptation is a necessity for developing countries but adaptation fund remains severely underfunded as compared to mitigation activities.
  • Developing countries emphasize on uniformity in application of Article 6.2 and 6.4 to fund adaptation, while developed countries want to restrict its application to only Article 6.4. This limits the voluntary cooperation to Article 6.2.
  • Another issue to be discuss is the equitable sharing of carbon and developmental space.
  • Carbon markets allow developed countries to keep emitting and developing countries to benefit from revenue generated from sale of their carbon credits, this should not be done. The main agenda of carbon market should be attainting climate targets and sustainable development.

Way forward

Climate justice demands that developing countries must get access to their fair share of global carbon markets space. A facilitative carbon market mechanism that respects the principles enshrined in UNFCCC will greatly help to accelerate the transition to low carbon development mechanism Also, a new supervisory body can be made under the Paris Agreement to look after the emission reduction units and make sure that they are not counted again and again.

General Studies Paper 3
  • Environment