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Navigating the Paris Agreement: A Closer Look at Articles 6.2 and 6.4 in the run-up to COP29  

28 May, 2024 | Nathaniel Attenborough
Categories: Article 6, Carbon Offsetting, Climate Change, Conferences

In 2015 at COP21 in Paris, countries agreed to a landmark agreement aiming to limit global warming to 2 degrees Celsius above pre-industrial levels. Within the accord, known as the Paris Agreement, are various mechanisms designed to facilitate international cooperation in combating climate change. Among these, Articles 6.2 and 6.4 hold particular significance within the carbon market. They offer frameworks for international cooperation and trade of emissions reductions (or credits). As we approach COP29 later this year in Baku, Azerbaijan, a number of questions surrounding their implementation remain. It’s important to assess the current implementation of these articles and chart the way forward. 

White writing on a blue background
COP29 in Baku, Energy Intelligence.

Article 6.2

Article 6.2 defines a mechanism to contribute to the mitigation of greenhouse gas emissions and support sustainable development through bilateral agreements between nations. This mechanism allows for voluntary cooperation between countries in achieving their nationally determined contributions (NDCs) through the use of internationally transferred mitigation outcomes (ITMOs). 

While not designed with market actors in mind, 6.2 offers the potential for project developers working in host countries to have a ready buyer of credits, in the form of the partner country with which a bilateral agreement has been reached. 

Article 6.4

Article 6.4 sets the stage for the implementation of a UN Clean Development Mechanism-style approach, which allows market actors to engage within ITMO generation and trade. Here, a central (UN-backed) body would specify a range of approved methodologies through which project developers could produce Article 6.4 credits. These could then be bought by countries as a tool to help them achieve NDC targets as well as private companies and individuals in the Voluntary Carbon Market. Private actors are likely to be attracted by an Article 6.4 credit due to the added level of assurance provided by UN-developed methodologies, and the fact that the ‘double counting’ risk is significantly reduced. 

An infographic explaining Article 6
The Nature Conservancy (2023) Article 6 Explainer.

Challenges and Opportunities for Article 6

Under both articles, a selling country must apply ‘Corresponding Adjustments’, stating that the traded carbon will not be counted towards their own NDCs, to allow the purchasing country to count it in theirs. This reduces the potential for ‘double counting’ of emissions reductions and is likely to lead to an uplift in credit price relative to a non-Article 6 credit.

In the case of Article 6.2, we are witnessing the fruits of this collaborative approach. Countries such as Switzerland and Japan have formed numerous partnerships with developing countries already. The first ITMO transfers have just recently taken place. However, the implementation of Articles 6.2 and 6.4 continues to face significant challenges despite the overarching goals outlined in the Paris Agreement. One of the primary hurdles has been the complex nature of designing operational rules and guidelines that ensure transparency, environmental integrity, and accountability while accommodating the diverse needs and capabilities of participating countries. 

Though Article 6.2 trades have occurred, issues within the process remain. At the fundamental level, countries must be confident that they will reach their own NDC targets before agreeing to provide corresponding adjustments, to ensure that it has a surplus to sell. As yet there is no formal process for verifying this, and many countries are yet to develop a robust and legal carbon framework to direct the process. 

Implementation of Article 6.4 is less advanced, with the UN-level governing body yet to be established. It is hoped that progress in this regard will be delivered at COP29 later this year.  

As the international community gears up for COP29 in Baku, there is renewed optimism and a sense of urgency to resolve outstanding issues related to the implementation of Articles 6.2 and 6.4. The conference presents a crucial opportunity for countries to come together and finalize the operational rules and guidelines necessary for the effective functioning of the mechanisms. This will pave the way for transformative climate action across the globe. 

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