Editing IPCC:AR6/WGIII/Chapter-14 (section)

==== 14.3.2.7 Cooperative Approaches ====

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Article 6 of the Paris Agreement provides for voluntary cooperative approaches. Its potential importance in terms of project-based cooperation should be viewed against the background of key lessons from the market-based mechanisms under the Kyoto Protocol, particularly the Clean Development Mechanism (CDM). The CDM has been used for implementing bilateral strategies and unilateral (non-market) actions for instance in India ( [[#Phillips--2013|Phillips and Newell 2013]] ), hence arguably covering all the mechanisms now included in Article 6 of the Paris Agreement. As we describe in [[#14.3.3.1|Section 14.3.3.1]] , below, ''ex post'' evaluation of the Kyoto market mechanisms, in particular the CDM, have been at best mixed. However, Article 6 goes beyond the project-based approach followed by the CDM, as hinted by the emerging landscape of activities based on Article 6 ( [[#Greiner--2020|Greiner et al. 2020]] ), such as the bilateral treaty signed under the framework of Article 6 in October 2020 by Switzerland and Peru ( [[#14.4.4|Section 14.4.4]] ).

This experience from the CDM is relevant to the implementation of Article 6 (4) of the Paris Agreement. It addresses a number of specific types of cooperative approaches, including those involving the use of internationally transferred mitigation outcomes (ITMOs) towards NDCs, a ‘mechanism to contribute to mitigation and support sustainable development’, and a framework for non-market approaches such as many aspects of REDD+.

Article 6.1 recognises the role that cooperative approaches can play, on a voluntary basis, in implementing Parties’ NDCs ‘in order to allow for higher ambition’ in their mitigation actions and to promote sustainable development and environmental integrity. Article 6.2 indicates that ITMOs can originate from a variety of sources, and that Parties using ITMOs to achieve their NDCs shall promote sustainable development, ensure environmental integrity, ensure transparency, including in governance, and apply ‘robust accounting’ in accordance with Conference of the Parties serving as the Meeting of the Parties to the Paris Agreement (CMA) guidance to prevent double counting. While this provision, unlike Article 17 of the Kyoto Protocol, does not create an international carbon market, it enables Parties to pursue this option should they choose to do so, for example, through the linking of domestic or regional carbon markets ( [[#Marcu--2016|Marcu 2016]] ; [[#Müller--2019|Müller and Michaelowa 2019]] ). Article 6.2 could also be implemented in other ways, including direct transfers between governments, linkage of mitigation policies across two or more Parties, sectoral or activity crediting mechanisms, and other forms of cooperation involving public or private entities, or both ( [[#Howard--2017|Howard 2017]] ).

Assessments of the potential of Article 6.2 generally find that ITMOs are likely to result in cost reductions in achieving mitigation outcomes, with the potential for such reductions to enhance ambition and accelerate Parties’ progression of mitigation pledges across NDC cycles ( [[#Fujimori--2016|Fujimori et al. 2016]] ; [[#Gao--2016|Gao et al. 2016]] ; [[#Mehling--2019|Mehling 2019]] ). However, studies applying insights from the CDM highlight environmental integrity risks associated with using ITMOs under the Paris Agreement given the challenges that the diverse scope, metrics, types and timeframes of NDC targets pose for robust accounting ( [[#Schneider--2019|Schneider and La Hoz Theuer 2019]] ) and the potential for transfers of ‘hot air’, as occurred under the Kyoto Protocol ( [[#La%20Hoz%20Theuer--2019|La Hoz Theuer et al. 2019]] ). These studies collectively affirm that robust governance on accounting for ITMOs, and for reporting and review, will be critical to ensuring the environmental integrity of NDCs making use of them ( [[#Mehling--2019|Mehling 2019]] ; [[#Müller--2019|Müller and Michaelowa 2019]] ).

Article 6.4 concerns the mitigation mechanism, with some similarities to the Kyoto Protocol’s CDM. Unlike the CDM, there is no restriction on which Parties can host mitigation projects and which Parties can use the resulting emissions reductions towards their NDCs ( [[#Marcu--2016|Marcu 2016]] ). This central mechanism will operate under the authority and guidance of the CMA, and is to be supervised by a body designated by the CMA ( [[#Marcu--2016|Marcu 2016]] ).

The Article 6.4 central mechanism is intended to promote mitigation while fostering sustainable development. The decision adopting the Paris Agreement specifies experience with Kyoto market mechanisms as a basis for the new mitigation mechanism ( [[#UNFCCC--2016a|UNFCCC 2016a]] , para. 37(f)). Compared with the CDM under the Kyoto Protocol, the central mechanism has a more balanced focus on both climate and development objectives, and a stronger political mandate to measure sustainable development impact and to verify that the impacts are ‘real, measurable, and long-term’ ( [[#Olsen--2018|Olsen et al. 2018]] ). There are also opportunities to integrate human rights into the central mechanism ( [[#Obergassel--2017b|Obergassel et al. 2017b]] ; [[#Calzadilla--2018|Calzadilla 2018]] ). It is further subject to the requirement that it must deliver ‘an overall mitigation in global emissions’, which is framed by the general objectives of Article 6 for cooperation to enhance ambition ( [[#Kreibich--2018|Kreibich 2018]] ).

Negotiations over rules to operationalise Article 6 have thus far proven intractable, failing to deliver both at COP24 in Katowice in 2018, where the rest of the Paris Rulebook was agreed, and in COP25 in Madrid in 2019. Ongoing points of negotiation have included: whether to permit the carryover and use of Kyoto CDM credits and assigned amount units into the Article 6.4 mechanism, whether to impose a mandatory share of proceeds on Article 6.2 mechanism to fund adaptation, like for Article 6.4; and whether and how credits generated under Article 6.4 should be subject to accounting rules under Article 6.2 ( [[#Michaelowa--2020a|Michaelowa et al. 2020a]] ).

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