Article 6 of the Paris Agreement provides for the transfer of mitigation outcomes between parties, which could then be used to meet their NDCs — the pledges that these countries have made under the agreement.
This provision could enable the creation of an international carbon market, through which these countries’ governments, and private entities, could trade emissions permits across national boundaries. This paper examines the lessons learned from the Kyoto Protocol with respect to the governance of international carbon markets, and how these lessons relate to the provisions under the Paris Agreement’s article 6.
The Paris Agreement has outlined the broad political lines of how such a market would function but provided limited specificity as to how to operationalize it. To reach an agreement in Paris, many issues were left reasonably ambiguous, and this is especially true with respect to the issue of governance of article 6. Consequently, there remain significant amounts of work to do, and many issues to negotiate.
This paper identifies issues to be decided with respect to article 6, options for dealing with them and outcomes to strive for.