Climate Warehouse Observer Node
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Approach Papers

EU parliament chambers
Country Processes and Institutional Arrangements for Article 6 Transactions

Unlike the Kyoto protocol’s clean development mechanism (CDM), Article 6.2 of the Paris Agreement is designed to allow for international cooperation in carbon markets through decentralized governance. Under this article, bilateral or plurilateral cooperation between participating parties can be established through a mutually agreed policy and governance framework and reflected in the agreement between the parties involved. This decentralized architecture requires considerably higher levels of engagement and oversight from participating parties. The context for setting institutions and approval procedures at the domestic level is fundamentally rooted in the country’s national climate strategy and their nationally determined contribution (NDC). A host country will need to establish a detailed Article 6 strategy that guides, but is not limited to, how its participation in Article 6 will help the country achieve its target. This paper forms the starting point, focusing on the institutional requirements to establish the policy and regulatory process that defines and supports the implementation of the potential activity cycle for Article 6.2 activities and transactions; identifies functions required at the national level from the host country’s perspective; and discusses different options to allocate these functions to existing or new institutions. The Article 6.2 activity cycle can build on project cycles under the Kyoto protocol, with an added requirement for the authorization and transfer of mitigation outcomes (MOs). While the entire process can be developed domestically, host countries can also choose to use international crediting programs to register projects and issue units. However, the host country will still be responsible for the Article 6.2 process of authorizing and transferring ITMOs, as well as applying corresponding adjustments. The type of arrangement that a country chooses to adopt affects the type of institutional arrangement and functions of the different bodies involved.

April 7, 2021
World Bank
Factory polluting environment
Ensuring Environmental Integrity under Article 6 Mechanisms

Ensuring environmental integrity is recognized as an important goal under Article 6. This paper examines factors that affect environmental integrity under Article 6 of the Paris Agreement, and identifies practical approaches for implementing the concept based on lessons learned from the World Bank’s pilot activities and feedback from stakeholders in pilot countries. The starting point is the commonly accepted definition that environmental integrity is ensured as long as global greenhouse gas (GHG) emissions do not increase as a result of transfers of mitigation outcomes (MOs) (when compared to the scenario where such transfers did not take place). Under the Kyoto protocol, not all countries had mitigation obligations. In contrast, the Paris Agreement requires all countries to voluntarily adopt individual targets, articulated in their nationally determined contribution (NDC). This effectively introduces a national commitment or emissions cap for the entire economy or for the sectors covered by the NDC. This means that the transfer of MOs will affect the host country’s ability to achieve its own NDC if decisions related to such transfers do not take into account the need for corresponding adjustments and the opportunity cost of making such adjustments. In this context, ensuring environmental integrity - transferring MOs without affecting the country’s ability to meet its NDC and ensuring that such transfers do not lead to an increase in global GHG emissions - requires the assessment of two aspects: (1) stringency of NDC compared to business as usual (BAU): whether the country’s emissions cap or NDC is stringent enough and its targeted GHG emissions are not higher than what will be expected under business as usual (BAU) conditions; and (2) unit quality: whether the volume of transferred MOs generated from a mitigation activity is accurately calculated by setting a stringent or conservative baseline.

April 6, 2021
World Bank

Blog Posts

Webinars

Benchmarking a Global Price for Carbon
Benchmarking a Global Price for Carbon

Putting a price on carbon, either through a domestic carbon pricing instrument or international carbon markets, will play an important role in driving innovation across sectors and facilitating an orderly transition towards low carbon by addressing market failures. While the current bottom-up development of carbon pricing and international carbon markets promote innovation, the diversity of approaches reduces transparency between climate actions and increases the complexity of market integration. This in turn reduces visibility over existing and future carbon prices, as well as acts as a barrier to making finance flow to support climate actions. In this context, the World Bank has been exploring an approach for the consolidation of carbon pricing information. A consolidated price would then be benchmarked as a “spread” against a global target price corridor that is consistent with the Paris Agreement. The objective of this webinar is to present the proposed consolidation methodology that the World Bank has developed and to discuss how it can be refined and leveraged to support multiple purposes.

December 13, 2021
World Bank
Carbon Pricing and Markets in the Asia-Pacific Webinar
Carbon Pricing and Markets in the Asia-Pacific Webinar

The purpose of this meeting was to review the state of play in Article 6 discussion and explore ongoing efforts to pilot and promote readiness for markets under the Paris Agreement in the Asia-Pacific region.

July 1, 2021
World Bank
Emerging Digital Technologies for Post-2020 Climate Markets
Emerging Digital Technologies for Post-2020 Climate Markets

Future climate markets will differ substantially from those we have today; how will they look after 2020? How can cooperation in climate markets be designed to help countries with their climate plans? The changing landscape of climate markets under the Paris Agreement resulted in a big push for innovative solutions and provide opportunities to leverage emerging technologies to support the post-2020 architecture for markets. This session will bring together different technology and climate experts to explore how innovative technology applications could support the long-term vision to develop broad, deep and liquid climate markets.

June 30, 2021
World Bank

Videos

Carbon Pricing and International Carbon Markets: Mitigation Action Protocol-thumbnail
Carbon Pricing and International Carbon Markets: Mitigation Action Protocol
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An Open Source Database to Help You Design and Develop Climate Actions-thumbnail
An Open Source Database to Help You Design and Develop Climate Actions
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Demo: Climate Warehouse Simulation II-thumbnail
Demo: Climate Warehouse Simulation II
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