Revision of Article 6 on climate targets

Islamabad:

In the global fight against climate change, it has become abundantly clear that public resources are not sufficient to finance developing countries’ NDCs.

Most emission reduction activities must be financed and implemented by the private sector. Appropriate financing approaches are therefore required – and this is where Article 6 of the Paris Agreement stands out as a key mechanism in the global fight against climate change.

Article 6 is designed to transform international climate action by facilitating the trading of emission reduction credits between countries. This strategy not only aims to reduce carbon but also supports developing countries to achieve their climate goals. Article 6 introduces the concept of “Internationally Transferable Mitigation Outcomes” (ITMOs), under which countries can reduce greenhouse gas (GHG) emissions by investing in projects that reduce emissions in other countries.

However, these projects must be ‘real’, ‘verified’ and ‘additional’, requiring a rigorous approval process before they can be listed, underscoring the need for international cooperation and substantial capacity building for countries like Pakistan. But what is Article 6 and how does it help a country achieve its Nationally Determined Contribution (NDC) targets?

Article 6 creates a cooperative framework for nations and private organizations to participate in climate change mitigation. It identifies and encourages opportunities for verifiable emission reductions, attracts funding to implement them and enables cooperation between countries and other groups to carry out and benefit from these activities. Within Article 6, there are three tools that countries can draw on: Article 6.2 allows countries to exchange mitigation results bilaterally and report their trades and use them for their NDCs.

Article 6.4 establishes a new UNFCCC mechanism for validating, verifying and issuing high-quality carbon credits, and Article 6.8 provides opportunities for countries to work together to achieve their NDCs without relying on carbon markets. In practice, Article 6 partnerships can take several forms. For example, under Article 6.2, Country A may sell excess carbon reductions from renewable energy projects to Country B, helping it meet its NDC targets.

Article 6.4 allows a company in Country C to support reforestation in Country D, resulting in carbon credits to be sold on the international market to offset emissions. In addition, Article 6.8 allows country E to share its energy efficiency program with others, promoting non-market cooperation. However, while this mechanism has a lot of potential, its complexity requires significant capacity building and detailed needs assessment, which can be difficult for countries with limited resources.

Reading Agency for identifying climate change issues

Countries are beginning to prepare for Article 6 ‘readiness’ to ensure they have all the necessary capacities, systems and institutional frameworks to engage in international cooperation fairly and transparently.

This preparedness is crucial as it strengthens national efforts by incentivizing private sector participation in global carbon reduction initiatives, providing a structured pathway to finance and cost-effectively implement emission reduction projects across borders.

Countries such as Japan and Switzerland have created frameworks for purchasing ITMOs and integrating them into their NDCs, demonstrating the practical applications of collaborative climate action. In this context, Support for Readiness for Article 6 Cooperation (SPAR6C) is emerging as a critical initiative, particularly for countries such as Pakistan, which are ready to leverage Article 6 mechanisms to accelerate their climate action and the sustainable development goals.

Funded by the German Federal Ministry for Economic Affairs and Climate Action (BMWK), through the German government’s International Climate Initiative (IKI) and led by the Global Green Growth Institute (GGGI), SPAR6C operates with a consortium of partners , including Carbon Limits. GFA Consulting, Kommunalkredit Public Consulting and the United Nations Environment Program for the Copenhagen Climate Centre.

It is a five-year €20 million program implemented in Pakistan, Zambia, Colombia and Thailand and is designed to help them navigate and leverage the mechanisms outlined in Article 6 of the Paris Agreement, enabling international cooperation on coal. markets. The initiative aims to demystify the complex processes associated with Article 6, making it easier to understand and apply in these different geopolitical landscapes.

The integrated program includes six interrelated work packages: four in-country programs (focusing on medium- and long-term emissions planning, governance frameworks and development of mitigation activities) and two global (Community of Practice for Article 6 Implementing Countries and Article 6 Toolkit) . By encouraging knowledge sharing and promoting the implementation of innovative climate solutions, SPAR6C is dedicated to strengthening national climate ambitions and catalyzing investment in greenhouse gas mitigation, paving the way for a more sustainable and resilient global community.

For Pakistan, SPAR6C is even more important. The country faces a formidable climate challenge, with a financial gap estimated at $101 billion just for its energy transition. Pakistan’s ambitious target of reducing greenhouse gas emissions by 50% by 2030 highlights the urgent need to mobilize significant investment in greenhouse gas mitigation projects. Here, SPAR6C plays a central role by catalyzing investment and laying the groundwork for ITMO trade with collaborative approaches, effectively turning Article 6 challenges into opportunities for national development and global environmental benefits.

Additionally, SPAR6C’s efforts extend beyond financial mobilization. By strengthening the capacity of national stakeholders to prepare and approve Article 6 transactions, the initiative enables Pakistan to strengthen its capacity for climate action. This is complemented by the development of key tools and guidelines for effective participation in Article 6 initiatives, promoting a deeper understanding and engagement with the international carbon market.

Another innovative strategy introduced by SPAR6C is with the Community of Practice for Article 6 Implementing Countries (CoP-ASIC). This initiative is set to revolutionize the way Article 6 is implemented through a pioneering ‘learn by doing’ strategy.

By engaging postgraduate students in a Research Mentorship Program (RMP) and facilitating their entry into sectors such as government, NGOs and the private sector, CoP-ASIC creates a vibrant platform for the exchange of Article 6 strategies and knowledge worldwide.

This initiative, particularly beneficial to Pakistan, seeks to close the gap between academia and industry, fostering a new generation of experts in carbon pricing and strengthening national capacity to participate in the carbon market.

CoP-ASIC’s annual workshops and financial support for student research underscore its commitment to developing sustainable climate change strategies in Pakistan and beyond. For the inaugural batch, RMP received 77 applications from the four SPAR6C program countries, from which eight finalists were selected to receive research support, followed by funded internships at renowned international organizations. The maximum number of applications came from Pakistan at 37, showing significant interest in the program.

Within the global discourse around climate change, there is no second opinion that cooperation across borders, sectors and industries is the cornerstone of effective climate action. An essential step towards strengthening this spirit of cooperation was taken during COP28 in Pakistan’s pavilion with the issuance of the Readiness and Needs Assessment (RNA), which identifies critical gaps and offers a pathway for the implementation of Article 6 among States -members of SPAR6C.

The author is a sustainability and climate risk professional, passionate about sustainable energy consumption and climate change

Published in The Express Tribune, April 1^St2024.

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