The Bonn Climate Change Conference saw limited progress resolving open issues related to Article 6 of the Paris Agreement, which aims to incentivize international cooperation in mitigating climate change through carbon credit market mechanisms and non-market mechanisms. Many issues remain unresolved as we approach COP29 in November 2024.
Article 6 of the Paris Agreement
Despite having hosted four negotiations and five side events on Article 6 of the Paris Agreement,1 the Bonn Climate Change Conference fell short of consensus on resolving open issues on the functioning of an international carbon credit market under the Paris Agreement. Countries failed to come to agreement on issues relating to the extent to which emission avoidance can be used to generate carbon credits, what components of Article 6's carbon credit systems should be centralized, and other relevant points, which were highlighted in our previous alert.2
Article 6 of the Paris Agreement introduces mechanisms for international collaboration to achieve climate goals through both market (Articles 6.2 and 6.4) and non-market (Article 6.8) approaches.
Article 6.2 enables countries to meet their climate targets, known as Nationally Determined Contributions ("NDCs"), through bilateral or multilateral cooperation agreements. This facilitates direct country-to-country trading of emission reduction credits, referred to as Internationally Transferred Mitigation Outcomes ("ITMOs").
Article 6.4 sets up a framework for a centralized international carbon market, facilitating the trading of emission credits among countries under the supervision of a designated Supervisory Body. This mechanism is designed to be more structured and regulated compared to the flexible approaches of Article 6.2. Unlike the mechanism in Article 6.2 that allows countries to exchange ITMOs directly through cooperation agreements, Article 6.4 provides a system of oversight to ensure that any emission credits (the so-called "A6.4ERs"), which can originate from public or private projects, and are traded within the international carbon market, are validated, verified, and issued according to the framework established by the provisions of Article 6.4. The A6.4ERs can then be traded or used to meet NDCs.
In contrast, Article 6.8 promotes non-market approaches ("NMA") for countries to jointly address climate challenges through initiatives, such as mitigation, adaptation, and technology transfer, thereby avoiding reliance solely on market mechanisms.
The main takeaways from the Bonn meetings are touched upon below as we head towards the 29th session of the Conference of the Parties ("COP") to the United Nations Framework Convention on Climate Change, also referred to as COP29.
Main takeaways on Article 6.2 of the Paris Agreement
According to the draft conclusions presented,3 the Subsidiary Body for Scientific and Technological Advice ("SBSTA") concluded discussions on common nomenclatures for specific information attributes required for the reporting of annual information. The SBSTA also tasked the Secretariat with developing and maintaining a list of common nomenclatures to be used in the centralized accounting and reporting platform. The SBSTA further concluded discussions on modalities for reviewing confidential information, recommended that the COP serving as the Meeting of the Parties to the Paris Agreement ("CMA") conclude this matter, and mandated that the Secretariat establish procedures and a code of conduct for handling confidential information.
Substantive progress was mainly postponed. The SBSTA (i) noted the ongoing work on whether ITMOs could include emission avoidance and agreed to revisit this in 2028, (ii) requested a workshop to be held before the 61st sessions of the SBSTA ("SBSTA 61") (November 2024) to discuss authorization, electronic formats, sequencing, first transfers, and registry issues, and (iii) agreed to continue working on the draft text for further guidance on cooperative approaches under Article 6.2, with the goal of recommending a decision at the sixth meeting of the COP serving as the Meeting of the Parties to the Paris Agreement ("CMA 6") in November 2024.
Main takeaways on Article 6.4 of the Paris Agreement
The draft conclusions on Article 6.4 of the Paris Agreement4 indicate some progress, but the operationalization of a centralized carbon market has not been resolved.
Nevertheless, the SBSTA (i) noted the work undertaken on the Supervisory Body's responsibilities for the Article 6.4 mechanism, the national arrangements used by host Parties to implement the mechanism, and the inclusion of emission avoidance and conservation enhancement in Article 6.4 activities, agreeing to revisit these matters in 2028, (ii) requested a hybrid workshop before SBSTA 61 to discuss carbon credit authorization and the mechanism registry, (iii) agreed to continue working on the draft text on further guidance on the rules, modalities, and procedures for the mechanism established by Article 6.4 with the goal of recommending a decision at CMA 6, and (iv) invited Parties to contribute to the trust fund for operationalizing the Article 6.4 mechanism.
Main takeaways on Article 6.8 of the Paris Agreement
The schedule released ahead of the Bonn meetings included two negotiation sessions on Article 6.8 of the Paris Agreement.
Concretely, the web-based NMA Platform is taking shape, and Parties have been invited to (i) notify the Secretariat of their National Focal Point5 to access the NMA Platform, (ii) submit their non-market-based approaches, and (iii) provide information on the financial, technological, and capacity-building support available for identifying, developing, and implementing NMAs. However, concrete initiatives under Article 6.8 to boost the Paris goals were not particularly highlighted in the conclusions presented.6
Additionally, the SBSTA called for an in-session workshop and roundtable discussions at the sixth meeting of the Glasgow Committee on NMAs in November 2024. The SBSTA also requested the inclusion of links to relevant support bodies on the NMA Platform and the integration of NMA-related activities into the broader capacity-building program for Article 6. Submissions on the progress of the first phase of the work program and recommendations for the second phase were requested by August 31, 2024.
Roadmap to COP29
The groundwork for implementing Article 6 of the Paris Agreement was laid in Bonn, with COP29 lead negotiator Yalchin Rafiyev highlighting the full functionality of Article 6 as a key point for negotiations in Baku.7
However, achieving consensus among Parties on most of the key Article 6 issues proved to be elusive, especially concerning market-based approaches for achieving NDCs, because disagreements persist on whether the market-based systems should be centralized or decentralized. Nevertheless, the Parties' discussion of the NMA Platform gained momentum, promising to advance non-market solutions in the near future.
Marta Teixeira Pires (White & Case, Legal Trainee, Brussels) contributed to the development of this publication.
1 Specifically, the negotiations on: (i) the ‘work programme under the framework for non-market approaches referred to in Article 6, paragraph 8, of the Paris Agreement and in decision 4/CMA.3 – Contact Group SBSTA 13 (c)’; (ii) the ‘guidance on cooperative approaches referred to in Article 6, paragraph 2, of the Paris Agreement and in decision 2/CMA.3 – Informal consultation SBSTA 13 (a)’; (iii) the ‘rules, modalities and procedures for the mechanism established by Article 6, paragraph 4, of the Paris Agreement and referred to in decision 3/CMA.3 – Informal consultation SBSTA 13 (b)’; and (iv) the ‘heads of Delegation on Article 6 of the Paris Agreement’. Side events were organized on: (i) ‘UNFCCC: Enhancing Readiness for Article 6: Challenges and Opportunities’; (ii) ‘KliK Foundation, Tunisia: Cooperative approach under Article 6.2: Benefits for participating countries’; (iii) ‘Verra, GSF, Singapore: Operationalizing Article 6: A playbook for governments and crediting programmes | UNFCCC’; (iv) ‘Article 6.4 Supervisory Body: Engagement with Parties and stakeholders | UNFCCC’; and (v) ‘IETA, Nigeria, ICC: Article 6: Moving Ahead with Implementation – Advancing the Energy Transition in Nigeria & Beyond | UNFCCC’.
2 Available here.
3 Available here.
4 Available here.
5 A National Focal Point is a national entity or authority appointed by a State Party to oversee and ensure the State Party’s adherence to international agreements within its jurisdiction. The list of National Focal Points for Article 6.8 is available here.
6 Available here.
7 See keynote speech from Yalchin Rafiyev’s here.
