RELEASE: First four Article 6 country evaluations sobering

The use of international carbon credits by governments to meet their climate targets under the Paris Agreement's Article 6 has the potential to undermine progress in climate action, the Climate Action Tracker said today.

Launching its Article 6 assessment series, the CAT has undertaken its first qualitative assessments of the carbon credit arrangements under Article 6 for four countries: Switzerland, Japan, Brazil and Kenya. The results so far are sobering.

The CAT has set out its policy on the use of carbon credits under Article 6: they should first create climate action that is additional to current plans - they should raise climate ambition; they should be equitable - and transparent.

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"The Paris Agreement requires Article 6 activities to increase climate action, and not replace it at home. Therefore, buyer countries should only count carbon credits under Article 6 towards their targets if their domestic climate target is in line with the 1.5˚C limit and they have delivered sufficient climate finance to developing countries. This is certainly not the case for Switzerland or Japan," said Janna Hoppe, CAT Article 6 lead, of NewClimate Institute.

"This is not what we would call responsible use of Article 6."

"Equally, developing countries like Brazil and Kenya - who are the host - or seller countries of carbon credits, should make sure they can deliver on ambitious domestic emission reductions before they can sell credits," she said.

Article 6 creates the framework that allows governments to support emission reduction or removal activities abroad and count those reductions towards their own targets, or Nationally Determined Contributions (NDCs), through internationally coordinated accounting. Article 6.1 of the Paris Agreement provides the basis for countries to cooperate to allow for higher ambition in mitigation and more resources for adaptation. In practice, this is not always the case as the CAT has found in these first four evaluations.

The CAT has warned of a real risk Article 6 poses to overall progress in climate ambition. For rich countries, there is a real risk that engagement in Article 6 delays domestic emissions reductions.

For developing countries, the risk is that they sell easy-to-abate emission reductions to rich countries, leaving them with more difficult and costly emission reduction challenges at home to meet their own target.

The CAT set out a series of other concerns in its full briefing here.

Summaries of country evaluations:

• Switzerland plans to meet a third of its 2030 emissions reduction target through Article 6 projects, totalling around 30 million tonnes over the current NDC period (2021-2030). As its domestic target is not 1.5˚C compatible, this does not constitute a ‘responsible use’ of Article 6. In addition, Switzerland relies primarily on Article 6.2, which has very few environmental and social safeguards. It is however positive that the Swiss government excludes activities that pose the largest risks to permanence or integrity.
• Japan intends to buy a total of 100 million credits until 2030 and 200 million credits until 2040. However, as its domestic target is not 1.5˚C compatible, this does not constitute a ‘responsible use’ of Article 6. Japan’s main engagement with Article 6 is under Article 6.2, where there are no clear environmental or social safeguards. Furthermore, Japan has not published additional safeguard standards that would guarantee the integrity of the projects.
• Brazil intends to sell carbon credits under Article 6 of the Paris Agreement. However, there is little information on whether the government has assessed the impacts of selling carbon credits on the fulfilment of its climate target (NDC) and its ability to ratchet up its own domestic climate action. Under its current plans it could end up selling 200 million tonnes of emission reductions in 2035 alone, rather than counting them toward its own domestic target. Currently, however, there are no projects in the pipeline.
• Kenya intends to sell emission reductions under Article 6, but it is unclear whether such cooperation would lead to additional mitigation outcomes beyond its NDC. The government has provided insufficient information, and there is a real risk that selling low-cost or non-additional mitigation options will leave Kenya with more costly options for domestic mitigation. While its regulatory framework does not include a grievance or complaints mechanism, it does include stakeholder consultation and mandatory benefit sharing for local communities.

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