Article 6.4 of the Paris Agreement introduced a new sustainable development mechanism, designed to replace the Clean Development Mechanism (CDM) under the Kyoto Protocol. This new mechanism aims to promote emission reduction projects in developing countries, generating carbon credits that can be used by other countries to meet their climate targets.
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The following are the key aspects of Article 6.4:
a. Establishment of a supervisory body and its functions:
- A supervisory body was established to ensure the environmental, social, and transparency integrity of the mechanism. This body will oversee project activities, evaluate the methodology used to calculate emission reductions, and ensure that the requirements set out in the Paris Agreement are met.
b. Transition of CDM projects:
- Rules were defined for the transition of CDM projects to the new mechanism. Projects that meet certain criteria may continue to generate carbon credits under Article 6.4, providing continuity to ongoing mitigation efforts. The main criteria for the transition are:
- Compliance with CDM requirements: Projects must have complied with all CDM requirements during their operational period.
- Approval of the new mechanism: Projects must be re-approved under the rules of the new mechanism, which involves an additional assessment of their environmental and social performance.
- Adaptation to new methodologies: Projects may need to adapt their methodologies for calculating emission reductions to meet the requirements of the new mechanism.
- Transparency and accountability: Projects must meet the transparency and accountability requirements established in the new mechanism.
c. Cancellation of 2% of credits:
- A requirement was established to cancel 2% of the credits issued to ensure an overall net reduction in global emissions. This measure aims to prevent credits from being used to offset an increase in emissions elsewhere. By canceling a portion of the credits, the total supply of credits available in the market is reduced, which in turn makes it more difficult for countries to use these credits to offset an increase in their own emissions.
d. Financing for adaptation:
- 5% of the revenue generated by the mechanism will be allocated to finance adaptation projects in developing countries. This measure seeks to ensure that the benefits of the mechanism are distributed equitably and contribute to the climate resilience of the most vulnerable countries.
Challenges:
- Complexity: The implementation of Article 6.4 is complex and requires the collaboration of multiple stakeholders, including governments, businesses, and civil society organizations.
- Double counting: It is essential to avoid double counting of emission reductions to ensure the integrity of the system.
- Transparency: A high level of transparency is needed to ensure trust in the mechanism and prevent manipulation of carbon markets.
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