Article 6: A loophole that risks undermining the Paris Agreement

The Paris Agreement is already a “fraud”. Carbon trading will make it worse.

PHOTO Credit: Zero Carbon Analytics.

Since 2010, the UN Environment Programme has published an Emissions Gap Report. The reports provide, “an annual, independent science-based assessment of the gap between the pledged greenhouse gas (GHG) emissions reductions and the reductions required to align with the long-term temperature goal of the Paris Agreement”.

Since 2021, the Emissions Gap Report have featured catchy titles, each of them highlighting the failure to address the climate crisis:

• 2021: The Heat Is On: A world of climate promises not yet delivered

• 2022: The Closing Window: Climate crisis calls for rapid transformation of societies

• 2023: Broken Record: Temperatures hit new highs, yet world fails to cut emissions (again)

In 2022, global emissions set a new record of 57.4 GtCO₂e, an increase of 1.2% over 2021. G20 countries are responsible for 76% of global emissions. G20 emissions also increased by 1.2% in 2022. In December 2023, research commissioned by Oxfam found that G20 countries were failing in both ambition and action to limit global heating to 1.5°C.

In the eight years since the Paris Agreement, governments have failed to take meaningful action. 2023 was the warmest year on record. September was more than 0.5°C warmer than the previous record.

The main problem with the Paris Agreement, as climate scientist James Hansen pointed out at the time is that it is “a fraud really, a fake”. Countries set their own targets, and when they miss those (inadequate) targets, nothing happens. “There’s no action, just promises,” Hansen said in 2015.

The first Global Stocktake took place at COP28 in Dubai in December 2023. Governments recognised the need for “transitioning away from fossil fuels in energy systems”. But as Amnesty International notes,

The final text of the Global Stocktake gives the fossil fuel industry a broad license to carry on conducting business as usual, polluting, land grabbing, wrecking the climate, degrading the environment and eroding people’s human rights.

The Paris Agreement and carbon trading

This catastrophically bad situation is only likely to get worse when the Paris Agreement’s loophole comes into play: carbon trading. This loophole threatens to completely undermine any benefits that might come out of the Paris Agreement.

So far, governments have failed to reach agreement on the details of Article 6, which includes two different mechanisms for carbon trading.

After the Paris Agreement governments of the Global South hoped that Article 6 would bring financing to help them meet the targets in their Nationally Determined Contributions.

But since 2015, negotiations on Article 6 have focussed on the rules needed to implement carbon trading under the UNFCCC system. While some progress was made at COP26 in Glasgow, negotiations have continued in the past two years to finalise the rules.

And eight years after the Paris Agreement, COP28 became yet another UNFCCC meeting that failed to reach agreement on the carbon trading rules.

This post gives a brief explanation of Article 6 and why it is so important to carbon trading.

Over the next 12 months, REDD-Monitor will produce a series of posts about Article 6 highlighting why carbon trading is a false solution to the climate crisis and why it must be scrapped if we are to address the climate crisis.

Article 6

Article 6 consists of nine paragraphs on pages 7 and 8 of the Paris Agreement:

Paragraphs 6.2 and 6.4 relate to two different types of carbon trading deals and paragraph 6.8 allows for non-market cooperation:

• Article 6.2 allows for the trade of internationally transferable mitigation outcomes (ITMOs) between countries. If one country reduces its emissions below the target in its Nationally Determined Contribution it can sell ITMOs to another country.

• Article 6.4 will create a new global carbon trading mechanism. It will be overseen by a UN organisation called the “Article 6.4 Supervisory Body”. This body will be responsible for approving projects. Once approved, project developers will be able to issue UN-recognised credits, which will be called A6.4ERs (Article 6.4 emission reductions).

• Article 6.8 recognises non-market approaches to helping countries meet their nationally determined contributions.

At COP28, governments failed to reach agreement on Article 6.2 largely because the US and other governments were pushing for the regulation of trade in ITMOs to be determined by the governments involved. The EU and other governments argued for global guidelines and standards that would apply consistently to all Article 6.2 carbon deals.

Even without the final agreement of the rules, several governments, including Switzerland, Japan, and Singapore, have already signed a series of Article 6.2 deals to trade ITMOs.

Similarly, no agreement was reached on Article 6.4 at COP28 because some governments wanted to weaken the methodological guidance, while others wanted to strengthen safeguards.

An agreement was reached at COP28 to complete the UNFCCC web-based platform for Article 6.8. It should be fully operational before June 2024. During COP28, Bolivia complained that the World Bank and other International Finance Institutions were attempting to financialise the non-market approach.

It is not clear how agreements under Article 6.8 will be tracked and kept out of carbon markets. As Tamra Gilbertson and Tom BK Goldtooth point out, the web-based platform “will not include a tracking system, and will be based on financial backers with no transparency or accountability”.

No mention of “carbon trading”, “carbon credits”, or “markets”

Article 6 doesn’t actually mention carbon trading. Instead it refers to “voluntary cooperation”. Similarly, carbon credits have become “internationally transferred mitigation outcomes”. And the word “markets” is nowhere to be seen.

Nevertheless, the purpose of Article 6.2 is to generate carbon credits and trade them. The purpose of Article 6.4 is to create UN-recognised carbon credits that will be traded under a global UN carbon market.

As Luis Arce, President of Bolivia, pointed out during COP26,

“The solution to the climate crisis is not going to be achieved with more green capitalism and more global carbon markets. The solution is civilizational change, to move towards an alternative model to capitalism the concept of living well together in harmony with Mother Earth.”

Gilbertson and Goldtooth note that, “Any and all carbon pricing and offsets programs allow polluting industries to continue polluting. Article 6 is no exception.” They write that,

The UNFCCC does not only occur at the end of the year. The decisions, designs, concepts, agreements are ongoing. However, many Indigenous Peoples do not have resources or access to engage in these decisions. Yet, it is important to pay attention especially in the next two years of implementation of Article 6. We cannot wait until COP 30 in Brazil to resist carbon markets in Article 6.

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