Paris Agreement - Article 6

What is Article 6 in the Paris Agreement?

Article 6 of the Paris Agreement stands out as a major mechanism in promoting international cooperation to achieve sustainability goals. This part of the Agreement recognises that countries can work together more effectively to reduce greenhouse gas emissions than they could individually. This offers a framework that enables countries to meet their climate commitments through shared initiatives and innovative mechanisms, paving the way for the voluntary carbon market.

Article 6.2: International Transfers of Mitigation Outcomes (ITMOs)

Article 6.2 of the Paris Agreement introduces the concept of International Transfers of Mitigation Outcomes (ITMOs). This mechanism allows countries to meet part of their Nationally Determined Contributions by using emission reductions achieved abroad. For instance, if Germany invests in a renewable energy project in China, the emission reductions from this project can be transferred to Germany and counted towards its NDC. This mechanism relies on a robust accounting framework to avoid double-counting of emissions and ensure transparency and environmental integrity.

Article 6.4: Sustainable Development Mechanism (SDM)

Article 6.4 establishes a Sustainable Development Mechanism (SDM) similar to the Clean Development Mechanism under the Kyoto Protocol. This mechanism aims to reduce greenhouse gas emissions while promoting sustainable development. It allows public and private entities to develop projects that reduce emissions in developing countries. In return, they receive credits for the emissions reduced by these projects, which can then be used by the investing countries to meet their NDCs or sold to other countries or companies.

Article 6.8: Non-market Approaches

Article 6.8 acknowledges the importance of non-market approaches to complement the market mechanisms outlined in Articles 6.2 and 6.4. This includes a variety of cooperative efforts that do not involve the buying and selling of emissions credits. These approaches can involve direct climate financing, technology transfer, capacity building, and other forms of support that contribute to emission reductions and sustainable development.

Importance for Sustainability Managers

For sustainability managers, Article 6 offers multiple pathways to align corporate strategies with global climate goals and policy. Understanding the intricacies of ITMOs and SDM can help companies invest in projects that yield credible emissions reductions and removals abroad, while recognising the value of non-market approaches can lead to partnerships that enhance a company's sustainability impacts beyond its immediate carbon footprint.