FAQ: Fixing Article 6 Carbon Markets at COP29

The document analyzes the implementation of Article 6 of the Paris Agreement, focusing on the distinctions between the bilateral/multilateral trades of Article 6.2 and the UN-overseen global market of Article 6.4. It highlights critical loopholes, including the risk of double counting in aviation offsetting (CORSIA), the lack of oversight for Article 6.2 trades, and the potential for 'junk' credits from the Clean Development Mechanism (CDM) to transition into the new system. The author argues for stricter authorization processes, mandatory transparency, and a 'firewall' between carbon markets and the new climate finance package being negotiated at COP29.

• Article 6.2 allows countries to trade Internationally Transferred Mitigation Outcomes (ITMOs) through cooperative approaches, but currently lacks meaningful oversight. The review team's power was weakened at COP27, preventing it from reviewing the 'adequacy or appropriateness' of cooperative approaches or their associated activities.
• Double counting remains a risk, particularly for ITMOs used under the CORSIA aviation offsetting scheme. Because many countries use an 'averaging' approach for corresponding adjustments over their NDC period rather than per credit, some ITMOs may not have a corresponding adjustment, leading to double counting.
• The transition of Clean Development Mechanism (CDM) projects to the Article 6.4 mechanism poses a risk to environmental integrity. While a worst-case scenario of 2.8 billion credits was avoided, it is estimated that 900 million credits could still be rebranded as A6.4ERs between 2021 and 2025 using outdated CDM methodologies.
• Article 6.4 establishes mandatory levies to support climate adaptation and global mitigation. Specifically, 5% of all issued credits must be transferred to the Adaptation Fund, and 2% of all A6.4ERs must be cancelled to achieve overall mitigation in global emissions (OMGE).
• There is a significant transparency loophole in Article 6.2 that allows countries to classify trade information as 'confidential' without providing justification, potentially hiding poor-quality credits or human rights failures from public scrutiny.
• Emission avoidance does not qualify for generating carbon credits under either Article 6.2 or 6.4, a point re-confirmed in June 2024 to prevent the issuance of 'hot air credits' based on unrealistic assumptions, such as a company claiming to pump less oil.

APA

Crook, J. (2024). FAQ: Fixing Article 6 Carbon Markets at COP29. Carbon Market Watch. https://carbonmarketwatch.org/2024/11/06/faq-fixing-article-6-carbon-markets-at-cop29/

Chicago

Crook, Jonathan. FAQ: Fixing Article 6 Carbon Markets at COP29. Carbon Market Watch, 2024. https://carbonmarketwatch.org/2024/11/06/faq-fixing-article-6-carbon-markets-at-cop29/.

Wikipedia

{{cite report |last1=Crook |first1=Jonathan |title=FAQ: Fixing Article 6 Carbon Markets at COP29 |publisher=Carbon Market Watch |date=6 November 2024 |url=https://carbonmarketwatch.org/2024/11/06/faq-fixing-article-6-carbon-markets-at-cop29/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{crook2024faq, author = {Crook, Jonathan}, title = {{FAQ: Fixing Article 6 Carbon Markets at COP29}}, institution = {Carbon Market Watch}, year = {2024}, month = nov, url = {https://carbonmarketwatch.org/2024/11/06/faq-fixing-article-6-carbon-markets-at-cop29/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }