Analysis of options for determining OMGE, SOP and transition within Article 6

This report by the NewClimate Institute analyzes the quantitative impacts of Overall Mitigation in Global Emissions (OMGE), Shares of Proceeds (SOP), and the transition of Clean Development Mechanism (CDM) activities and units under Article 6 of the Paris Agreement. It evaluates how different policy choices affect global greenhouse gas (GHG) abatement, credit prices, and revenues for adaptation, specifically to inform negotiations for COP26 in Glasgow.

• Increasing the Overall Mitigation in Global Emissions (OMGE) cancellation rate leads to higher net global abatement and increased credit prices, market revenues, and project owner profits. Specifically, a 30% OMGE rate could result in approximately 800 MtCO2 of additional abatement between 2021 and 2030, which would avoid global damages estimated between $45 billion and $181 billion.
• Higher Shares of Proceeds (SOP) increase revenues for the Adaptation Fund and raise credit prices and market revenues, though they decrease project owner profits and buyer cost savings. SOP does not affect net global abatement, as host country emission increases are offset by equivalent decreases in buyer country emissions.
• When OMGE and SOP are applied together without CDM transition, global GHG abatement increases, particularly with a 30% OMGE rate. In this combination, SOP revenues increase as the higher credit price outweighs the lower quantity of credits transacted; a 5% SOP rate could generate between €2.7 billion and €4.6 billion for adaptation from 2021 to 2030, depending on OMGE rates between 2% and 30%.
• The transition of CDM units and activities poses risks to global emissions. Transitioning CP2 CERs could increase global GHG emissions by up to 320 MtCO2e if projects registered on or after 1 January 2013 are eligible. Transitioning CDM activities could increase global emissions by about 763 MtCO2e if 30% of projects transition, unless transition is limited to 'vulnerable' activities at risk of discontinuing abatement without credit revenues.
• Applying SOP and OMGE only to credits issued by the Article 6.4 Supervisory Body, while excluding ITMO transfers under Article 6.2, may undermine the intended climate mitigation and adaptation benefits of the Article 6.4 requirements.

APA

NewClimate Institute (2021). Analysis of options for determining OMGE, SOP and transition within Article 6. http://www.newclimate.org/resources/publications/analysis-of-options-for-determining-omge-sop-and-transition-within-article-6

Chicago

NewClimate Institute. Analysis of options for determining OMGE, SOP and transition within Article 6. 2021. http://www.newclimate.org/resources/publications/analysis-of-options-for-determining-omge-sop-and-transition-within-article-6.

Wikipedia

{{cite report |author=NewClimate Institute |title=Analysis of options for determining OMGE, SOP and transition within Article 6 |date=31 May 2021 |url=http://www.newclimate.org/resources/publications/analysis-of-options-for-determining-omge-sop-and-transition-within-article-6 |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{newclimateinstitute2021analysis, author = {{NewClimate Institute}}, title = {{Analysis of options for determining OMGE, SOP and transition within Article 6}}, institution = {NewClimate Institute}, year = {2021}, month = may, url = {http://www.newclimate.org/resources/publications/analysis-of-options-for-determining-omge-sop-and-transition-within-article-6}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }