Market Mechanisms in the Paris Agreement – Differences and Commonalities with Kyoto Mechanisms Discussion Paper

The document provides a detailed comparative analysis between the Kyoto Protocol's flexibility mechanisms (CDM, JI, and IET) and the emerging frameworks under Article 6 of the Paris Agreement (specifically Articles 6.2 and 6.4). It examines differences in purpose, governance, and accounting, highlighting the shift from a bifurcated system of Annex I and non-Annex I countries to a universal application for all Parties. The paper emphasizes the need for 'robust accounting' and 'environmental integrity' to avoid double counting and the transfer of 'hot air', while outlining critical unresolved questions for UNFCCC negotiations regarding the nature of internationally transferred mitigation outcomes (ITMOs) and the scope of eligible activities.

• The Kyoto Protocol's mechanisms were divided by country group: the Clean Development Mechanism (CDM) was for non-Annex I countries, while Joint Implementation (JI) and International Emissions Trading (IET) were restricted to Annex I countries. In contrast, Article 6 of the Paris Agreement allows all countries to participate in both the cooperative approaches of Article 6.2 and the mechanism under Article 6.4.
• Article 6.2 allows for 'internationally transferred mitigation outcomes' (ITMOs) to be used toward NDCs, but it remains undecided whether these will be issued as formal units in registries or simply reported as amounts for 'corresponding adjustments'.
• The mechanism under Article 6.4 is structured as a crediting mechanism with a dual objective of supporting mitigation and sustainable development, requiring that benefits be 'real, measurable, and long-term' and that additionality is ensured.
• Environmental integrity in international transfers is threatened when a country's NDC target is above its business-as-usual (BAU) emissions, as there is no incentive to ensure the integrity of the outcomes being sold, potentially leading to the transfer of 'hot air'.
• To prevent double counting, Article 6.2 requires 'robust accounting' through 'corresponding adjustments' for emissions and removals. This differs from the Kyoto Protocol, which adjusted the emissions budget (assigned amount) of the country.
• Governance of Article 6.2 is primarily Party-driven, with a focus on transparency and environmental integrity, whereas Article 6.4 is a centralized UNFCCC mechanism under the authority and guidance of the CMA and supervised by a designated body.
• The Paris Agreement introduces a new emphasis on adaptation in Article 6.1, which may be operationalized through the 'sustainable development' element or via shares of proceeds from the Article 6.4 mechanism directed toward vulnerable developing country Parties.

APA

Schneider, L., Broekhoff, D., Cames, M., Healy, S., Füssler, J., & Theuer, S. L. H. (2016). Market Mechanisms in the Paris Agreement – Differences and Commonalities with Kyoto Mechanisms Discussion Paper. Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/Climate/DEHSt-2016-Market-mechanisms-Paris-Agreement-Kyoto-Protocol.pdf

Chicago

Schneider, Lambert, Derik Broekhoff, Martin Cames, Sean Healy, Jürg Füssler, and Stephanie La Hoz Theuer. Market Mechanisms in the Paris Agreement – Differences and Commonalities with Kyoto Mechanisms Discussion Paper. Stockholm Environment Institute, 2016. https://www.sei.org/mediamanager/documents/Publications/Climate/DEHSt-2016-Market-mechanisms-Paris-Agreement-Kyoto-Protocol.pdf.

Wikipedia

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BibTeX

@techreport{schneider2016market, author = {Schneider, Lambert and Broekhoff, Derik and Cames, Martin and Healy, Sean and Füssler, Jürg and Theuer, Stephanie La Hoz}, title = {{Market Mechanisms in the Paris Agreement – Differences and Commonalities with Kyoto Mechanisms Discussion Paper}}, institution = {Stockholm Environment Institute}, year = {2016}, month = oct, url = {https://www.sei.org/mediamanager/documents/Publications/Climate/DEHSt-2016-Market-mechanisms-Paris-Agreement-Kyoto-Protocol.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }