International transfers under Article 6 in the context of diverse ambition of NDCs

This research paper examines the risk of "hot air" in international carbon markets under Article 6 of the Paris Agreement, where countries with unambitious NDC targets could transfer credits without actual emission reductions. The authors analyze relative and absolute limits on transfers, the importance of unit quality, and the risks of carry-over provisions, recommending a combination of historical-based relative limits and international oversight to safeguard environmental integrity.

• A significant risk to environmental integrity is the presence of "hot air" in current NDC targets, where some countries have mitigation targets that allow for higher emissions than business-as-usual (BAU) projections. The study estimates that the volume of this hot air globally is similar in magnitude to the total mitigation pledged by countries with targets more stringent than BAU.
• The transfer of hot air as ITMOs or its carry-over to future targets could increase cumulative aggregated global greenhouse gas emissions compared to achieving targets without transfers. Additionally, it may create a perverse incentive for countries to set less ambitious future NDC targets to gain economic benefits from transfers.
• The authors propose relative limits on international transfers to prevent hot air. One specific option, proposed by Brazil, suggests limits based on average historical emissions, which would restrict ITMO transfers to countries on a decreasing emissions pathway. This approach could prevent nearly all hot air in current NDCs but is challenging because most countries currently have increasing emissions trends.
• Absolute limits on international transfers are simple to implement and provide ex ante certainty, but they are applied bluntly to all countries regardless of risk. Road-testing indicates that a 1% absolute limit would prevent approximately 90% of hot air from being transferred, though very low limits might hinder legitimate transfers driven by the private sector.
• To promote unit quality, the study suggests several international rules: requiring countries to report on environmental integrity for international review, providing international guidance on mechanism design, and implementing an international approval process for mechanisms similar to the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).
• The study warns that carry-over provisions (transferring overachievement from one period to the next), while providing flexibility, pose serious risks of increasing cumulative GHG emissions and entrenching low ambition. The authors suggest that Parties might consider not introducing carry-over provisions at all.
• Road-testing of various relative limit options across 17 countries showed that no single tested approach reliably prevented hot air transfers for all countries while simultaneously allowing transfers resulting from actual mitigation action.

APA

Theuer, S. L. H., Schneider, L., Broekhoff, D., & Kollmuss, A. (2017). International transfers under Article 6 in the context of diverse ambition of NDCs. Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/SEI-2017-WP-international-transfers.pdf

Chicago

Theuer, Stephanie La Hoz, Lambert Schneider, Derik Broekhoff, and Anja Kollmuss. International transfers under Article 6 in the context of diverse ambition of NDCs. Stockholm Environment Institute, 2017. https://www.sei.org/mediamanager/documents/Publications/SEI-2017-WP-international-transfers.pdf.

Wikipedia

{{cite report |last1=Theuer |first1=Stephanie La Hoz |last2=Schneider |first2=Lambert |last3=Broekhoff |first3=Derik |last4=Kollmuss |first4=Anja |title=International transfers under Article 6 in the context of diverse ambition of NDCs |publisher=Stockholm Environment Institute |date=November 2017 |url=https://www.sei.org/mediamanager/documents/Publications/SEI-2017-WP-international-transfers.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{theuer2017international, author = {Theuer, Stephanie La Hoz and Schneider, Lambert and Broekhoff, Derik and Kollmuss, Anja}, title = {{International transfers under Article 6 in the context of diverse ambition of NDCs}}, institution = {Stockholm Environment Institute}, year = {2017}, month = nov, url = {https://www.sei.org/mediamanager/documents/Publications/SEI-2017-WP-international-transfers.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }