Article 6 of the Paris Agreement is generally known as the “markets article.” While broadly correct,
it could more properly be called the “article on international cooperation.” A number of provisions address
specific instances of cooperation that involve using internationally transferred mitigation outcomes
(ITMOs) toward meeting nationally determined contributions (NDCs), and creating a framework for
building international carbon markets and a framework for non-market approaches to international
cooperation. These provisions are as follows:
(i) Cooperative approaches that involve the use of internationally transferred mitigation
outcomes (para. 6.1). This paragraph covers the general concept that Parties may choose,
on a voluntary basis, to cooperate in the implementation of their NDCs. Article 6 is meant
to cover all existing cases of cooperation, and others that may emerge in the future. It is
important to mention that cooperation is noted, acknowledged, and recognized, rather
than approved by a body under the Paris Agreement. This reinforces the decentralized and
bottom–up nature and ethos of the Paris Agreement governance.
(ii) Cooperation through the transfer of mitigation outcomes (para. 6.2–6.3). These
paragraphs cover the specific case where Parties cooperate through the ITMOs that are
to be used toward NDCs. In the case of such cooperation, Parties need to observe the
accounting guidance from the Conference of the Parties serving as the meeting of the
Parties to the Paris Agreement (CMA). These paragraphs are not about markets, but about
a framework for accounting for transfers between Parties. What is particularly important
about this provision is that these ITMOs can be produced through any mitigation approach
(mechanism, procedure, or protocol), not necessarily operating under the authority of the
Conference of the Parties (COP). Essentially, only the Parties involved need to agree. In
these paragraphs, the Paris Agreement itself sets no limits on what constitutes an ITMO,
and this broad scope is supported by the “institutional memory” of the Paris Agreement
negotiations. Any limits that may be introduced will essentially be an additional boundary or
limitation that Parties to the Paris Agreement will need to agree on in the operationalization
of Article 6, but have no “hook” in the current text of the Paris Agreement.
(iii) Mechanism to contribute to mitigation and support sustainable development (para.
6.4–6.7). These paragraphs refer to the establishment of a mechanism that will produce
mitigation outcomes and support sustainable development, and that operates under the
authority of the COP. The mitigation outcomes produced can then be used to fulfill the NDC
of another Party. A key issue currently under debate is whether the scope of these paragraphs
is limited to a mechanism like the Clean Development Mechanism (CDM), or if it is much
broader in scope, (i.e., including programmatic and sectoral scales). The interpretation that
the new mechanism can have a broader scope seems to receive support from the historical
evolution of the text, from submissions made so far under Article 6 under the Subsidiary
Body for Scientific and Technological Advice (SBSTA) on Article 6, as well as from positions
expressed in formal and informal discussions. Another key issue under discussion is whether
or not Article 6.4 emission reductions should be treated and transferred as ITMOs under
Article 6.2. This would make Article 6.4 subject to Article 6.2 guidance.
(iv) Establishment of a framework for non-market approaches (para. 6.8–6.9). Para. 6.8
outlines the establishment of a framework for non-market approaches. What this part
of Article 6 covers is still largely undefined, although some clarity is starting to emerge.
One intended focus of attention seems to be the coordination of different non-market
