The Supervisory Body responsible for overseeing Article 6.4 of the Paris Agreement has recently released a preliminary draft document outlining proposed methodologies for carbon reduction projects. This is a significant development as the highly anticipated climate conference, COP28, is scheduled to take place in Dubai starting from November 30th. The methodologies outlined in the draft recommendation focus on the requirements set for projects aimed at curbing greenhouse gas (GHG) emissions.
The Conference of the Parties (COP), which serves as the meeting of the Parties to the Paris Agreement (CMA), made a crucial decision during its 3rd session in Glasgow. They adopted Decision 3/CMA.3, which captures the rules, procedures, and operational framework for the mechanism established by Article 6, paragraph 4, of the Paris Agreement, commonly referred to as “the mechanism”. In line with this decision, the CMA has appointed a Supervisory Body to oversee and administer the mechanism, operating under the authority and guidance of the CMA. The Supervisory Body also works with full accountability to the COP.
The Supervisory Body comprises 12 members from Parties to the Paris Agreement and ensures a wide and fair geographical representation. The members aim for a balanced composition, with two members from each of the five United Nations regional groups, one member representing the least developed countries, and one member representing small island developing States. The newly appointed members will begin their term of service from the first meeting of the Supervisory Body this year.
The proposed methodologies put forward by the Supervisory Body emphasize several key principles and features of carbon projects. These include a cautious approach in estimating a project’s emission reductions or removals to ensure the credibility of the credits and promote greater ambition in emissions reduction efforts. The draft also suggests that the baseline for emissions reductions should evolve or lead to a downward adjustment of creditable emission reductions over time to uphold increasing environmental ambition. Stakeholder involvement throughout the methodology development process and accounting for potential uncertainties associated with the underlying data are also crucial aspects highlighted in the draft.
Demonstrating a project’s additionality is another pivotal requirement within each methodology. It requires an assessment showing that the project activity would not have taken place without the incentives from the mechanism, taking into consideration all relevant national policies, including legislation. Mechanism methodologies will also need to address project leakage, which refers to a change in GHG emissions outside the project boundary linked with the project’s activities. The draft document also touches upon non-performance and reversal aspects, such as the potential reversal of emission removals or the risk that the carbon avoided or removed might not remain so for the duration of the project. The Supervisory Body acknowledges the ongoing need to further develop guidance in these areas.
Prior to the release of the draft, some market players have provided comments. An accredited observer organization highlighted the need for an agreed definition of “removals”, specifically distinguishing between the removal of greenhouse gases (GHG) and carbon dioxide (CO2). In response, the Supervisory Body has adopted a final definition in its recently published draft, stating that “Removals are the outcomes of processes to remove greenhouse gases from the atmosphere through anthropogenic activities and durably store them.”
Others have noted that until the credits are issued under the Article 6.4 mechanism, the voluntary carbon market (VCM) remains the primary avenue for private capital investment in activities aimed at GHG mitigation or removal. Given the timelines associated with investments in project activities and the preparatory period for project implementation, the VCM is expected to remain the predominant platform for investment until 2025, if not longer, as frameworks and methodologies for the mechanism are established. However, the Supervisory Body’s focus on key principles such as cautious estimation of emission reductions, stakeholder involvement, and addressing uncertainties demonstrates a commitment to credibility and accountability.
The release of the preliminary draft outlining methodologies for carbon reduction projects marks a pivotal step in establishing frameworks for emission reduction credits. As the world prepares for COP28, the outcomes of these methodologies will play a crucial role in shaping global efforts to combat climate change and achieve the goals set out in the Paris Agreement.