What is it about and why is it important? Learn more about Article 6.
What is Article 6 about?
Article 6 is part of the Paris Agreement that was negotiated at the UN climate summit COP21. It governs how different countries can voluntarily cooperate across national borders and thereby achieve climate goals together. The driving force here is that different countries have different capacities to contribute to achieving climate goals, and by opening up the possibility of voluntary cooperation across national borders goals will achieved more effectively and more quickly. Article 6 replaces the part of the Kyoto Protocol that deals with how capital shall be transferred between nations to benefit climate efforts.
Why is Article 6 relevant right now?
There is currently a framework for Article 6, but it needs to be refined, which is an ongoing process that shall be completed by COP28. The UN climate summit COP27 in Egypt is therefore an important opportunity to discuss the details and arrive at how they should be crafted.
Why is Article 6 important?
It is essential that Article 6 promote as much trade as possible while avoiding double claiming of efforts between countries or between companies. Article 6 and the texts adopted at COP26 have created uncertainty about how it should be applied. It is essential that this uncertainty is removed so that the article can contribute to maximum trade in climate measures.
What does Article 6 mean for Sweden?
Sweden has the potential to produce more negative emissions than what is required or demanded in Sweden and can therefore export to actors in other countries. There is potential for a new export industry if Article 6 is framed in a such way that enables export of climate services/products, both for countries and for companies. The latter should include both voluntary trade and official trade so that purchasing companies can meet legal requirements in their respective countries.
Stockholm Exergi commissioned a study showing that if Sweden were to use its full potential to capture and store 30 million tons of carbon dioxide per year, it would create 11 500 direct job opportunities (28 000 with indirect job opportunities included) and contribute SEK 24 billion to Sweden’s GDP.
Stockholm Exergi believes that there is a lack of clarity around Article 6, what is that about?
Article 6 is difficult to understand and there are ambiguities. The biggest problem is not Article 6, but how some stakeholders believe it should be applied with additional criteria regarding so-called “double claiming”. The way we interpret Article 6, it is possible for a company to claim its purchase of negative emissions in its own climate reporting while the purchase is simultaneously included in the negative-emissions-producing country’s national climate accounting, thereby also contributing to that country’s climate targets for negative emissions. This is in line with the same principle that is applied for carbon emissions, where the emitter and its nation both claim the same emissions.
There are, however, stakeholders who oppose this. This could lead to a situation where the voluntary market cannot help finance negative emissions via the purchase of negative credits if the state provides public funding to produce the negative emission. We believe that this is not logical. Our bottom line is that negative emissions should be counted once by a nation in the context of its climate reporting and once by companies in its climate reporting.
Why is it important for Stockholm Exergi to clarify Article 6?
Stockholm Exergi would like to see a solution where private and public capital can work together to create as much climate benefit as possible. We believe that it is both natural and desirable that state-supported climate measures can be traded on the voluntary carbon market (VCM) and that the company can credit a purchase of negative emissions in its climate accounting and the country producing the negative emissions can include it in its own national climate accounting.
Stockholm Exergi’s goal is to produce negative emissions through carbon capture at its Hjorthagen bioenergy plant by 2026. The negative emissions are intended to be sold in the form of certificates on the voluntary carbon market (VCM) where buyers can be in Sweden as well as in other countries.
What will be important at COP27 regarding Article 6?
Stockholm Exergi wants to make it clear that the negative emissions can be credited to both the company that buys them on a voluntary market and the country where they are produced. We believe that this application of the Paris Agreement is already being embraced by the UK, the US, and Norway, as expressed in draft regulations in the UK and in a collaboration known as the Leaf Coalition. Stockholm Exergi would like the Paris Agreement signatories to state in the texts being negotiated in relation to Article 6 that:
“Nothing in the Paris Agreement’s Article 6 shall be interpreted as preventing a host nation from counting mitigation outcomes in its NDC that are traded internationally on the voluntary carbon market, except for compliance purposes or cooperative approaches that are explicitly agreed by the Parties to be covered by international mitigation purposes (e.g. ICAO/CORSIA and IMO) for which Corresponding Adjustments may apply.”
In addition, Stockholm Exergi would like COP27 to clarify what “other purposes” refers to. It is a concept that was introduced at COP26 (Annex to Decision 3/CMA.3, paragraph 44). If VCMs are included in this concept, it may lead to restrictions in the trade of climate measures and Sweden’s export potential not being harnessed in the best possible way.
Who is responsible for the development of Article 6?
The UN is responsible, and it is up to the Member States to work out the details.