Environmental Integrity under Article 6 of the Paris Agreement

This discussion paper explores key issues and options to achieve environmental integrity under Article 6 of the Paris Agreement. It proposes that environmental integrity in context of Article 6 means that using international transfers does not result in higher global GHG emissions than if mitigation targets of NDCs had been achieved only through domestic mitigation action. The paper identifies four issues that can affect the global GHG emissions outcome from international transfers: robust accounting for international transfers; the quality of units from mechanisms; the ambition of the NDC target of the transferring country; and presence of incentives and disincentives for further mitigation action. A particular risk is the international transfer of „hot air“. Based on global GHG emissions and the communicated NDCs, it is estimated that global mitigation action be undermined by up to 68 % if all hot air in current NDCs would be transferred. The paper identifies and discusses seven options to mitigate environmental integrity risks from international transfers, including principles for international guidance on mechanism design and communication of NDCs, international reporting and review, eligibility criteria, limits on international transfers, exchange or discount rates, green investment schemes, and carbon clubs. Finally, the paper explores for crediting mechanisms how additionality could be demonstrated and how emission baselines could be set under the new framework of the Paris Agreement where nearly all Parties have communicated a mitigation target in their NDC.