Options for implementing ‘first transfer’ for contributions to the Article 6.4 buffer pool account

This working paper provides a preliminary technical analysis of options for implementing the concept of ‘first transfer’ in the context of contributions to the reversal risk buffer pool account under the Paris Agreement Crediting Mechanism (PACM). The paper identifies three options to address this matter: not effecting a first transfer, effecting a first transfer when the contribution to the buffer pool account is made, or effecting a first transfer when reversals occur. This is followed by a discussion of the implications of these options, including whether reversals are compensated for, whether any unused units in the buffer pool account provide for an additional safeguard, the implications for host countries, and what changes would be necessary to decisions on Article 6 to implement the option. The paper shows that the implications of the options are complex and depend on multiple factors that are beyond the influence of the PACM and that all three identified options have advantages and disadvantages.