Overview of World Bank’s ERP

The ERP includes two main workstreams.

Climate Active is an ongoing partnership between the Australian Government and Australian businesses to drive voluntary climate action. The brand represents Australia’s collective effort to measure, reduce, and offset carbon emissions to lessen our negative impact on the environment.

Climate Active certification reflects the role that government, business and community have to play in working together to address climate change.

Every country has mitigation opportunities in different sectors with varying costs depending on several factors such as the maturity of technologies, access to finance, policy support, and natural resources available. A country can plan its nationally determined contribution (NDC) based on such abatement cost information and prepare its strategy to achieve the NDC most effectively.

The objective of this paper is to develop guidance for host countries on assessing and choosing their approach to participation in Cooperative Approaches of Article 6 of the Paris Agreement. The main audience is government officials in charge of Article 6 in potential host countries. Decisions on Article 6 engagement for host countries could happen on three levels:

• High-level (“strategic”): the overall decision on whether to participate. This answers the question, “under what conditions would it be beneficial to participate in Article 6?”

The Kyoto Protocol has provided a common framework for greenhouse gas (GHG) accounting through its internationally governed market-based approaches. On the other hand, the Paris Agreement is not calling for the establishment of one centrally coordinated or interlinked emissions trading architecture. The discussions at COP25 on Article 6.2 only suggest that each participating Party shall have, or have access to, a registry for tracking purposes.

The Paris Agreement provides a framework for all countries - both developed and developing - to voluntarily adopt individual targets, elaborated in their nationally determined contributions (NDCs). This effectively introduces commitments on the country in the sectors covered by their NDCs. Consequently, there is a need for countries to ensure that mitigation outcomes (MOs) and their international transfer are accompanied by robust accounting.

Unlike the Kyoto protocol’s clean development mechanism (CDM), Article 6.2 of the Paris Agreement is designed to allow for international cooperation in carbon markets through decentralized governance. Under this article, bilateral or plurilateral cooperation between participating parties can be established through a mutually agreed policy and governance framework and reflected in the agreement between the parties involved. This decentralized architecture requires considerably higher levels of engagement and oversight from participating parties.

Ensuring environmental integrity is recognized as an important goal under Article 6. This paper examines factors that affect environmental integrity under Article 6 of the Paris Agreement, and identifies practical approaches for implementing the concept based on lessons learned from the World Bank’s pilot activities and feedback from stakeholders in pilot countries.