High Interest in Transfers of Emission Reductions

An analysis by the Wuppertal Institute sheds light on the role that Article 6 of the Paris Agreement could play for Nationally Determined Contributions (NDCs). Overall, there is considerable interest in the transfer of emission reductions under Article 6: more than half of the 195 countries analysed intend to or are considering the use of  Article 6 in their NDCs. In contrast, only 19 per cent of countries explicitly exclude the use of Article 6. The number of potential buyers is significantly higher than the number of possible sellers: while 53 countries are interested in selling emission reductions, only eleven countries indicated a possible intention to buy such units.

"However, it is not yet possible to draw conclusions on the supply and demand balance based on these figures alone," says Nicolas Kreibich, Senior Researcher in the Global Climate Governance Research Unit at the Wuppertal Institute and author of the analysis, and points out: "Firstly, there is a lack of information on the potential trading volumes of individual countries – and secondly, the NDCs do not represent the entire market, as non-state actors can also get involved here." In general, the market dynamics are difficult to assess based on the information currently available, according to the researcher. The reasons for this include the fact that the framework conditions for trading of emission reductions have not yet been fully laid out and that balancing the costs and benefits of such transfers is highly complex for the individual countries.

The analysis can be downloaded free of charge via the following link.