Accounting and Environmental Integrity in Article 6 Workshop 11 Accounting and Environmental Integrity in Article 6 13 April 2018 African Carbon Forum Nairobi, Kenya Sandra Greiner

UNFCCC Art 6 negotiations: Concerns regarding environmental integrity Double counting: Emission reductions are counted towards more than one Party’s NDC or other mitigation obligations (e.g. CORSIA) Perverse incentives on ambition: Fear that countries may strategically put forward lower ambition in their NDC or do not include sectors, to be able to sell more “Hot air”: What is being sold does not represent an additional effort Trade inflates global target: due to different nature of NDCs and single year targets, countries may not be adding and subtracting the same cumulative total

UNFCCC Art 6 negotiations: How concerns are / may be addressed Double counting Corresponding adjustments to be made by host Party and acquiring Party Perverse incentives Eligibility restrictions: only mitigation activities inside the NDCs? Ambition level is Party prerogative Hot air Quality standards for units that are traded (real, permanent, additional, verifiable); Baselines to not exceed BAU or be more stringent Trade inflates global target Special rules on how ITMOs can be traded for single year targets

What do the emerging rules mean for host country participation in Article 6? CDM: Light requirements on host country DNA Issue a Letter of Approval, confirming that participation in activity is voluntary and contributes to the sustainable development of the host country Article 6: Host country to perform assessment and undertake certain activities: Assess how Article 6 activity relates to the country’s NDC Authorize the transfer of emission reductions (a national asset) Report on ITMOs (under transparency framework) Make a corresponding adjustment in the country’s NDC accounting

How to prepare for Article 6? Identification of potential, e.g. Identify sectors / technologies / projects suitable for carbon markets (keeping low-hanging fruit for NDC achievement) Make emission trajectories and identify data gaps Estimate how many emission reductions may be available for export without compromising ability to deliver on NDC Governance, e.g. Designate an Article 6 national authority which also oversees NDC implementation Designate national institutions that can technically evaluate the potential Clarify ownership over emission reductions through regulations (ensuring that private sector does not sell emission reductions which the country needs) Adopt procedures for ITMO authorization [Build national registries]