COP29: What is Article 6? How will it help reduce carbon pollution?

After nearly a decade of negotiations, leaders during the United Nations climate conference’s first day decided on some of the finer points of a much debated sticking point aimed at cutting planet-warming emissions from coal, oil and gas.

Known as Article 6, it was set up as part of the 2015 Paris Agreement to help nations work together to reduce climate-causing pollution. Part of that was a system of carbon credits, allowing nations to put planet-warming gases in the air if they offset emissions elsewhere.

But the gaveling through of Article 6 late Monday was criticised by climate justice groups, who said carbon markets allow major polluters to keep emitting at the expense of people and the environment.

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COP29, as this year’s summit is known, has brought together world leaders to discuss ways to limit and adapt to the climate crisis. Scientists agree that the warming of the atmosphere caused primarily by human-burnt fossil fuels is fuelling deadlier and increasingly catastrophic droughts, flooding, hurricanes and heat.

Here’s a look at Article 6 and the carbon credits system it aims to implement.

What is Article 6?

Article 6 first made an appearance at the Paris climate talks in 2015, where world leaders agreed to try to keep global warming below 1.5 degrees Celsius (2.7 degrees Fahrenheit) from pre-industrial levels.

Its aim is to outline how countries and companies can trade emissions reductions to remove and stop more carbon pollution from reaching the atmosphere. The idea is to set up carbon trading markets, allowing higher polluters to offset some of the pollution they produce by buying carbon credits from less polluting countries.

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Article 6 offers two ways for countries to do this. The first is for the two nations to set their own rules and standards for carbon credit trades. Some countries are already signing deals to do this, including Singapore with the Philippines, Costa Rica and Sri Lanka, Switzerland with Ghana, Peru and Ukraine, among others.

The second option creates an international, UN-governed market that anyone can purchase credits through.

Isa Mulder, an expert on global carbon markets with the research group Carbon Market Watch, said the idea behind Article 6 is for countries to find the cheapest way to cut emissions. By trading carbon credits, it makes cutting global pollution cheaper and more efficient.

But Article 6 is contentious, leading to years of delays. At COP28, negotiations crumbled after disagreements on transparency, rules on credits that could be traded, and what makes a good carbon removal credit.

“There are other problems, like when local communities don’t have a say in the project and are forced to resettle,” said Mulder, referring to how some tree-planting carbon credit schemes can happen on inhabited Indigenous lands. “So there’s a lot of human rights concerns.”

United Nations secretary-general Antonio Guterres urged negotiators to “agree to rules for fair, effective carbon markets” and “leave no space for greenwashing or land-grabbing.”

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How might it help reduce carbon pollution?

The hope of Article 6 is that it incentivises countries to collaborate to reach their climate goals.

Countries could generate carbon credits based on projects aimed to meet their own climate goals, such as protecting existing forests from development or shutting coal-fired plants.

Private-sector players or other high-carbon polluter countries could then buy the credits, which would allow them to emit a certain amount of carbon dioxide or other greenhouse gases. Heavy-polluting companies would be important customers.

Each credit would equal a tonne of CO2 or the equivalent of other greenhouse gases that can be reduced in the air, sequestered, or avoided by using green energies instead.

Money from the credits generated would go to local projects. The per-tonne price of carbon would fluctuate in the market, meaning that the higher it rises, the more green projects could fetch through new credits generated.

Under carbon markets, countries that lower their emissions by installing clean energy projects like solar or wind power or electrifying public transportation systems can sell carbon credits.

But critics question whether it will be effective and worry it could lead to similar problems seen with the Kyoto Protocol, a 1997 pact for developed nations to reduce their heat-trapping gas emissions to 1990 levels and below. The deal was dealt a hammer blow when the then-US administration withdrew from it.

“There’s a lot of concerns about whether that credit actually represents what it stands for,” said Mulder from Carbon Market Watch.

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What could happen at the Baku climate talks?

Monday’s decision signalled early momentum on establishing Article 6, which the COP29 presidency said it would prioritise this year.

But leaders still need to agree on other sections of the issue, including rules on two-nation carbon credit trading and the final details of the international, U.N.-governed market.

Once finalised, Article 6 could reduce the cost of implementing national climate plans by $250 billion annually according to UN estimates. The COP29 presidency will then encourage countries to participate in carbon trading.

On Monday, COP29 President Mukhtar Babayev said Article 6 “will be a game-changing tool to direct resources to the developing world.”

But concerns remain about how it will work, given how it was developed.

“Communities’ consent and ownership over these initiatives are not just essential but also a matter of respect and inclusion,” said David Nicholson, chief climate officer at Mercy Corps, a nonprofit that works on poverty, climate and other issues.

“We are concerned that the agreement lacks adequate protections for human rights and undermines the goals of the Paris Agreement rather than supporting them. If these concerns aren’t addressed, the decision could allow carbon trading to take the place of genuine, much-needed climate finance commitments,” Nicholson added.