Voluntary Carbon Program Use under Paris Agreement Article 6.2
This article is an automatically translated version of the original Japanese article. Please refer to the Japanese version for the most accurate information.
This is the newsletter of Sustainacraft Inc.
Methodology Updates is a series covering carbon and biodiversity credit methodologies. This time, we will explain the Article 6.2 Crediting Protocol, jointly announced by the Government of Singapore, Verra, and Gold Standard, for the implementation of Paris Agreement Article 6.2 (cooperative approaches between countries). This protocol aims to connect the expertise of private sector-led credit markets (VCM) with inter-country compliance markets.
In this newsletter, we will delve into the overview of this protocol, the flow of specific procedures, and its differences from Japan's Joint Crediting Mechanism (JCM), primarily from the perspective of Project Proponents.
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Introduction: Why Leverage Existing Programs under Article 6.2?
The Article 6.2 Crediting Protocol (hereinafter referred to as ACP), which was announced last month, is a standardized framework for properly managing and tracking Credits issued by Independent Crediting Programs (ICPs) such as Verra and Gold Standard, under Paris Agreement Article 6.2.
The ACP highlights the following benefits of leveraging existing ICPs rather than requiring national governments to create their own systems from scratch:
- Established Framework: The ability to utilize existing, validated certification frameworks.
- Reduced Administrative Burden: Governments can delegate project certification and review processes to ICPs or third-party Validation/Verification Bodies (VVBs), thereby reducing their administrative workload.
- Familiarity and Recognition: It is familiar to Project Proponents and Validation/Verification Bodies, and already recognized by international schemes such as CORSIA, thus anticipating market demand.
The main stakeholders in the ACP are three parties: the Host Country (a Paris Agreement Party), the ICP, and the Project Proponent. A key feature of the ACP is its focus on how these three parties exchange information for the execution of **Corresponding Adjustments (CA)**, with **clearly defined roles and responsibilities** for each.
Host Country
Approves the use of mitigation outcomes for specific purposes (e.g., NDC achievement or CORSIA).
Tracks events such as approval, First Transfer, and use, and reports them to the UNFCCC.
ICP (Verra, Gold Standard, etc.)
Certifies mitigation outcomes generated by projects, and Issuance and manages Credits on its registry.
Attaches a label indicating Article 6 approval to Credits and ensures data consistency in coordination with the Host Country.
Project Proponent
Implements projects **in accordance with ICP requirements**.
Is responsible for transmitting approval information obtained from the Host Country to the ICP.
For Project Proponents, while additional interactions regarding approval for Corresponding Adjustments will occur with the Host Country government and the registry, project development itself will fundamentally proceed under the rules of conventional VCM. Therefore, unlike Japan's Joint Crediting Mechanism (JCM), where **unique Methodologies approved by each Host Country must be used (or newly created if none exist)**, one significant difference is the ability to widely apply existing VCM Methodologies. It will be interesting to observe how this difference in approach will affect project development under both mechanisms in the future. For more on this point, please refer to the following article which introduces the differences between the JCM and Singapore's approach.
Specific Procedures
From here, we will look at the process from a project being recognized as an Article 6-approved Credit ("Obtaining Approval from the Host Country"), its use for specific purposes ("Use of Credits"), and the implementation of Corresponding Adjustments ("Reporting and Tracking: Executing Corresponding Adjustments"). The names in parentheses are the corresponding section titles below.