Transformation & Article 6: Strengthening the transformative effect of market approaches under the Paris Agreement

On behalf of the German Environment Agency, UNEP Copenhagen Climate Centre conducts research to explore options for fostering transformational change through market approaches (Art.6) under the Paris Agreement.

Transitioning towards sustainable development and net-zero global greenhouse gas (GHG) emissions will be key to staying within the temperature limits established by the Paris Agreement. The potential contribution of market-based instruments towards these objectives is, however, unclear.

Against this background, the German Federal Environment Agency (UBA) commissioned the project ‘Transformation & Article 6: Strengthening the transformative effect of market approaches under the Paris Agreement’ which is being implemented by UNEP Copenhagen Climate Centre in collaboration with Perspectives Climate Research and First Climate. The project explores how Article 6 market mechanisms can help countries to achieve net-zero emissions by 2050 and simultaneously contribute to meeting the Sustainable Development Goals (SDGs).

The project aims at developing recommendations on how to exploit the potential of Article 6 to support transformative change. Based on insights from literature review and interviews, the researchers propose a definition of ‘transformative change’ specific to Article 6: “A fundamental, sustained change of a system that ends established high-carbon practices and contributes to a zero-carbon society, in line with the Paris Agreement goal to limit global warming to 1.5–2°C and the United Nations SDGs.”

An international workshop with government representative, market participants and researchers from all around the world was held in May 2021 to discuss interim research results presented in a discussion paper on carbon market incentive structures for transformative change. The project will also deliver key messages and recommendations to maintain environmental integrity while increasing NDC ambitions through Article 6 measures. A final report will be published at the end of the project.