Knowledge Base

The Paris Agreement provides a framework for all countries - both developed and developing - to voluntarily adopt individual targets, elaborated in their nationally determined contributions (NDCs). This effectively introduces commitments on the country in the sectors covered by their NDCs. Consequently, there is a need for countries to ensure that mitigation outcomes (MOs) and their international transfer are accompanied by robust accounting. Beyond international climate markets under Article 6, the International Civil Aviation Organization (ICAO) decided to establish a global market-based mechanism, in the form of the carbon offsetting and reduction scheme for international aviation (CORSIA), to help achieve ICAO’s global goal of carbon-neutral growth. This note seeks to identify processes for the generation and transfer of carbon assets in post-2020 international climate markets and to suggest standard terminology in the carbon asset development cycle across key independent standards. The note builds on existing practices among different independent standards to streamline and harmonize process flows and ensure that country governments have greater clarity on the process for engaging in climate markets. This note reflects inputs from the informal working group on carbon assets, pilot transactions under different initiatives, as well as knowledge produced in relevant platforms.

Unlike the Kyoto protocol’s clean development mechanism (CDM), Article 6.2 of the Paris Agreement is designed to allow for international cooperation in carbon markets through decentralized governance. Under this article, bilateral or plurilateral cooperation between participating parties can be established through a mutually agreed policy and governance framework and reflected in the agreement between the parties involved. This decentralized architecture requires considerably higher levels of engagement and oversight from participating parties. The context for setting institutions and approval procedures at the domestic level is fundamentally rooted in the country’s national climate strategy and their nationally determined contribution (NDC). A host country will need to establish a detailed Article 6 strategy that guides, but is not limited to, how its participation in Article 6 will help the country achieve its target. This paper forms the starting point, focusing on the institutional requirements to establish the policy and regulatory process that defines and supports the implementation of the potential activity cycle for Article 6.2 activities and transactions; identifies functions required at the national level from the host country’s perspective; and discusses different options to allocate these functions to existing or new institutions. The Article 6.2 activity cycle can build on project cycles under the Kyoto protocol, with an added requirement for the authorization and transfer of mitigation outcomes (MOs). While the entire process can be developed domestically, host countries can also choose to use international crediting programs to register projects and issue units. However, the host country will still be responsible for the Article 6.2 process of authorizing and transferring ITMOs, as well as applying corresponding adjustments. The type of arrangement that a country chooses to adopt affects the type of institutional arrangement and functions of the different bodies involved.

Ensuring environmental integrity is recognized as an important goal under Article 6. This paper examines factors that affect environmental integrity under Article 6 of the Paris Agreement, and identifies practical approaches for implementing the concept based on lessons learned from the World Bank’s pilot activities and feedback from stakeholders in pilot countries. The starting point is the commonly accepted definition that environmental integrity is ensured as long as global greenhouse gas (GHG) emissions do not increase as a result of transfers of mitigation outcomes (MOs) (when compared to the scenario where such transfers did not take place). Under the Kyoto protocol, not all countries had mitigation obligations. In contrast, the Paris Agreement requires all countries to voluntarily adopt individual targets, articulated in their nationally determined contribution (NDC). This effectively introduces a national commitment or emissions cap for the entire economy or for the sectors covered by the NDC. This means that the transfer of MOs will affect the host country’s ability to achieve its own NDC if decisions related to such transfers do not take into account the need for corresponding adjustments and the opportunity cost of making such adjustments. In this context, ensuring environmental integrity - transferring MOs without affecting the country’s ability to meet its NDC and ensuring that such transfers do not lead to an increase in global GHG emissions - requires the assessment of two aspects: (1) stringency of NDC compared to business as usual (BAU): whether the country’s emissions cap or NDC is stringent enough and its targeted GHG emissions are not higher than what will be expected under business as usual (BAU) conditions; and (2) unit quality: whether the volume of transferred MOs generated from a mitigation activity is accurately calculated by setting a stringent or conservative baseline.

This approach paper presents template Letter of Authorization or Acknowledgement and a guidance manual for its use.

This approach paper delves into components of CDM methodologies that require reassessment for the transition from the Kyoto to the Paris regime.

This approach paper examines the role of additionality for environmental integrity under Article 6.2 approaches.

This paper aims to develop guidance on the pricing based on opportunity cost pricing for emission reduction credits that come with corresponding adjustment.

This paper provides guidance for host countries on assessing and choosing their approach to participation in Cooperative Approaches of Article 6 of the Paris Agreement. The paper intends to help government officials understand the opportunities and risks of participating in international carbon markets and suggest options to minimize risks and maximize opportunities.

This paper explains what infrastructure may be needed at the national and international level to meet transparency and integrity requirements of Article 6, as well as to store, track, and transact units at different stages of a carbon asset’s life cycle.

This information paper outlines three avenues for monetizing climate results – results-based climate finance (RBCF), voluntary carbon markets (VCM), and compliance carbon markets (CCM) and their definition.

Policy framework has been drafted on a unilateral basis for a Party to declare its preferred approach towards implementing a cooperative approach under Article 6.2. The policy framework is intended to provide the minimum legal foundation required to give Parties (including private sector entities) the necessary certainty regarding their rights and obligations as participants to the cooperative approach, including the ability to enforce cross-border contractual arrangements. The policy framework is intended to facilitate negotiations and subsequent agreement between two or more Parties, and the policy framework does not in itself create an effective and binding cooperative approach between Parties. The policy framework is accompanied by several schedules to the policy framework, which play an integral role in setting out the specific requirements. It is intended that these schedules contain the detailed and technical information related to, among other things, environmental integrity, sustainability requirements, approved sectors and activities, and approved standards and methodologies, for the purposes of implementing a cooperative approach. The development of schedules will also benefit from inputs from various technical experts and consultations in platforms such as the climate market club, alongside the final article 6.2 guidance.

The Paris Agreement provides a framework for all countries - both developed and developing - to voluntarily adopt individual targets, elaborated in their nationally determined contributions (NDCs). This effectively introduces commitments on the country in the sectors covered by their NDCs. Consequently, there is a need for countries to ensure that mitigation outcomes (MOs) and their international transfer are accompanied by robust accounting. Beyond international climate markets under Article 6, the International Civil Aviation Organization (ICAO) decided to establish a global market-based mechanism, in the form of the carbon offsetting and reduction scheme for international aviation (CORSIA), to help achieve ICAO’s global goal of carbon-neutral growth. This note seeks to identify processes for the generation and transfer of carbon assets in post-2020 international climate markets and to suggest standard terminology in the carbon asset development cycle across key independent standards. The note builds on existing practices among different independent standards to streamline and harmonize process flows and ensure that country governments have greater clarity on the process for engaging in climate markets. This note reflects inputs from the informal working group on carbon assets, pilot transactions under different initiatives, as well as knowledge produced in relevant platforms.

Unlike the Kyoto protocol’s clean development mechanism (CDM), Article 6.2 of the Paris Agreement is designed to allow for international cooperation in carbon markets through decentralized governance. Under this article, bilateral or plurilateral cooperation between participating parties can be established through a mutually agreed policy and governance framework and reflected in the agreement between the parties involved. This decentralized architecture requires considerably higher levels of engagement and oversight from participating parties. The context for setting institutions and approval procedures at the domestic level is fundamentally rooted in the country’s national climate strategy and their nationally determined contribution (NDC). A host country will need to establish a detailed Article 6 strategy that guides, but is not limited to, how its participation in Article 6 will help the country achieve its target. This paper forms the starting point, focusing on the institutional requirements to establish the policy and regulatory process that defines and supports the implementation of the potential activity cycle for Article 6.2 activities and transactions; identifies functions required at the national level from the host country’s perspective; and discusses different options to allocate these functions to existing or new institutions. The Article 6.2 activity cycle can build on project cycles under the Kyoto protocol, with an added requirement for the authorization and transfer of mitigation outcomes (MOs). While the entire process can be developed domestically, host countries can also choose to use international crediting programs to register projects and issue units. However, the host country will still be responsible for the Article 6.2 process of authorizing and transferring ITMOs, as well as applying corresponding adjustments. The type of arrangement that a country chooses to adopt affects the type of institutional arrangement and functions of the different bodies involved.

Ensuring environmental integrity is recognized as an important goal under Article 6. This paper examines factors that affect environmental integrity under Article 6 of the Paris Agreement, and identifies practical approaches for implementing the concept based on lessons learned from the World Bank’s pilot activities and feedback from stakeholders in pilot countries. The starting point is the commonly accepted definition that environmental integrity is ensured as long as global greenhouse gas (GHG) emissions do not increase as a result of transfers of mitigation outcomes (MOs) (when compared to the scenario where such transfers did not take place). Under the Kyoto protocol, not all countries had mitigation obligations. In contrast, the Paris Agreement requires all countries to voluntarily adopt individual targets, articulated in their nationally determined contribution (NDC). This effectively introduces a national commitment or emissions cap for the entire economy or for the sectors covered by the NDC. This means that the transfer of MOs will affect the host country’s ability to achieve its own NDC if decisions related to such transfers do not take into account the need for corresponding adjustments and the opportunity cost of making such adjustments. In this context, ensuring environmental integrity - transferring MOs without affecting the country’s ability to meet its NDC and ensuring that such transfers do not lead to an increase in global GHG emissions - requires the assessment of two aspects: (1) stringency of NDC compared to business as usual (BAU): whether the country’s emissions cap or NDC is stringent enough and its targeted GHG emissions are not higher than what will be expected under business as usual (BAU) conditions; and (2) unit quality: whether the volume of transferred MOs generated from a mitigation activity is accurately calculated by setting a stringent or conservative baseline.

International cooperation through market-based instruments, if designed well, could reduce the cost of implementing Nationally Determined Contributions (NDC) by more than half...

Reporting programs provide a uniform approach to monitoring, reporting and verifying the emissions that underpin a carbon price. They are the foundation for building a market for emissions.

MAAP takes a scale-based approach to provide a more nuanced assessment of the relative strengths and weaknesses of climate actions and policies.

Bhutan is the world’s first carbon-negative country; its vast forests absorb more carbon dioxide (CO2) than the country emits from all activities. This accomplishment stems from Bhutan’s holistic approach to development.

With backing from organizations like The Digital For Climate Working Group, the movement toward a transparent, DPI-driven carbon market is gaining momentum.

Digital for Climate (D4C) was highlighted by Nandan Nilekani during the Secretary General's High Impact Initiative launch at the SDG Digital. At this event, senior leaders have come together to underscore how digital technologies can be leveraged to accelerate progress towards the Sustainable Development Goals (SDGs).

The urgency for enabling tools to finance the low-carbon transition has never been greater, as the potential of carbon markets to unlock climate action savings is huge. However, in order to achieve real and credible emissions reductions, transparency and accountability are key.

A cornerstone of carbon markets has been the Monitoring, Reporting, and Verification (MRV) of reductions in greenhouse gas emissions. MRV is a multi-step process to measure the emission reductions achieved by a specific mitigation activity, report the findings to an accredited third party, and verify the reductions so they can be certified, and carbon credits can be issued. Currently, the process is often costly, time-consuming, and susceptible to error, as it relies on manual information recording or in-person surveys. But increasingly, digital technologies are being used to streamline data collection, processing, and quality control in MRV processes.

The World Bank developed two jurisdictional assessment tools under the Mitigation Action Assessment Protocol (MAAP) – the Domestic Carbon Pricing Instruments (MAAP-CPI) and the International Transfer Readiness (MAAP-ITR) in 2020.

International cooperation through market-based instruments, if designed well, could reduce the cost of implementing Nationally Determined Contributions (NDC) by more than half...

Reporting programs provide a uniform approach to monitoring, reporting and verifying the emissions that underpin a carbon price. They are the foundation for building a market for emissions.

MAAP takes a scale-based approach to provide a more nuanced assessment of the relative strengths and weaknesses of climate actions and policies.

This document includes six test scripts to guide the participant through a number of scenarios, such as creating a project, issue a unit, etc.

The technical provides all the information related to the technical architecture, data model and blockchain technology for the purposes of the testing and simulation activities conducted from March-August 2022.

The World Bank conducted a technical assessment with a consortium of experts to discuss and review the Chia White Paper to determine whether and how Chia blockchain meets the requirements of the Climate Warehouse. Please find here the latest version of the Chia White Paper, which incorporates the feedback received during the technical review.

Document codifying the common data model and taxonomy of the metadata layer. It includes data fields, picklist values and their respective definitions.

This document includes six test scripts to guide the participant through a number of scenarios, such as creating a project, issue a unit, etc.

The technical provides all the information related to the technical architecture, data model and blockchain technology for the purposes of the testing and simulation activities conducted from March-August 2022.

The World Bank conducted a technical assessment with a consortium of experts to discuss and review the Chia White Paper to determine whether and how Chia blockchain meets the requirements of the Climate Warehouse. Please find here the latest version of the Chia White Paper, which incorporates the feedback received during the technical review.

The 21st Climate Market Club meeting discussed one potential approach to pricing emission reduction credits that come with corresponding adjustment. The document is the presentation material used at the 21st meeting of the Climate Market Cub.

The purpose of this technical report is to illustrate the need for digital monitoring, reporting, and verification (D-MRV) systems to underpin future carbon markets under the goals of the Paris Agreement by discussing the available technologies and barriers to their adoption.

Roundtable on climate change and sustainable transition

This high-level guidance document offers structured questions to guide the development of a host country’s carbon market strategy, and a clear entry point to the most relevant tools and resources provided by Technical Assistance partners for countries to engage in carbon markets. It has been jointly developed with the Article 6 Implementation Partnership (A6IP), the Global Green Growth Institute (GGGI), the Integrity Council for the Voluntary Carbon Market (ICVCM), the United Nations Development Program (UNDP), and the Voluntary Carbon Markets Integrity Initiative (VCMI).

The 2024 State and Trends of International Carbon Markets report evaluates the progress made in addressing these bottlenecks, highlights the urgency of these issues, and proposes recommendations to ensure that carbon markets reach their full potential.

This approach paper delves into components of CDM methodologies that require reassessment for the transition from the Kyoto to the Paris regime.

This report aims to supplement the annual State and Trends report and contribute to the global effort to promote market transparency and trust by providing digestible insights into the state of play of international carbon markets.

This presentation is derived from the COP 28 session titled 'Digital for Climate (D4C): Building an End-to-End Digital Ecosystem for Carbon Markets.' It featured a series of comprehensive technical presentations, presenting valuable insights and findings from ongoing pilot projects and practical use cases conducted by the Digital 4 Climate Working Group.

This approach paper examines the role of additionality for environmental integrity under Article 6.2 approaches.

This paper aims to develop guidance on the pricing based on opportunity cost pricing for emission reduction credits that come with corresponding adjustment.

Establishing and securing agreement on a global-level benchmark carbon price can be achieved by consolidating a range of carbon pricing initiatives (explicit, implicit and implied) into a single global platform that can be broken down into regions or sectors. This can then be compared against a target price corridor required to achieve the Paris Agreement goals.

The 21st Climate Market Club meeting discussed one potential approach to pricing emission reduction credits that come with corresponding adjustment. The document is the presentation material used at the 21st meeting of the Climate Market Cub.

The purpose of this technical report is to illustrate the need for digital monitoring, reporting, and verification (D-MRV) systems to underpin future carbon markets under the goals of the Paris Agreement by discussing the available technologies and barriers to their adoption.

Roundtable on climate change and sustainable transition