World Resource Institute

Paris Rulebook: Carbon Markets and other Cooperative Implementation

Navigating the Paris Agreement Rulebook:

Carbon Markets and other Cooperative Implementation

The Paris Agreement recognizes that some countries will choose to pursue voluntary cooperation in implementing their NDCs.

As part of the Rulebook, countries are negotiating three separate elements related to how countries cooperate:

  1. The Agreement specifies that countries may engage in the use of Internationally Transferred Mitigation Outcomes (ITMOs) toward NDCs. When doing so, countries must promote sustainable development, ensure environmental integrity and transparency, and apply robust accounting to ensure emissions are not counted twice, known as double counting.
  2. The Paris Agreement established a mechanism that credits emissions reductions that countries can use toward their NDCs. The mechanism will deliver overall mitigation of global emissions, and a share of proceeds from this mechanism will assist vulnerable developing countries.
  3. Countries may also choose to pursue nonmarket approaches in implementing their NDCs. In Katowice, countries did not agree to the guidelines for any of these three elements, including on how to avoid double counting.

Remaining Issues from COP24

There were several reasons countries could not come to agreement on these elements, including disagreements concerning:

  • Whether emissions reductions considered under the crediting mechanism mentioned above would be subject to the same accounting provisions as ITMOs. This led to a disagreement about whether a host country‚Äôs emissions would need to be adjusted with the transfer of emissions reductions generated under the crediting mechanism, as many countries argued that double counting would ensue if they were not adjusted.
  • Whether the use of a share of the proceeds from the crediting mechanism, which would be used to finance assistance for vulnerable countries, would also apply in the case of ITMOs.
  • Whether the mandate to deliver overall mitigation in global emissions also applies to ITMOs and whether this means that a discount (subtraction in the national emission total) would be applied to the transfer of ITMOs accordingly.
  • Whether and how countries could transfer emissions reductions that arise from outside of the NDC-covered sectors and gases.
  • Whether and how emissions units from the market mechanisms used under the Kyoto Protocol would transition to the Paris Agreement.

Despite these disagreements, considerable progress was made during the negotiations, and versions of the text were streamlined. Decisions on these issues were deferred to COP25 in December 2019.

Related Decisions

In Katowice, countries also agreed to guidelines for the enhanced transparency framework, which among other requirements, specifies that countries should use structured summaries to report progress and achievement toward the NDCs, taking into account the use of ITMOs.

Enhanced Transparency Framework