Seoul, Republic of Korea – On 9 June 2022, the Global Green Growth Institute (GGGI) completed the 3-month consultation phase for its latest initiative to promote the opening of international carbon markets, the Carbon Transaction Platform (CTP).
The “Global Event on Article 6 and the Carbon Transaction Platform” was a hybrid online/in-person event hosted at GGGI headquarters in Seoul, attended by over 100 people. The event wrapped the second day of consultations with GGGI Members and partners on the CTP concept, which also included regional webinars for Article 6 experts in the regions of Latin America and the Caribbean; Africa, Europe and the Middle East; and Asia and the Pacific.
The Global Event began with opening remarks by GGGI Director-General, Dr. Frank Rijsberman, followed by a brief presentation given by GGGI Deputy Director and Head of Carbon Pricing Unit, Ms. Fenella Aouane, on a forthcoming report on the findings of a recent GGGI survey of seller country readiness and perceptions in the Article 6 market. This was followed by a presentation on the CTP concept and a panel discussion joined by government representatives actively involved in Article 6 engagement and decision making from the Republic of Korea (ROK), Indonesia and Nepal.
“Developing countries need much larger inflows of finance to be able to take ambitious climate action. One way that this could happen is from carbon trading under Article 6 of the Paris Agreement,” said Dr. Rijsberman. “However, for countries to be able to participate, the burden for establishing governance arrangements, and proving that monitoring, reporting and verification systems are in place is very high. Many potential sellers are struggling to manage and need additional support.” To respond to this need, GGGI is proposing to introduce a new facility to support seller country readiness, and one or more carbon purchasing trust funds as part of a new umbrella initiative called the “Carbon Transaction Platform.”
During the panel discussion Ms. Jenny Kim, Ambassador and Deputy Minister for Climate Change at the Ministry of Foreign Affairs, ROK, emphasized that Article 6 is an important component of Korea’s efforts to support developing countries to achieve sustainable development and transformational climate change mitigation. “The Korean government is working to set up the legal frameworks for cooperation with counterpart (seller) countries,” she said. “Korea wants to implement win-win arrangements which are beneficial for both countries in Article 6 cooperation,” she said, including by promoting technology transfer, investment and improved know-how. The Korean government has an ambitious GHG emissions reduction target of 40% reduction from 2018 levels by 2030 and is pursuing partnerships with developing countries to potentially purchase Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6, including Vietnam, Indonesia, Peru, Sri Lanka, Myanmar and others.
In response, Mr. Dida Gardera, Assistant Deputy for Agro, Pharmacy and Tourism from Indonesia’s Coordinating Ministry of Economic Affairs, welcomed the offer for partnership with ROK, noting the important role Article 6 ITMO trading can play in helping achieving Indonesia’s sustainable development and climate change targets. “Only if we have international cooperation, we can achieve up to 41% reduction by 2030. We believe that Article 6 can not only support Indonesia in achieving its (conditional) NDC, but it can facilitate cooperation among all countries to save our earth.” GGGI is currently supporting the Government of Indonesia to enhance its readiness for engagement in Article 6 and exploring the potential for policy-based crediting approaches.
Mr. Milan Dhungana, Under Secretary of the Ministry for Forests and Environment of Nepal agreed that carbon trading was a key tool to achieving more ambitious climate change mitigation outcomes in Nepal. Mr. Dhungana thanked GGGI for the support the Government of Nepal receives through the Swedish Energy Agency-funded program “Mobilizing Article 6 Trading Structures” or MATS program. He noted that the program, and Article 6 in general, is one way for Nepal to engage private sector in climate action as it can encourage investment. Mr. Dhungana welcomed the CTP concept as a way to help developing countries like Nepal be prepared to actively engage in Article 6.
The global event and regional consultations are part of GGGI’s efforts to collect feedback from Members and partners on the design options for the CTP. In addition to the 8-9 June consultations, feedback was collected through a survey of 29 Member and partner countries on their perceptions and challenges with Article 6 engagement as well as through e-consultations with over 300 stakeholders in Member and partner countries.
In July, the special Carbon Transaction Platform Task Force established by the GGGI Secretariat will share its recommendations for the CTP design with the organization’s Management and Programming Subcommittee. The final decision to establish the CTP will be taken by the GGGI Council in October 2022.