Paris Agreement: How Article 6 can strengthen the carbon market and accelerate the transition to net zero

The Sixth Assessment Report of the UN Intergovernmental Panel on Climate Change (IPCC) – in charge of mitigation – shows that there is little time left to avoid the worst climate impacts. That means the world must generate stronger incentives and cooperation to achieve deeper decarbonization before 2030. The implementation of Article 6 of the Paris Agreement is seen as an opportunity to achieve national emission reduction targets more cost-effectively, as it allows countries to cooperate voluntarily to achieve more ambitious reduction targets by trading carbon credits (Article 6.4). Trading carbon credits through carbon markets is believed to incentivize climate action, as credits are obtained by eliminating or reducing greenhouse gases, replacing fossil fuels with renewable energy, or conserving carbon stocks in natural ecosystems.

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