What are NDCs?
In 2015, the Parties of the United Nations Framework Convention on Climate Change (UNFCCC) signed the Paris Agreement, committing to keeping global temperatures below 2°C above pre-industrial levels, and preferably staying below 1.5°C. To meet this target, all countries that ratified the agreement must submit national plans to reduce greenhouse gas emissions (GHG), known as Nationally Determined Contributions (NDCs). NDCs outline long-term emissions reduction goals and strategies, including conserving and restoring blue and green carbon ecosystems. Fair Carbon’s NDC Map provides an overview of countries where blue carbon is integrated into NDC submissions.
At the 26th Conference of the Parties (COP26) in 2021, parties to the UNFCCC created new rules and requirements for the international trade of carbon credits. The rules, known as the Article 6 Rulebook, lay out the criteria based on which buying and selling emissions reductions between countries counts towards their NDC targets. Any emissions reduction occurring in a country automatically contributes to either their NDC targets, an internal carbon market, or the voluntary carbon market.
Credits traded between countries thus require carbon accounting methods to ensure they are not counted by both countries (known as “double counting”). This accounting method is referred to as Corresponding Adjustments (CA). A CA ensures traded reductions contribute to the buyer’s NDC targets and are deducted from the seller. For example, a project in Ghana (the host country) sells credits to Canada (the buyer), where each country must make a corresponding adjustment (CA) to their national carbon accounts. Ghana adds the emissions to their account, and Canada deducts them. If no trade occurs, the reductions apply to Ghana’s NDC.
Traded credits require CAs when the host country authorizes the trade towards uses other than their NDC, such as the voluntary carbon market or selling the removal to another country.
While not all voluntary carbon market (VCM) projects must navigate Article 6, some countries may require VCM credits to apply CAs. National legislation, climate change policies, compliance markets, or participation in the second component of Article 6 (Article 6.4) may require VCM projects to meet certain requirements for CAs, accounting, registration, etc.
Article 6.4 (The Mechanism)
One component of Article 6 is Article 6.4, which establishes an international carbon trading mechanism to replace the Clean Development Mechanism (CDM). The CDM is the largest carbon trading system for developing countries to sell verified credits to developed countries under the Kyoto Protocol, an international legal instrument established prior to the Paris Agreement.
Article 6.4 contains similar methodologies and requirements to the CDM and is currently under development. Participating countries must develop national infrastructure to record, track, and authorize credits towards specific uses.
Not all countries will participate in Article 6.4 activities; however, many countries are already laying the policy groundwork for future trading. For example, Ghana recently released a national Article 6 framework with corresponding adjustment and authorization requirements, including allocating a share of produced credits towards maintaining the policy infrastructure.
For voluntary carbon market projects, an Article 6 national policy and framework does not mean project development is impossible. Some countries will permit the trade of VCM credits but may require the project to follow specific rules, registers, or secures permission before selling credits. Frameworks may even facilitate trade by removing specific challenges to project development, such as ensuring carbon rights, by clearly defining them in law.
In countries where no Article 6 framework, national carbon market, or legislation regulating carbon exist, projects do not need prior authorization from the government to sell VCM credits, nor do they need to apply corresponding adjustments.
Where an Article 6 framework exists or is under development, ensure the policies permit voluntary credit sales and closely follow any requirements that can impact project design and implementation.
The Fair Carbon Blue Carbon Enabling Conditions tool identifies where Article 6 frameworks are intended or are currently under development. NDC submissions also provide a valuable tool and resource to understand a country's intentions for Article 6 and blue carbon.
The full Article 6 text and Rulebook can be found on the UNFCCC website here.
Which countries mention Blue Carbon in their NDCs?
Fair Carbon analysed the most recent NDC submissions for all mangrove countries for blue carbon content. Countries are colour-coded to show the level of commitment to blue carbon in the most recent NDC submission, with dark blue countries demonstrating the strongest commitments. This map may also be viewed here.
To use this tool, click on "View larger map," then click on a country to view more information.
