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Government of Canada Developing Article 6 ITMO Framework

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Environment and Climate Change Canada (ECCC) today announced that the Government of Canada is exploring a policy framework to trade internationally transferred mitigation outcomes (ITMOs). ECCC stated that the framework “could allow Canadian companies to participate in international carbon markets catalyzing further investment in climate mitigation activities, including deployment of carbon removal technologies and nature‑based solutions.” The announcement was made by Minister of the Environment, Climate Change and Nature Julie Dabrusin in Ottawa this morning. Article 6 and ITMOs. ECCC noted that Article 6 of the Paris Agreement allows countries to choose to cooperate in meeting their national climate targets through measures including international carbon markets and the trading of ITMOs. It stated that ITMOs could mobilize investment in projects generating high-integrity emissions reductions and removals in Canada and abroad and create opportunities for the deployment of Canadian technology and expertise. ITMO requirements. ECCC further noted that any carbon credit used as an ITMO must meet the requirements of Article 6, including requirements relating to additionality and corresponding adjustments. ECCC stated that it will ensure that any ITMO trading activities are aligned with Article 6 rules and guidance to support environmental integrity and rigorous accounting, including to help ensure that traded emissions reductions and removals are real, additional, verified, and permanent. Next steps. ECCC said that it will engage with provinces and territories, Indigenous organizations, and other partners in exploring a possible approach to operationalizing ITMOs in the Canadian context. ECCC also stated that development of an ITMO framework complements the more than $13B in international climate finance included in the Spring Economic Update. For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com or Jonathan McGillivray at jonathan@resilientllp.com.

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World Bank Group Releases Template Article 6 LOA and Related Guidance

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Resilient LLP is pleased to share that the World Bank Group has today released guidance on Letters of Authorization and Acknowledgement as part of its Article 6 Approach Paper Series. The guidance includes a Letter of Authorization that provides a common template intended to be used for all authorizations to be granted under Articles 6.2 and 6.4 of the Paris Agreement. The Letter of Authorization is intended to be used with schedules that may be specified by each country and includes illustrative terms and conditions that are most likely to maximize investment and value for the country. It also allows each country to actively choose whether a project is intended to be authorized (subject to corresponding adjustments and a Letter of Authorization) or outside the scope of authorization (ideally subject to a Letter of Acknowledgement in order to increase certainty and corresponding investment value). A template Letter of Acknowledgement is also provided. This common template (with schedules) is intended to simplify the process for authorization, reduce transaction costs, and allow flexibility for bilateral arrangements. The guidance also includes a template Letter of Authorization developed by the Multilateral Investment Guarantee Agency (MIGA), which presents illustrative terms that are conducive to facilitating insurance for breach of a Letter of Authorization.   For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.

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Guyana Announces World’s First Credits Eligible for Use for CORSIA

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The Government of Guyana and Architecture for REDD+ Transactions (ART) have announced the world’s first carbon credits eligible for use under the International Civil Aviation Organization’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). ART issued 7.14 million vintage 2021 carbon credits to Guyana under The REDD+ Environmental Excellence Standard (TREES), marking the first issuance of Paris Agreement correspondingly adjusted units reported to the UNFCCC. ART indicated that the credits will be eligible for the first phase of CORSIA (2024-2026), enabling airlines to use them towards their emission reduction targets under the program. Article 6 of the Paris Agreement. ART indicated that the TREES credits were issued to Guyana for reducing emissions from forest loss and degradation and maintaining one of the world’s most intact tropical forests as part of a jurisdictional REDD+ program. In addition, the Government of Guyana authorized the credits to be used for a range of compliance and voluntary purposes pursuant Article 6 of the Paris Agreement. As such, Guyana’s authorization for the use of the credits and its reporting of a corresponding adjustment to the UNFCCC enabled ART to label the credits as “CORSIA Eligible” on its public registry. Guyana is now the first country in the world to report a corresponding adjustment to the UNFCCC as a result of its authorization for the international transfer of emission reduction credits or internationally transferred mitigation outcomes under Article 6.2 of the Paris Agreement.  CORSIA. CORSIA requires airlines from participating countries with annual emissions over 10,000 tonnes of CO2 to monitor and report their emissions. Airlines may use carbon credits to offset any remaining emissions that exceed a percentage of their 2019 baseline emissions. ART and the America Carbon Registry are currently the only crediting programs that have been approved by ICAO to supply credits for…

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Public Policy Forum Publishes Article 6 Report

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We are pleased to announce the release of an Article 6 report published by Public Policy Forum, authored by Lisa DeMarco (Resilient LLP), Katie Sullivan (IETA), and Steve MacDonald (+SM). The report, entitled The Missing Article: How to Get Canada Back in the Game on Article 6, is available now on PPF’s website and sets out a pathway for Canada to maximize the opportunity and minimize the cost of energy transition through Article 6.

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Supervisory Body Publishes Recommendations for Methodologies and Removals Under Article 6.4 of the Paris Agreement

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The Article 6.4 Supervisory Body (SB) has published guidance on activities involving removals under the Article 6.4 mechanism of the Paris Agreement (the Removals Guidance). The SB also published recommendations on the requirements for the development and assessment of Article 6.4 mechanism methodologies (the Methodology Requirements). Both recommendations will be presented for consideration and adoption by the Parties to the Paris Agreement (CMA) at COP 28 starting later this month in Dubai, UAE. This bulletin highlights key information, guidance, and requirements provided by the SB in both the Removals Guidance and the Methodology Requirements. Removals Guidance Recommendation The Removals Guidance defines removals as the outcomes of processes to remove GHGs from the atmosphere through anthropogenic activities and destroy or durably store them. Requirements. The Removals Guidance provides the following requirements for activities involving removals under the Article 6.4 mechanism: Monitoring. Activity participants must monitor removals through appropriate application of quantification and estimation based on field measurements, remote sensing, measurement through instrumentation, and/or modelling. Post-crediting period monitoring, reporting, and remediation of reversals. Activity participants must undertake monitoring, reporting, verification, and remediation measures during the post-crediting monitoring period to confirm the continued existence of removals and to address any reversals of removals for which 6.4 carbon credits (6.4ERs) were issued during the active crediting period(s). The SB noted that 6.4ERs will not be issued for removals generated after the last active crediting period, including during the post-crediting monitoring period. Reporting. Activity participants must prepare monitoring reports after implementing monitoring operations and methods. These reports are to be prepared without a gap between two successive monitoring periods. The SB noted that methodologies will contain provisions specifying the minimum frequency of monitoring report submission, commensurate with the degree and nature of the risk of reversals. Accounting for removals. Removals eligible for crediting must exceed the applicable baseline determined in accordance with the Methodology Requirements and will be…

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