UN Article 6.4 should become offset standard: Atmosfair

Article 6.4 of the Paris climate agreement should become the standard for carbon offset credits both regarding the double-counting of emissions reductions and the role granted to host countries, chief executive of non-profit carbon credit developer Atmosfair Dietrich Brockhagen told Argus.

The voluntary carbon market (VCM) should incorporate much of the Article 6 provisions, otherwise lower quality projects will continue to dominate and diminish the market's integrity and credibility, Brockhagen said.

Article 6.4 is designed to establish a high integrity centralised UN-supervised carbon market. The rules for the mechanism are currently being finalised by the UN's climate arm.

But the key feature of Article 6.4 is less its much-touted corresponding adjustment — which precludes double counting of achieved emissions reductions by the host and buyer country — than the necessary co-operation between project developers and host country governments, Brockhagen said.

Joint planning, development of project activities and negotiations with the host government when setting up a carbon offset project are "crucial", Brockhagen said, as this allows a host government to maintain "authority" over its nationally-determined contribution (NDC) — emissions reduction pledge — to the Paris deal.

The government can decide whether it should implement certain projects itself or co-operate with an investor from abroad, incentivising developers only to propose projects in the best interests of the country.

But an Article 6.4 credit is only worth as much as the transparency and quality of the underlying NDC — a corresponding adjustment based on a shoddy NDC can amount to "hot air", Brockhagen said. "Having a corresponding adjustment does not automatically guarantee a good project."

"Ultimately, all good offset projects have to be additional at least to the government policies in its NDCs, so the government sets the ambition threshold," Brockhagen said. The transparency key to this would only be provided by Article 6 provisions.

Negotiations with host country governments can be lengthy and complicated processes that some developers of carbon offsetting projects in the VCM are "understandably" unwilling to go through, Brockhagen said. He pointed to the two-year long process Atmosfair undertook with the Nigerian government when building a cook-stove factory project there in 2022.

Atmosfair has since 2019 focused exclusively on developing projects aligned with Article 6 standards. "I do not know whether other offsetting companies will follow us here" until the mechanism's rules are either adapted by or enforced in the VCM, Brockhagen said.

Atmosfair currently "parks" its Article 6.4-aligned credits with the VCM's Gold Standard ahead of the article registry's full operationalisation. "It is hard to come up with any price tag for the new certificates," Brockhagen said. "There is not yet a real market and the unsuccessful negotiations in Dubai have not helped," he said, referring to the failure of parties to come to an agreement on outstanding Article 6 elements at the UN Cop 28 climate conference last year.

By Chloe Jardine