Market mechanism debate: Article 6 key to emissions reduction

Can market mechanisms deliver?

- VARUN MOHAN PhD scholar at National Institute of Advanced Studies, Bengaluru. Also research fellow with the Earth System Governance Project

The 29th United Nations Climate Change Conference (COP29) in Baku, Azerbaijan, concluded amid widespread disappointment and criticism. Though it is considered a failed COP, one part of the compromise deal was the operationalisation of Article 6 of the Paris Agreement. Article 6 of the 2015 Paris Agreement establishes a framework for international cooperation to achieve climate goals through market-driven and non-market mechanisms.

It facilitates emissions reductions via three pathways: Article 6.2, enabling nations to trade surplus reductions as Internationally Transferred Mitigation Outcomes (ITMOs) to meet their Nationally Determined Contributions (NDCs); Article 6.4, creating a UN-regulated global carbon market to certify and trade credits; and Article 6.8, focusing on non-market approaches like technology transfer, capacity building, and sustainable development to support vulnerable communities.

Together, these mechanisms aim to enhance climate finance, foster collaboration, and ensure accountability in emissions reductions. However, a more pressing question remains: Are market mechanisms truly capable of delivering the deep emissions reductions required?