Article 6 of the Paris Agreements provides for a new generation of carbon markets under the Paris Agreement. A number of fundamental changes with the Paris Agreement, notably the universality of Nationally Determined Contributions, the ambition ratchet mechanism, a balance of emissions and sinks by the second half of the century, and the agreed overall temperature target call for a changed approach. Importantly, mitigation activities must account for, encourage and enable, and most importantly not be a disincentive for increased domestic climate action.

NewClimate Institute, on behalf of the Swedish Energy Agency, is working to elaborate virtual Article 6 pilots to contribute to the discussion regarding rulemaking for Article 6 of the Paris Agreement and inform eventual future investment considerations. These virtual pilots are intended to be fully thought through mitigation pilot activities based on real-world contexts, which could be implemented in the future.

Important aspects are enabling further climate ambition through a focus on high-hanging fruit that further sectoral change and enable more host country NDC ambition in the future. Further aspects include compatibility with and contribution to decarbonization around mid-century, congruency with host country priorities, and a contribution towards the achievement of Sustainable Development Goals.

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