Understanding Article 6.2 reporting with the JCM: Experience from mutual learning program

Discussion Paper

Executive summary

  • Under Article 6 paragraph 2 (Article 6.2) of the Paris Agreement (PA), Parties may take cooperative approaches in the implementation and achievement of nationally determined contributions (NDCs). The draft guidance of Article 6.2 stipulates, inter alia, the reporting requirements for the participating Parties to engage in a cooperative approach to ensure environmental integrity and transparency by applying robust accounting, to avoid double counting and other issues.
  • This paper presents and evaluates possible options for Article 6.2 reporting, drawing on the results of the Mutual Learning Program for Enhanced Transparency (MLP) and the Asian Transparency Workshop (ATW). The MLP offered an opportunity for participants to engage in a hypothetical Article 6.2 reporting drafting exercise using the Joint Crediting Mechanism (JCM) as an example of a cooperative approach. At the ATW, participants then held discussions to share their views on how Article 6.2 reporting can be realised in their countries in the future. Reporting requirements with possible reporting options are identified, and these options were evaluated using two criteria (i.e. transparency and administrative efficiency).
    • Timing of submission of initial report (IR): Higher levels of transparency can be achieved by submitting an IR at an early stage, no later than the time of authorisation or initial first transfer of mitigation outcomes. Alternatively, submitting the IR in conjunction with the next due biennial transparency report (BTR) can be more efficient in terms of administration.
    • Methodology for calculation of the expected mitigation: Although IR requires information on expected mitigation from a cooperative approach, there is no specific requirement to report the methodology used to calculate the expected mitigation. Reporting on the methodology will certainly enhance transparency, but it may reduce administrative efficiency if it requires inter-ministerial coordination between participating Parties to ensure that the reported approach and amount is consistent.
    • Arrangements for authorisation (governance): JCM participating countries can apply the existing arrangements set by the Joint Committee (JC) to carry out bilateral authorisation of the first transfer of mitigation outcomes. In this way, countries can secure higher administrative efficiency compared with unilateral authorisation by individual governments. Unilateral authorisation must consider ways to align the timing and authorisation arrangement within each government as well as how this relates with the process of the JC.
    • Arrangements for authorisation (Level): Project level authorisation is in line with the existing project registration/approval process by the JC. Scheme level authorisation allows higher administrative efficiency as it is a one-time process, but it may be difficult for partner countries to regulate transfers of internationally transferred mitigation outcomes (ITMOs). On the other hand, transfer (credit issuance) level authorisation will be administratively less efficient.
    • JCM credits issued by partner countries: JCM credits issued by partner countries (host countries) are not ITMOs unless they are subsequently transferred internationally. There is no need to report on those credits which remain with the host countries. However, reporting them voluntarily could enhance overall transparency.
    • Quantity of ITMOs used for corresponding adjustments (CAs): Transparency can be enhanced if countries apply CAs using the quantity of ITMOs based on the vintage year to the emissions and removals of the respective year, as the actual year of emission reductions will be reflected in the emissions balance. In addition, if ITMOs are based on the vintage year, this will allow all mitigation outcomes during the NDC implementation period to be included, even if they are first transferred after the NDC implementation period. On the other hand, CAs using the quantity of ITMOs based on the first transfer year may enhance administrative efficiency if the vintage year cannot be tracked.
    • Common information on the JCM: JCM participating countries can enhance transparency by reporting common information on the JCM in regular information as an annex to the BTR containing commonly-agreed information. Alternatively, administrative efficiency is enhanced if countries prepare and report the common information on the JCM separately.
    • Timing of reporting of ITMOs towards the implementation of NDCs: Countries with a single-year target in their NDCs can enhance transparency of reporting if they report the use of ITMOs towards the implementation of their NDCs annually. On the other hand, they can enhance administrative efficiency by reporting the use of ITMOs towards the achievement of their NDCs once in the target year of their NDCs.
  • Recommendations as actions for enhancing future reporting were as follows:
    • For JCM participating countries:
      • Coordination among the JCM participating countries
      • Consideration on how arrangements for authorisation should be formed
      • Possible refinement to the bilateral documents and JCM rules and guidelines
    • For international negotiation processes:
      • Consideration on how to support capacity building in countries participating in Article 6.2
      • Balance between transparency and administrative efficiency must be ensured