At the Conference of the Parties to the UNFCCC (COP26) held in Glasgow, the Parties finally agreed on the Article 6 rulebook for the Paris Agreement (PA). This was a long overdue task since the signing of the PA in 2015. The PA allowed the use of internationally transferred mitigation outcomes (ITMOs) towards achieving nationally determined contributions (NDCs). Nevertheless, it was a challenge for the Parties to implement greenhouse gas (GHG) mitigation projects under Article 6 without detailed guidelines. This development is especially significant for Korea as it plans to use voluntary cooperation under Article 6 as a complementary measure to its mitigation efforts. 11.5% of the 2030 GHG reduction target, amounting to 35 million tons, is expected to come from international mitigation activities. Thus, it has become an urgent task for Korea to develop an overarching plan as well as specific guidelines for the implementation of international mitigation activities.

This research reviews Article 6 of the PA and its rulebook specifying ITMOs. The study also addresses the issue of improving Korea’s institutional arrangement for international mitigation activities in light of the rulebook. An example is to determine whether a company should use the emission reductions obtained from a project abroad for its compliance or the NDC target. Our study outlines the limitations associated with utilizing more flexible approaches under the Article 6.2, as the current legal and institutional arrangement is designed on small-scale Clean Development Mechanism (CDM)-typed projects. 

Developing countries indicates their interest in Article 6.2 activities involving low-carbon investment. To utilize the Article 6.2 cooperative approach, both transferring and transferred parties of mitigation outcomes need to comply with the reporting requirement of the enhanced transparency framework of the PA Article 13 and corresponding adjustment. Multilateral development banks and bilateral development agencies support various activities to enhance readiness, enabling environments and infrastructure within developing countries to participate in Article 6 activities. Those activities are reviewed in this study to provide insights for the Korean government as it intends to create synergies between international mitigation activities and its international development cooperation.  

This research proposes two approaches to utilize the PA Article 6 activities towards Korea’s NDC achievement: i) transferring the mitigation outcomes acquired from the activities conducted under Article 6.2 and Article 6.4 in a host country, ii) purchasing mitigation outcomes from the host country or private companies. For the former approach, this study presents an implementation process and explains several issues to be considered under the PA and its rulebook. In the latter, we highlight that the corresponding adjustment of ITMOs might be adapted differently, depending on whether the partner is a government or companies within the boundaries of the PA.

Under the Paris Agreement, all Parties have obligations to reduce GHG emissions, regardless of their stage of national development, in contrast to the Kyoto Protocol. Accordingly, it is necessary to focus not only on cost-effective aspects but also pursuing sustainable development and global environmental integrity when mitigation outcomes are internationally transferred. Based on a clear understanding of the PA Article 6, Korea needs to implement its international mitigation activities. The Article 6.2 approach will require selecting partner countries and government funding. In particular, there is a need to explore ways to link with international mitigation activities as the volume of climate change related-ODA expands. Above all, there is an urgent need to resolve legal and institutional uncertainty related to the private sector’s utilization of mitigation outcomes obtained internationally.