The Swedish Energy Agency commissioned Carbon Limits to analyse a key policy question for crediting under the Paris Agreement – whether the mitigation activities generating emission reductions must be inside the scope of the transferring country’s NDC or not. Many countries do not have economy-wide NDC commitments, with some sectors or gases being excluded, including some countries that have stated their interest in engaging with the international market mechanisms. Given the limited coverage of NDCs in many countries, the potential for emission reductions through voluntary cooperation on mitigation outside of NDCs is clearly substantial. This paper examines the benefits and risks of allowing Article 6.4 crediting outside of the scope of NDC commitments, as well as the policy options to mitigate those risks.
The report could be downloaded here.