June 2019 – In Katowice, Parties were unable to agree on a rulebook on Article 6. One of the contentious issues was the introduction of the so-called Share of Proceeds (SOP), an international tax on activities and/or emission credits generated by international market mechanisms for climate change mitigation. The Paris Agreement requires an SOP to be generated through Art. 6.4 activities, while SOP is not mentioned in the context of cooperative approaches under Art. 6.2. In Katowice, negotiations saw a stalemate between many developing country Parties pushing to extend the SOP to Art. 6.2 and industrialized countries unwilling to accept it.
Against this backdrop, Perspectives and Climate Focus have published a short policy-oriented study that seeks to contribute to the elaboration of the rulebook for carbon market instruments under Article 6 of the Paris Agreement. The objective of the study is to enhance the base of evidence for this discussion by providing an analytical background on previous experiences with the SOP under the CDM and current technical options as an input to the political negotiations. This study has been prepared in the context of the BMU-supported project "Climate Finance Innovators – Linking carbon markets with climate finance in Africa".