Carbon Market Mechanisms Working Group

Background and Objective

The Carbon Market Mechanisms Working Group (CMM-WG) is chaired by Perspectives Climate Research gGmbH and is supported and coordinated in close collaboration with the Federal Ministry for Economic Affairs and Climate Action of Germany (BMWK). In Phase I (2019-2022) and Phase II (2022-2024), a steady exchange of ideas and experiences between stakeholders was successfully facilitated regarding technical aspects concerning the piloting and rulemaking of market-based cooperation under Article 6 of the Paris Agreement. This included events and meetings at the Innovate4 Climate (I4C), Regional Climate Weeks, and sessions of the Subsidiary Bodies and the Conferences of the Parties (COPs). 

Implementation

Building upon the previous phases, Phase III (2025-2027) will continue to contribute to the operationalisation and implementation of Article 6 cooperation. Even if a breakthrough was achieved at COP29 regarding the Article 6 rules, their implementation will require further discussions including on the PACM standards, tools and methodologies. Additionally, the project will enhance capacities for Article 6 implementation by engaging in relevant events and fora, collaborating with various international initiatives to share insights and coordinate efforts. The emphasis lies on large-scale activities such as programmes, sectoral and policy approaches. The CMM-WG aims to foster a shared understanding of complex technical issues among relevant stakeholders, to provide an informal space for carbon market experts and to enhance the integrity of carbon market instruments.

Milestones and Outlook

In designing international market-based cooperation as set out in Articles 6.2 and 6.4 of the Paris Agreement, the Parties ought to consider the experience gained to date under the Kyoto Protocol (e.g., under the Clean Development Mechanism), build on successful models and operationalise the new rules in a stringent manner. To this end, the BMWK supports the CMM-WG, established at the I4C in Singapore in June 2019. 

The CMM-WG provides a platform for dialogue, enabling the exchange of experiences and coordination of activities to support the role of programmatic and upscaled activities financed through international market-based cooperation or results-based climate finance. The CMM-WG conducts regular meetings and workshops attended by technical experts and stakeholders to share experiences, challenges, and success stories of their activities. In addition, background papers on technical aspects of the ongoing operationalisation and implementation of Article 6 are prepared and circulated to consolidate a common understanding. 

In this way, the working group contributes to the following key areas: 

• Contributing to the operationalisation and enhancement the Paris Agreement Crediting Mechanism with a special focus on methodological documents for upscaled activities 
• Elaborating technical issues in the ongoing Article 6 implementation and coordinating Article 6 capacity-building efforts 
• Spreading of ambitious best practice approaches and concepts in the implementation of Article 6.2 cooperative approaches
• Enhancing the alignment of the voluntary carbon market (VCM) with the Paris Agreement