| Green Policy Platform

SPAR6C Program Introduction

Many developing and emerging economies are keen to pursue carbon transactions under Article 6 of the Paris Agreement in the hope that they will promote ambitious climate change mitigation and generate sustainable development outcomes. However, for countries to be fully prepared to actively engage in the future Article 6 carbon market, there is a steep learning curve.

Article 6 transactions must be underpinned by strong technical fundamentals to safeguard environmental integrity and meet the other requirements of the Paris Agreement and the Article 6 rulebook agreed to in Glasgow. Building robust national governance frameworks to respond to these requirements and building sustainable national capacities to facilitate transactions is essential. Governments need to establish institutional structures, pass transparent regulations, and create well thought-out strategies to guide decision makers and provide clear signals to private sector investors. Human resource capacities and technical skills related to Article 6 must also be strengthened in stakeholders throughout the entire carbon trading ecosystem, including government, private sector, and civil society. One of the best ways to build the necessary skills and capacities is through piloting under a learning by doing approach.

Recognizing these needs, the German Federal Ministry of Economic Affairs and Climate Action (BMWK) is funding a €20.4 million program through the International Climate Initiative (IKI) titled Supporting Preparedness for Article 6 Cooperation (SPAR6C). Among the program’s many ambitious goals is to support the partner governments of Colombia, Pakistan, Thailand, and Zambia to become fully prepared to engage in Article 6 transactions. Launched officially in June 2022 and continuing into 2027, SPAR6C is currently the largest and most comprehensive program focused solely on enhancing Article 6 preparedness globally. It is being implemented by a consortium of partners under the leadership of the Global Green Growth Institute (GGGI) (Box 1).

The defining characteristic of SPAR6C is its focus on implementation and practical application of best practices. Accordingly, the program is composed of three interconnected components as shown in Figure 1: Country readiness support in four countries, a compendium of resources called the “Article 6 Toolbox”, and a forum for knowledge generation, dissemination and application called the “Community of Practice for Article 6 Implementing Countries”.

Country Readiness Support

Improving the readiness of the four priority partner countries to engage in Article 6 transactions is a major focus of SPAR6C. The program will undertake tailored technical assistance and capacity building activities for government decision makers and other national stakeholders which will be shaped through a process of in-depth readiness assessments to help to identify the priorities for each country. Hybrid teams of international and national experts – often composed of multiple consortium partners – will then support stakeholders with some configuration of medium- and long-term emissions planning, governance framework development (including the design of strategies, regulations, institutional arrangements, etc.), and the development of mitigation activities that can generate Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6. The program aims to result in, among other things, eight Mitigation Activity Design Documents (MADDs) endorsed by partner countries who are well-equipped with the governance frameworks and skills to engage in transactions and host mitigation activities.

The four priority partner countries involved in SPAR6C constitute a unique peer group for learning around Article 6 implementation. These countries were selected because of their geographic and economic diversity, their importance to the Government of Germany, their potential for cross-learning, links to consortium partners and status as members of GGGI. However, most importantly, these countries demonstrated strong interest in Article 6 engagement. Their keenness has already resulted in productive discussions with consortium partners in inception missions throughout July and August intended to inform the Country Readiness and Needs Assessments. These assessments will allow government and consortium partners to better understand where there are gaps in governance frameworks, what type of capacity building is needed, and which sectors or technologies might be most eligible for trading based on their Nationally Determined Contributions.

Community of Practice for Article 6 Implementing Countries

A program of this size and scope is expected to substantially contribute to the future development of the Article 6 carbon market. As such, SPAR6C will share its lessons learned in real-time by facilitating global dialogue on Article 6 implementation through a Community of Practice for Article 6 Implementing Countries (CoP-ASIC). In line with the program’s overall focus on implementation, this unique forum will provide stakeholders the opportunity to learn from each other as they design their institutional arrangements and mitigation activities and establish a global network of government experts on Article 6. Although the first annual CoP-ASIC meeting is not planned to take place until June 2023, knowledge exchange between program partners Thailand and Colombia on the topic of activity registries has already been identified as an area of priority. Other areas of potential future cross-learning include forestry sector crediting under Article 6 and policy approaches.

Through the CoP-ASIC, the program aims to cultivate a new generation of carbon pricing experts in partner countries by engaging them in science-based policy research on Article 6 implementation. Using a research mentorship approach, the program will invite eight young researchers (two from each partner country: Colombia, Pakistan, Thailand and Zambia) per year from a variety of academic backgrounds and levels of experience to examine the challenges and opportunities associated with Article 6 implementation in their country. These young researchers will be paired with local and international research mentors as they develop a paper for presentation and discussion at the annual meeting of the CoP-ASIC, alongside other global knowledge exchange on Article 6 implementation by government stakeholders, private sector, and other international experts.

Beyond the knowledge generation, dissemination and application functions of the CoP-ASIC, the research-based approach taken by the program seeks to promote sustainable capacity building – a perennial challenge for development programs – by engaging national youth in the process of unpacking Article 6 and exposing them to global expert discussions on the topic. After each one-year mentorship cycle has ended, successful participants will be supported with internships giving them on-the-job experience within the Article 6 implementation ecosystem (in public or private sector roles).

The CoP-ASIC will be officially launched at the 27th Conference of Parties (COP27) in Sharm El Sheikh this year on November 9th at the International Emissions Trading Association (IETA) Business Hub. The launch event will be co-hosted by BMWK and GGGI and feature speakers from consortium partners UNEP Copenhagen Climate Center (UNEP-CCC) as well as representatives from all partner countries

Article 6 Toolbox

Ever since the signing of the Paris Agreement, global experts on carbon pricing and carbon markets have been debating, publishing, and revising Article 6 implementation support materials for the wider climate change community in attempts to clarify and simplify processes and speed up implementation of carbon transactions, particularly through bilateral cooperative approaches under Article 6.2. Building on this and forthcoming guidance from the UNFCCC Supervisory Body for Article 6.4 transactions, SPAR6C aims to create a collection of implementation tools and guides for both partner countries and the broader global community to utilize in their Article 6 readiness journeys. Recognizing the need for practical application, the program aims to create enduringly relevant, user-friendly guidance for government and other Article 6 practitioners. To achieve this, the "SPAR6C Article 6 Toolbox" will cover a wide spectrum of topics related to Article 6 transactions, with a focus on integration of best practices, including the latest UNFCCC guidance on rules, modalities and procedures for Article 6.4 and lessons learned from bilateral cooperation under Article 6.2. The development of the guides will be iterative in nature, benefitting from the experiences of others captured in knowledge exchange between program partners and others as global activity in the Article 6 market swells. To ensure that the toolbox guides and resources are useful, country partners receiving readiness support will have an important role in review, and the latest guidance will be presented at annual CoP-ASIC events.

Team of Experts

Partner countries will benefit from the insights of a wide range of global expertise mobilized to implement SPAR6C. Overall, the consortium of partners includes more than 35 international experts in the areas of climate economics, carbon pricing and trading, project development, transparency and MRV, governance and a range of sectoral specialties. For example, GGGI – overall program lead and Colombia country lead – has worked since 2019 to support countries Nepal, Cambodia, Indonesia, Senegal, Vietnam and Morocco in their Article 6 readiness journeys providing technical assistance from within government institutions. Toolbox development will be led by consortium partners Carbon Limits, a widely referenced source of knowledge on Article 6 implementation. The research focus and experience of consortium partners UNEP Copenhagen Climate Center (formerly UNEP-Danish Technical University Partnership) will also contribute substantially to the toolbox, and will play a key role in the successful implementation of research partnerships in the CoP-ASIC. The vast international project finance, mitigation activity development and other technical experience from partners GFA Consulting and Kommunalkredit Public Consulting, leading efforts in Zambia and Thailand, respectively, will also be critical in developing high quality MADDs and governance frameworks.

SPAR6C Outreach and Coordination

As implementation of SPAR6C moves forward, GGGI and consortium partners are seeking to establish national, regional and global partnerships with other stakeholder institutions in the Article 6 ecosystem, in line with the program’s focus on knowledge sharing and mutual learning. Initial findings in the Readiness and Needs Assessments, as well as results of other technical support in the country programs are tentatively scheduled for open discussion among program partners and other interested countries and stakeholders in June 2023, alongside the 58th meeting of the Subsidiary Body for Scientific and Technological Advice (SBSTA 58) in Bonn, Germany.