Robust Accounting of International Transfers under Article 6 of the Paris Agreement - Preliminary Findings

Abstract

This discussion paper explores key issues and options to ensure robust accounting of international transfers from market mechanisms under Article 6 of the Paris Agreement. The paper provides an overview of key issues that must be addressed to ensure robust account and highlights approaches to address them. The further analysis focuses on two aspects: we first explore the nature and scope of “internationally transferred mitigation outcomes” under Article 6.2 of the Paris Agreement, discussing possible definitions and scopes. We then assess how double claiming of emission reductions could be avoided through “corresponding adjustments”, taking into account the diversity of nationally determined contributions under the Paris Agreement.

Full text

Robust Accounting of International
Transfers under Article 6 of the Paris
Agreement – Preliminary Findings
Discussion Paper

Editorial information
Publisher
German Emissions Trading Authority (DEHSt)
at the German Environment Agency
Bismarckplatz 1
D-14193 Berlin
Phone: +49 (0) 30 89 03-50 50
Fax: +49 (0) 30 89 03-50 10
emissionstrading@dehst.de
Internet: www.dehst.de/EN
Status: October 2016
Authors
Lambert Schneider
Derik Broekhoff
Stockholm Environment Institute (SEI), Boston
Martin Cames
Öko-Institut, Berlin
Jürg Füssler
INFRAS, Zürich
Stephanie La Hoz Theuer
University of Cambridge
Öko-Institut e.V.
Schicklerstraße 5-7
10179 Berlin
Phone: +49 (30) 40 50 85-0
On behalf of Umweltbundesamt (German Environment Agency)
Umweltforschungsplan des Bundesministeriums für Umwelt, Naturschutz, Bau und Reaktorsicherheit
Forschungskennzahl 3716 42 501 0
Cover image: Tkemot/ Shutterstock.com
This PDF is not barrier-free. If you need a barrier-free PDF, please do not hesitate to contact us.
This paper was written for the German Environment Agency (UBA) as part of the project titled “Entwicklung von
Konzepten zur Umsetzung von neuen oder Transformation von vorhandenen Marktmechanismen in ein neues
UNFCCC Klimaabkommen ” (FKZ 3716 42 501 0). This project is being carried out by Öko-Institut (coordination)
in cooperation with Stockholm Environment Institute (SEI) and INFRAS.
The contents of this publication do not necessarily reflect the official opinions of the German Environment
Agency.

3Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings
Abstract
This discussion paper explores key issues and options to ensure robust accounting of international transfers
from market mechanisms under Article 6 of the Paris Agreement. The paper provides an overview of key issues
that must be addressed to ensure robust account and highlights approaches to address them. The further
analysis focuses on two aspects: we first explore the nature and scope of “internationally transferred mitigation
outcomes” under Article 6.2 of the Paris Agreement, discussing possible definitions and scopes. We then assess
how double claiming of emission reductions could be avoided through “corresponding adjustments”, taking
into account the diversity of nationally determined contributions under the Paris Agreement.
Kurzbeschreibung
Das vorliegende Diskussionspapier erörtert wichtige Aspekte und Ansätze, um eine robuste Bilanzierung bei der
internationalen Übertragung von Emissionsminderungen aus Marktmechanismen unter Artikel 6 des Pariser
Klimaabkommens sicherzustellen. Das Papier gibt einen Überblick, welche Aspekte geregelt werden müssen,
um eine robuste Bilanzierung sicherzustellen, und zeigt mögliche Regelungsansätze auf. Die weitere Analyse
fokussiert sich auf zwei Fragestellen: zunächst werden mögliche Definition und Geltungsbereiche von “interna-
tional übertragenen Minderungen” unter Artikel 6.2 des Pariser Klimaabkommens erörtert. Daraufhin wird
untersucht, wie eine Doppelzählung von Emissionsreduktionen durch entsprechende Anpassungen vermieden
werden kann. Hierbei werden die verschiedenen Ausprägungen der Klimaschutzbeiträge der Staaten unter dem
Pariser Klimaabkommen berücksichtigt.

Content
1 Introduction ............................................................................................................................................ 7
2 Overview of key issues and approaches for accounting of NDCs ................................................................ 8
3 Overview of key issues and approaches for accounting of international transfers under Article 6 .............. 10
3.1 Quantifying mitigation targets and progress towards mitigation targets .......................................11
3.2 Quantifying mitigation outcomes ...............................................................................................12
3.3 Avoiding double counting .........................................................................................................12
3.4 Accommodating different metrics for mitigation outcomes and mitigation targets .........................13
3.5 Accounting for the vintage of mitigation outcomes and time frame of mitigation targets ................14
4 Nature and scope of ITMOs ..................................................................................................................... 14
4.1 Metric of ITMOs ........................................................................................................................15
4.2 Units versus reported amounts ..................................................................................................16
4.3 Relation of ITMOs to the scope of the NDC of the transferring country ...........................................17
4.4 Use of ITMOs by the acquiring country .......................................................................................18
4.5 Mechanism type .......................................................................................................................19
4.6 Fungibility of ITMOs ..................................................................................................................19
4.7 Relationship to Article 6.4 .........................................................................................................19
5 Avoiding double claiming .......................................................................................................................20
5.1 Should corresponding adjustments be applied to reported emissions or emission budgets? .........20
5.2 In which circumstances do corresponding adjustments need to be applied? .................................23
5.3 How can the diversity of NDCs be addressed? .............................................................................24
5.4 How could the use of different GWP values in NDCs be reconciled? ...............................................25
5.5 How could corresponding adjustments be applied to international transfers under non-GHG mitiga-
tion targets? .............................................................................................................................27
5.6 Should corresponding adjustments apply to emission reductions generated under Article 6.4? .....28
5.7 How could double claiming with ICAO or IMO be avoided? ...........................................................29
6 Conclusions ........................................................................................................................................... 30
7 References .............................................................................................................................................31

5Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings
List of Tables
Table 1: Key elements of accounting for mitigation targets ...............................................................9
Table 2: Provisions to avoid double counting in the Paris Agreement ................................................13
Table 3: Options for the nature and scope of ITMOs ........................................................................14
List of Figures
Figure 1: Issues and possible approaches for robust accounting of international transfers ..................11
Figure 2: Application of corresponding adjustments to reported emissions ........................................21
Figure 3: Application of corresponding adjustments to emission budgets ..........................................22
Figure 4: Application of corresponding adjustments for an international transfer between a country with
a renewable power target and a country with a GHG emissions target ..................................28

Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings 6
Abbreviations
AAU Assigned Amount Unit
BAU Business-As-Usual
CDM Clean Development Mechanism
CER Certified emission reduction
CMA Conference of the Parties serving as the meeting of the Parties to the Paris Agreement
CORSIA Carbon Offsetting and Reduction Scheme for International Aviation
ETS Emissions trading system
EU European Union
GHG Greenhouse gas
GWP Global warming potential
ICAO International Civil International Civil Aviation Organization
IMO International Maritime Organization
INDCs Intended nationally determined contribution
ITL International transaction log
ITMO Internationally transferred mitigation outcome
LDC Least Developed Country
LULUCF Land use, land use change and forestry
NDC Nationally determined contribution
tCO2eq Tonnes of CO2 equivalent
UNFCCC United Nations Framework Convention on Climate Change

7Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings
1 Introduction
Article 6 of the Paris Agreement introduces provisions for using international market mechanisms to fulfil
nationally determined contributions (NDCs). The cooperative approaches under article 6.2 allow countries to
use “internationally transferred mitigation outcomes” (ITMOs) to achieve their NDCs. The cooperative approa-
ches are commonly understood to enable Parties to transfer mitigation outcomes among each other – be it
through international linking of emission trading schemes, international crediting mechanisms, or direct
government-to-government transfers – and to account those outcomes towards their NDCs.
Article 6.4 establishes a new crediting mechanism under the authority and guidance of the Conference of the
Parties serving as the meeting of the Parties to the Paris Agreement (CMA). The provisions resemble strongly
those of the Clean Development Mechanism (CDM): the mechanism has a dual objective of supporting mitiga-
tion action as well as sustainable development, is supervised by a body designated by the CMA, involves public
as well as private entities, requires mitigation action to be additional, real, measurable, long term, and to be
verified by designated operational entities.
The Paris Agreement includes several provisions that aim to ensure robust accounting for mitigation targets.
These include general provisions for accounting for NDCs under Articles 4 and 13 of the Agreement, as well as
specific provisions to account for international transfers under Article 6. The Paris Agreement provides only
generic elements or principles; detailed rules governing these elements will have to be negotiated over the next
years.
This discussion paper explores key issues and options to ensure robust accounting of transfers from internati-
onal market mechanisms under Article 6 of the Paris Agreement. The paper aims to contribute to the ongoing
discussions on international rules governing Article 6. It draws upon the relevant literature, the experiences
with accounting under the Kyoto Protocol and other market mechanisms, and submission by Parties and
non-governmental organizations.
The paper is part of a larger research project exploring different aspects of international rules for Article 6. It
presents preliminary results and will be updated and amended in 2017 based on further research. Here we
provide an overview of what robust accounting is and what elements it entails, both generally with regard to
mitigation targets in NDCs (section 2), and specifically with regard to international transfers under Article 6
(section 3). These overviews aim to facilitate understanding of what issues have to be addressed to ensure
robust accounting and what approaches could be pursued to address these issues. We then explore two aspects
in more detail: the nature and scope of NDCs (section 4) and avoiding double claiming (section 5). Finally, we
provide preliminary conclusions (section 6).
This paper does not yet address a number of other important issues to ensure robust accounting of international
transfers under Article 6, such as tracking transfers (e.g. through registries or reporting provisions) or appropri-
ately accounting for the vintage of mitigation outcomes. We also do not explore all issues in depth. The large
diversity of mitigation targets or actions communicated in NDCs is one of the key accounting challenges not yet
fully reflected in this version of the paper. Moreover, this research project does not explore options for addres-
sing the potential non-permanence of emission reductions or removals, such as for mitigation actions in the
forest sector. We also limit our consideration to accounting for the GHG emissions impact of mitigation action;
we do not explore other potential accounting issues, such as accounting for international support provided and
received or any accounting for sustainable development impacts.
When exploring and discussing options for robust accounting, we make several assumptions and use specific
terminology. Article 6.2 refers to “ITMOs”, while the Article 6.4 mechanism refers to “emission reductions”. For
simplicity, we use the term “international transfers” to refer to transfers of both mitigation outcomes generated
under Article 6.2 and emission reductions resulting from the Article 6.4 mechanism. Respectively, when
referring to “mitigation outcomes”, this includes both ITMOs generated under Article 6.2 and emission reduc-
tions resulting from the Article 6.4 mechanism. We use the term “transferring country” for the country that
transfers a mitigation outcome to another country and “acquiring country” for the country acquiring the
transferred mitigation outcome, noting that such transfers do not necessarily have to involve a price or purchase
of the mitigation outcomes.

Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings 8
The term “environmental integrity” is used in several parts of the Paris Agreement but is not defined. In the
context of Article 6, we assume that environmental integrity means that the use of international transfers under
Article 6 does not result in higher global emissions than if the NDCs had been achieved only through domestic
action. Finally, when referring to “NDCs” we also include intended nationally determined contributions (INDCs)
submitted prior to the adoption of the Paris Agreement.
2 Overview of key issues and approaches for accounting of NDCs
The Paris Agreement includes several general provisions for accounting of NDCs under Articles 4 and 13, as
well as specific provisions for the accounting of international transfers under Article 6. This section provides an
overview of all issues relevant for accounting of NDCs.
In the context of climate mitigation targets, the term “accounting” is often understood to refer to a system that
allows comparing mitigation targets with the progress made, so to understand whether mitigation targets have
been achieved (Prag et al. 2013). Robust accounting generally aims to appropriately reflect levels and changes
to anthropogenic emissions by sources or removals by sinks as a result of mitigation actions by countries or
other entities. Accounting also aims to provide transparency and comparability between mitigation efforts and
to preserve environmental integrity. Article 4.13 of the Paris Agreements specifies that Parties, in accounting for
their NDCs, should promote environmental integrity, transparency, accuracy, completeness, comparability,
consistency, and ensure the avoidance of double counting.
Accounting for mitigation targets typically involves the following elements:
▸Defining mitigation targets: Accounting for mitigation targets requires (a) that they are expressed in
quantifiable indicators – such as absolute GHG emissions, GHG emissions per gross domestic product (GDP),
or Megawatts (MW) of installed renewable power capacity –, (b) that the scope of the mitigation targets is
clearly defined – including the geographical coverage; the emission sources, removals, and GHGs included;
and the time frames covered –, and (c) that the target level is clearly specified – e.g. in relation to historical
reference year or projected business-as-usual (BAU) emissions. The definition of mitigation targets often
includes specific ways of accounting for the land-use, land-use and forestry (LULUCF) sector.
▸Tracking progress towards targets: Accounting for mitigation targets requires establishing systems and
procedures to track progress towards the targets. This includes defining the methodologies and data sources
to quantify the progress, such as relevant IPCC guidelines; making institutional arrangements to collect
relevant data, calculate the progress achieved, and report on the outcome; and establishing means and
methods to compare the reported and reviewed progress with the mitigation targets.
▸Accounting for international transfers: Robust accounting for international transfers from or to other
countries requires, inter alia, standards and procedures to robustly quantify mitigation outcomes; accoun-
ting rules to account for net flows of such transfers, including their vintage; and establishing systems to
transparently track and reconcile transfers. It may also involve defining which transfers are eligible or any
conditions or limits on transferring or using mitigation outcomes.
▸Accounting for domestic transfers: Domestic transfers could include transfers from emission sources not
included in the scope of the mitigation target, or intertemporal transfers from prior to future target periods
(“banking” or “carry-over”). Robust accounting requires standards and procedures to robustly quantify
mitigation outcomes and accounting rules to account for flows of mitigation outcomes. It may also involve
defining which transfers are eligible or any conditions or limits on transferring or using mitigation outcomes.
▸Final accounting balance: Once all information on progress towards targets and any transfers is available,
a final accounting balance compares the mitigation target with the progress made, adjusting appropriately
for any transfers.
▸International review and compliance: All or some of the information and steps may be subject to an
international review and an international mechanism to facilitate compliance.
Accounting for mitigation targets requires action and information at different points in time:
▸Up-front information defining the mitigation target and the methods used to assess progress towards the
target, as well as relevant information on the accounting approaches used for the LULUCF sector, for interna-
tional or domestic transfers, and for addressing the temporary nature of any emissions or removals (Levin et
al. 2014).

9Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings
▸Regular information on progress made towards achievement of the mitigation target, possibly including
information on transfers.
▸Ex-post information, including a final accounting balance that compares the mitigation target with the
progress made, adjusting appropriately for any transfers.
Table 1 provides an overview of key accounting provisions under the Paris Agreement. Several provisions in the
agreement relate to providing robust upfront information in defining mitigation targets in NDCs (e.g. Articles 4.8
and 4.10, and paragraphs 26-30 of decision 1/CP.21). The agreement also establishes key principles for accoun-
ting, including promoting environmental integrity, transparency, accuracy, completeness, comparability and
consistency, and ensuring the avoidance of double counting (Article 4.13, paragraph 31 of decision 1/CP.21).
Countries have to regularly provide a national inventory report as well as other information necessary to track
progress towards achieving the target, (Articles 13.7, paragraphs 91-98 of decisions 1/CP.21). Robust accoun-
ting shall be applied to the international transfer of mitigation outcomes under the cooperative approaches
(Article 6.2, paragraph 36 of decision 1/CP.21). Emission reductions resulting from the Article 6.4 mechanism
should only be used by one Party towards achieving its NDC (Article 6.5). Finally, countries shall account for
their NDCs, which can be understood to involve a final accounting balance to demonstrate whether their NDC
was achieved (Article 4.13, paragraph 31 of decision 1/CP.21). Several of these provisions may be subject to a
technical expert review (Article 13.11, paragraphs 91-98 of decisions 1/CP.21). Moreover, a mechanism is
established to facilitate implementation and promote compliance with the provisions of the Agreement in a
non-adversarial and non-punitive manner (Article 15). The detailed provisions governing these approaches will
be negotiated over the next years with a view to agree upon a set of international rules to be adopted by the
CMA.
An important question for the negotiations is how the general accounting provisions under Article 4 and the
provisions on the transparency framework of Article 13 will relate to the specific provisions for international
transfer under Article 6. How the general accounting provisions under Article 4 an 13 evolve could have impli-
cations on what accounting provisions are needed under Article 6, and vice-versa. At the same time, some
countries may not engage in international transfers and hence a more limited or simpler set of accounting
provisions could apply to them. In this regard, Parties could explore a tiered or modular approach, with
general accounting provisions applicable to all Parties, and more specific provisions only applicable to Parties
wishing to engage in international transfers.
Table 1: Key elements of accounting for mitigation targets
Element Timing Key issues Provisions in the Paris Agreement
Denition of mi-
tigation targets,
methods and
accounting appro-
aches
Up-front
Clearly dened and quanti-
tative mitigation targets
Consistent and accurate
methods to track progress
(e.g. IPCC Guidelines)
Transparent and robust
accounting methods
Clarity, transparency and understanding of NDCs
(Art. 4.8, para. 28)
Guidance on features of NDCs (para. 26)
Common time frames for NDCs (Art. 4.10)
Public registry of NDCs (Art. 4.12, para. 29)
Accounting for NDCs, including promoting environmen-
tal integrity, transparency, accuracy, completeness,
comparability and consistency, and ensuring the avoi-
dance of double counting (Art. 4.13, para. 31)
Tracking progress Regular
Transparent, accurate,
complete, comparable and
consistent reporting on
progress made
Reporting of national inventory report and information
necessary to track progress (Art. 13.7, para. 91)
Accounting for
international
transfers
Regular
or
ex-post
Robust accounting rules to
avoid double counting and
to account for dierent met-
rics and vintages of mitigati-
on targets
Tracking transfers
Appropriate design of
mechanisms to quantify
mitigation outcomes
Robust accounting to ensure, inter alia, the avoidan-
ce of double counting on the basis of corresponding
adjustments (Art. 6.2, para. 36)
Emission reductions only used by one Party towards
NDC achievement (Art. 6.5, para. 37-38)

Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings 10
Element Timing Key issues Provisions in the Paris Agreement
Accounting for do-
mestic transfers
Regular
or
ex-post
Robust accounting rules
Appropriate quantication
of mitigation outcomes
NA
Final assessment Ex-post Final accounting balance Accounting for NDCs (Art. 4.13, para. 31)
Review and com-
pliance
Regular
or
ex-post
International technical ex-
pert review of information
Compliance assessment
Technical expert review (Art. 13.11, para. 91)
Mechanism to facilitate implementation and promote
compliance (Art. 15, para. 104)
Source: Authors’ own compilation
3 Overview of key issues and approaches for accounting of
international transfers under Article 6
Robust accounting of international transfers involves a number of different issues, which could be addressed
through several approaches, under a range of different governance arrangements (Figure 1). In this section we
identify which issues have to be addressed to ensure robust accounting and which general approaches could be
pursued towards this end; in the next chapters we explore some of these issues and approaches further, inclu-
ding possible governance arrangements.
Key issues that must be addressed to ensure robust accounting of international transfers include (see Figure 1):
▸ Quantifying mitigation targets and progress towards mitigation targets;
▸ Quantifying mitigation outcomes;
▸ Avoiding double counting of emission reductions;
▸ Accommodating any different metrics for mitigation outcomes and mitigation targets;
▸ Accounting for the vintage of mitigation outcomes in relation to mitigation targets; and
▸ Addressing any non-permanence of mitigation outcomes, such as in the LULUCF sector or from geological
storage of CO2.
In sections 3.1 to 3.5 below, we briefly explore these issues, with the exception of addressing non-permanence
of mitigation outcomes. In doing so, we highlight which general (accounting) approaches could address these
issues. A variety of approaches could be used (see Figure 1), including:
▸Accounting rules for international transfers, including rules to appropriately account for the net flow of
international transfers, such as through the “corresponding adjustments” referred to in paragraph 36 of
decision 1/CP.21;
▸Tracking the transfer and use of mitigation outcomes, such as through registry systems or systems
allowing Parties to report on transferred mitigation outcomes and applied corresponding adjustments;
▸Appropriate design of market mechanisms, including standards and procedures to quantify mitigation
outcomes or to avoid double issuance of units;
▸Ensuring clarity of NDCs, such as guidance on elements that countries could clarify when communicating
their NDCs (e.g. the coverage the NDC in terms of sectors, geographical area and GHGs);
▸Ensuring that NDCs have common features, such as agreements between countries or on international
level to use common time frames, common Global Warming Potential (GWP) values or IPCC methodologies;
▸Eligibility requirements for the participation in international market mechanisms, such as require-
ments to have quantitative NDCs and a system in place to track progress towards NDCs;
▸Procedures for reporting and review of relevant information, such biannual reports by countries on
progress towards NDCs and international expert review of the submitted information.

11Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings
In many instances, a combination of approaches may be best suited or even necessary to address a particular
issue; for example, avoiding double counting requires not only robust accounting rules but also clarity on NDCs
and tracking international transfers. In some instances, different approaches could be pursued to address an
issue; for example, all NDCs could use a common set of values for GWP values, or accounting rules could
accommodate differences in the GWP values applied by the countries involved in an international transfer.
Issues (what?) Approaches (how?) Governance (who?)
Quantifying mitigation
targets and progress
Quantifying mitigation
outcomes
Accommodating
different metrics
Accounting
for vintages
Accounting for
non-permanence
Avoiding double counting
Double issuance
Double claiming
Double use
Accounting rules
Tracking
transfers
Mechanism
design
Clarity of NDCs
Common features
of NDCs
Eligibility
requirements
Reporting and
review
e.g. correspon-
ding adjustments
e.g. registries /
reporting
e.g. checks to
avoid double
issuance
e.g. sectors and
GHGs covered
e.g. common
GWP values
e.g. quantitative
mitigation
targets
e.g. CRF tables
Parties
UNFCCC
Bodies regulating
mechanisms
Source: Authors’ own illustration
Figure 1: Issues and possible approaches for robust accounting of international transfers
3.1 Quantifying mitigation targets and progress towards mitigation targets
Appropriate quantification of mitigation targets and progress towards achieving the mitigation targets is a key
prerequisite of robust accounting of international transfers. Without quantification, it is not possible to “count”
the transferred mitigation outcomes towards achieving a mitigation targets.
Quantification of mitigation targets is in all cases required for the acquiring countries if they use the mitigation
outcomes towards achieving their NDC. For transferring countries, quantification of mitigation targets is
required if the mitigation outcomes are generated within the scope of their mitigation target. If the mitigation
outcomes were generated outside the scope of mitigation targets (e.g. in sectors not covered by the target or
affecting GHGs not included in the target) and transferred internationally, quantification of mitigation targets
would not be necessary on the side of the transferring country.
It is also important that mitigation targets can be expressed – at least ex-post – in absolute terms, e.g. as abso-
lute GHG emissions, or the capacity of installed renewable energy. For example, an intensity target expressed as
a reduction in GHG emissions per gross domestic product (GDP) can be converted ex-post into an absolute
amount of GHG emissions, based on the information on GHG emissions and GDP development over time
(Kreibich and Obergassel 2016). Absolute terms are needed to enable the accounting for transfers, e.g. through
corresponding adjustments.

Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings 12
Appropriate quantification of mitigation targets and expressing them – at least ex-post – in absolute terms could
be primarily ensured through clarity on NDCs. Countries could also agree on establishing eligibility require-
ments for the participation in international market mechanisms which require that mitigation targets be quanti-
fied.
3.2 Quantifying mitigation outcomes
Appropriate quantification of mitigation outcomes is another key prerequisite of robust accounting of internati-
onal transfers. Mitigation outcomes are quantified through relevant standards and procedures of the underlying
mechanisms. Appropriate design of the market mechanisms, including its standards, procedures, and gover-
nance arrangements, is thus important.
Under crediting mechanisms, quantification of mitigation outcomes commonly requires standards and proce-
dures as well as institutional arrangements to ensure that mitigation actions are additional – that is, they would
not occur in the absence of the incentives from the crediting mechanism – and that resulting emission reduc-
tions (or other types of outcomes) are not overestimated. Under trading mechanisms, such as international
linking of emissions trading systems (ETSs), a transferred unit reduces the amount of units available for compli-
ance in the country of origin, thereby generating a corresponding emission reduction. The environmental
integrity of the transferred units depends on whether the ETS emissions cap is set below the emissions level that
would occur in the absence of the trading system. Other design features, such as price floors or ceilings, unit
reserves, and provisions for banking of units, also affect the mitigation outcome – mainly by altering the cap
(Schneider et al. 2016).
Under Article 6.2, quantification of mitigation outcomes and ensuring environmental integrity is mainly the
responsibility of the Parties involved in the transfer. Article 6.2 requires countries engaging in cooperative
approaches to ensure environmental integrity and apply robust accounting. Parties have different views
whether the guidance under Article 6.2 extends to all elements of Article 6.2, including environmental integrity,
or only to robust accounting. The quantification of mitigation outcomes could also be seen as one of the
elements to ensure “robust accounting”.
Article 6.4 and decision 1/CP.21 establish specific principles aiming to ensure appropriate quantification of
emission reductions, including “additionality”, “real, measurable and long-term benefits”, and “verification
and certification of emission reductions (...) by designated operational entities”. Under Article 6.4, the CMA and
the body assigned by the CMA may develop rules to implement these principles.
3.3 Avoiding double counting
Double counting of emission reductions occurs when a single GHG emission reduction is counted more than
once towards achieving mitigation targets. If emission reductions are double counted, actual global GHG
emissions are higher than the sum of what individual countries or entities report. As a result, countries or
entities could appear to meet their mitigation targets, while total emissions exceed these levels (Schneider et al.
2015). Avoiding double counting is thus an important prerequisite for ensuring environmental integrity.
In the context of mechanisms transferring mitigation outcomes, double counting can occur in three ways
(Hood et al. 2014; Prag et al. 2011, 2013; Schneider et al. 2015; UNFCCC 2012):
1. Double issuance occurs if more than one unit is issued for the same emissions or emission reductions. For
example, in a fragmented carbon market, with multiple mechanisms under international, bilateral, national
or non-governmental governance, two mechanisms could issue units for the same emissions or emission
reductions. A particular challenge is addressing double issuance where mechanisms account for indirect
lifecycle emissions that occur upstream or downstream of the entities taking the mitigation action.
2. Double claiming occurs if the same emission reductions are counted twice towards fulfilling mitigation
targets: by the country or entity where the reductions occur, through reporting of its reduced GHG emissions,
and by the country or entity using the units issued for these reductions towards meeting its mitigation
target. As with double issuance, double claiming can occur in more indirect ways when mechanisms
account for indirect emissions.

13Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings
3. Double use occurs if the same issued unit is used twice to achieve a mitigation target. Double use may
occur, for example, if a unit is duplicated in registries, or if one country uses the same unit in two different
years to achieve its mitigation target.
Under Paris Agreement, avoiding double counting is relevant for achieving NDCs and international transfers of
mitigation outcomes between countries. The Paris Agreement and decision 1/CP.21 include provisions to avoid
double counting in several contexts: accounting for NDCs under Article 4, international transfers under
Article 6, the transparency framework under Article 13, as well as enhanced action prior to 2020 (see Table 2).
The first three provisions intend to avoid double counting towards NDCs, while the forth provision relates to
double counting with regard to mitigation action prior to 2020.
Table 2: Provisions to avoid double counting in the Paris Agreement
Issue Applicable provisions
Accounting for NDCs
(Article 4) Article 4.13: Parties shall avoid double counting in accounting for their NDCs
International transfers
(Article 6)
Article 6.2: Parties engaging in international transfers of mitigation outcomes shall apply
robust accounting to ensure, inter alia, the avoidance of double counting
Paragraph 36 of decision 1/CP.21: The guidance under Article 6.2 should “ensure that
double counting is avoided on the basis of a corresponding adjustment by Parties for
both anthropogenic emissions by sources and removals by sinks covered by their NDCs”.
Article 6.5: Emission reductions resulting from the Article 6.4 mechanism shall not be
used to demonstrate achievement of the host Party‘s NDC if used by another Party to
demonstrate achievement of its NDC.
Transparency framework
(Article 13)
Paragraph 94: The modalities, procedures and guidelines for Article 13.13 should take
into account the need to ensure that double counting is avoided.
Enhanced action prior to
2020 (decision 1/CP.21)
Paragraph 106: Parties are encouraged to promote the voluntary cancellation by Party
and non-Party stakeholders, without double counting, of units issued under the Kyoto
Protocol, including certied emission reductions that are valid for the second commit-
ment period.
Paragraph 107: Host and purchasing Parties are urged to report transparently on interna-
tionally transferred mitigation outcomes, including outcomes used to meet international
pledges, and emission units issued under the Kyoto Protocol with a view to promoting
environmental integrity and avoiding double counting.
Source: Authors’ own compilation
Double counting could not only occur between NDCs but also between NDCs and international mechanisms to
address emissions from international aviation or international shipping (Cames and Schneider 2016). At its 39th
assembly in October 2016, the International Civil Aviation Organization (ICAO) adopted the Carbon Offsetting
and Reduction Scheme for International Aviation (CORSIA). The scheme allows using emissions units generated
from mechanisms established under the United Nations Framework Convention on Climate Change (UNFCCC)
and the Paris Agreement, provided that “they align with future decisions, including on avoiding double coun-
ting”.
Addressing double counting requires action at different levels (Schneider et al. 2015), including mainly accoun-
ting rules for international transfers, tracking the transfer and use of mitigation outcomes, appropriate design
of market mechanisms, and ensuring clarity on NDCs. Section 5 of this discussion paper explores one form of
double counting – double claiming – in more detail in the context of the Paris Agreement.
3.4 Accommodating different metrics for mitigation outcomes and
mitigation targets
Mitigation targets and transferred mitigation outcomes can be expressed in a variety of metrics. Many countries
included in their NDCs mitigation targets which are not quantified in GHG emission levels (in the following
referred to as “non-GHG mitigation targets”), including for increasing energy efficiency, expanding renewable
energy use, or expanding forest areas. Some of these countries have communicated only non-GHG mitigation
targets. Among the countries that use GHG targets, different GWP values are used (Graichen et al. 2016).

Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings 14
Different metrics pose challenges for accounting for international transfers. They could be addressed through a
range of different approaches, including accounting rules for international transfers, appropriate design of
market mechanisms, ensuring that NDCs have common features, and eligibility requirements for the participa-
tion in international market mechanisms.
3.5 Accounting for the vintage of mitigation outcomes and time frame of
mitigation targets
Appropriately accounting for the vintage of mitigation outcomes and the time frame of mitigation targets is an
important and complex issue for ensuring robust accounting. Not appropriately accounting for the vintage of
mitigation outcomes in relation to time frames of mitigation targets can, in some instances, lead to higher
cumulative global GHG emissions, even if the transferred mitigation outcomes have environmental integrity.
This could occur under a range of different circumstances. Exploring different constellations and aspects of
accounting of the vintage of mitigation outcomes in relation to the time frame of mitigation target is an
important area of further research.
Under the Kyoto Protocol, all countries with commitments inscribed in Annex B and mitigation targets for the
same defined multi-year commitment periods. Many NDCs only specify mitigation targets for single years, such
as 2025 or 2030. Single-year targets pose several challenges for accounting for international unit transfers
(Prag et al. 2013; Kreibich and Obergassel 2016; Lazarus et al. 2014). Appropriate accounting for the vintage of
mitigation outcomes and time periods of mitigation targets requires actions at a variety of levels, in particular
robust accounting rules. Ensuring that NDCs use common time frames, as envisaged under Article 4.10, may
greatly facilitate robust accounting for the vintage of mitigation outcomes.
4 Nature and scope of ITMOs
Article 6.2 of the Paris Agreement allows countries to engage in cooperative approaches that involve the use of
“internationally transferred mitigation outcomes” (ITMOs) towards NDCs. ITMOs or “mitigation outcomes” are
not further defined in the Agreement. Understanding and defining the nature of ITMOs is one important ques-
tion in the negotiations on guidance under Article 6.2. How ITMOs are defined has implications on what rules
are necessary to ensure robust accounting. This section explores different aspects of the definition and scope of
ITMOs. Table 3 provides an overview of the aspects that are further discussed below.
Table 3: Options for the nature and scope of ITMOs
Issue Options
Metric of ITMOs ▸One common metric (e.g. t CO2eq)
▸Several metrics (e.g. t CO2eq, MW of renewable power capacity installed)
Units versusreported
amounts
▸Units transferred within or across electronic registries
▸Amounts reported by countries in tables
Relation to seller country
NDCs
▸Mitigation outcomes can be generated only within the scope of NDCs
▸Mitigation outcomes may be generated both within and outside the scope of NDCs
Use of ITMOs
▸Mitigation outcomes are only considered as IMTOs if they are both internationally
transferred and used by the buyer country towards achieving its NDC
▸Mitigation outcomes are considered as ITMOs whenever they are internationally trans-
ferred; they could be used for various purposes, including NDC achievement or
voluntary cancellation
Mechanism type
▸Trading schemes, such as international linking of ETSs
▸Crediting schemes
▸Other types of government-to-government transfers which may or may not involve a
market mechanism

15Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings
Issue Options
Fungibility of ITMOs ▸ITMOs as a single international compliance unit
▸Different types of ITMOs recognized by different countries or groups of countries
Relationship to Article 6.4
▸Emission reductions generated under the Article 6.4 mechanism are considered as
ITMOs if they are (a) internationally transferred and (b) used by the buyer country to
achieve its NDC
▸Emission reductions generated under the Article 6.4 mechanism are considered as
ITMOs if they are (a) internationally transferred, (b) used by the buyer country to
achieve its NDC, and (c) covered by the scope of the seller country NDC
▸Emission reductions generated under Article 6.4 are always considered as ITMOs
▸Emission reductions generated under Article 6.4 are never considered as ITMOs
Source: Authors’ own compilation
4.1 Metric of ITMOs
The metric of ITMOs relates to the question how “mitigation outcomes” are defined. Under the UNFCCC, the
term “mitigation” relates to “mitigation of climate change”, which has been linked to reducing GHG emissions
or enhancing removals in several places. Article 2(a) of the Convention requires Parties to take measures on the
“mitigation of climate change, by limiting its anthropogenic emissions of greenhouse gases and protecting and
enhancing its greenhouse gas sinks and reservoirs”. Similarly, Article 4.14 of the Paris Agreement refers to
“mitigation actions with respect to anthropogenic emissions and removals”. One could thus argue that the
outcome of mitigation is ultimately a reduction in GHG emissions or an enhancement of removals. This would
point to using GHG metrics for international transfers, such as t CO2eq, which has been used under the Kyoto
Protocol. Alternatively, the mitigation outcomes could be measured in a variety of other metrics that would
relate more to the specific mitigation actions taken, such as MWh of renewable electricity generated, MWh of
energy saved through demand side energy efficiency measures, ha of land forested, etc.).
Many Parties have proposed that t CO2eq be used for ITMOs. Using t CO2eq as the only or predominant metric for
transfers under Article 6.2 could have several advantages. Countries with GHG targets can only account ITMOs
towards achieving their NDC if the ITMO is expressed as or converted to a GHG metric. So far, all countries that
have indicated in NDCs that they intend to purchase international carbon market units have communicated
GHG targets in their NDCs. The Paris Agreement also encourages that targets be expressed as “emissions”
targets. According to Article 4.4, developed countries should express their targets as “emission reduction
targets” and developing countries are encouraged to move over time towards “emission reduction or limitation
targets”. This suggests that, over time, most NDCs will include targets expressed in GHG metrics. For transfers
between countries with GHG targets, t CO2eq is a well-established and straightforward metric for mitigation
outcomes. Using t CO2eq requires either that common GWP values be applied by the countries involved in an
international transfer or that differences in GWP values between countries be accounted for (see section 5.4).
Using only t CO2eq for transfers under Article 6.2 would make accounting for ITMOs through “corresponding
adjustments” simpler. Corresponding adjustments, as referred to in paragraph 36 of decision 1/CP.21, could be
compiled, aggregated and reconciled more easily if a common metric is used. It may also provide for more
clarity and make it easier to ensure that what is transferred from country A corresponds to what country B
receives.
A further important advantage of t CO2eq is that it reflects the ultimate outcome in terms of GHG emissions and
removals. Indeed, for other metrics, the mitigation outcome in terms of emissions and removals may not
necessarily “correspond” between the two countries engaging in cooperative approaches. Assume, for example,
two countries that have targets for renewable electricity generation and use a system of renewable energy
certificates (RECs) to achieve their targets. The two RECs systems are interlinked, enabling private sector entities
to trade RECs between the two countries. The countries may wish to account the net transfer of RECs towards
achieving their NDCs, to ensure that the mitigation outcome from the bilateral transfer of RECs is reflected and
accounted for when achieving their NDC. However, if their electricity systems are not connected and have a
different carbon intensity, the emission reductions from one MWh of renewable electricity may differ between
the two countries.

Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings 16
One MWh of renewable electricity in country A could lead to higher or lower emission reductions than in
country B. Transferring MWh of renewable electricity as ITMOs would thus not correspond to the same mitiga-
tion outcome and could lead to higher or lower aggregated GHG emissions from the two countries.
The diversity of mitigation targets and the application of “corresponding adjustments”, as referred to in para-
graph 36 of decision 1/CP.21, are important considerations for potential other metrics than t CO2eq. 32 coun-
tries have communicated only non-GHG mitigation targets or actions in their NDCs (Graichen et al. 2016). To
engage in international transfers and avoid double claiming, these countries would either need to convert their
non-GHG mitigation target into a GHG emissions target – which would allow them to make a corresponding
adjustment for an ITMO in t CO2eq – or the corresponding adjustment would need to be made in the non-GHG
metric. This latter option could involve a pair of corresponding adjustments in different metrics for one ITMO
(see section 5.5).
This raises the question how the metrics of ITMOs and corresponding adjustments relate to each other. The
metric of ITMOs could be defined independently of the metric of the corresponding adjustments. In that
case, t CO2eq could be used as the single metric of ITMOs, whereas different metrics may be used for correspon-
ding adjustments to account for non-GHG mitigation targets. This may a simple approach to ensure consistent
tracking and reporting on ITMOs. Alternatively, ITMOs might be defined in the same metrics as the correspon-
ding adjustments. This could require expressing a single ITMO in two different, corresponding metrics, to
account for the different metrics of mitigation targets of two countries involved. This latter approach may be
more complex for reporting and tracking international transfers.
In conclusion, t CO2eq is a well-established metric for ITMOs, which fits the purpose under most circumstances.
This metric would also ensure that the mitigation outcome corresponds between the transferring and the
acquiring country. Using t CO2eq as a generic metric would also not limit the ability of countries to engage in
international transfers, as the mitigation outcome from mechanisms in other metrics, such as international
transfers of RECs, could be converted into t CO2eq.
4.2 Units versus reported amounts
The term ITMO is not further defined in the Paris Agreement and decision 1/CP.21. In the negotiations, the term
was mainly introduced to avoid implicit references to market mechanisms (Marcu 2016). ITMOs could consti-
tute:
▸ Units that move across or within electronic registries; or
▸ Amounts reported by countries for the purpose of accounting for international transfers and implementing
corresponding adjustments.
The first option would require establishing registry systems to transfer ITMOs. Formalized registries may
facilitate the tracking of the issuance, transfer and use of ITMOs, because registry systems could effectively
prevent double use of units. Relevant information on the mitigation outcomes could be attached to the units in
the form of serial numbers, similar to registry systems used under the Kyoto Protocol or in ETSs. This option
may also facilitate the reconciliation of international transfers between countries, i.e. ensuring that the transfer-
ring and acquiring countries report consistent information. However, it also requires establishing the necessary
infrastructure and agreeing on common international standards for such transfers. If ITMOs are considered as
units transferred across or within electronic registries, several further questions arise:
▸ Do they represent a single international compliance unit or do they include different types of units generated
under the governance of the Parties involved in the transfer (e.g. units transferred in a bilateral registry of a
bilateral mechanism)?
▸ Do they represent an emissions budget such as assigned amount units (AAUs) under the Kyoto Protocol or
are they issued for internationally transferred amounts only?
▸ What information should be attached to the units (e.g. country of origin, vintage, etc)?
▸ Would unit transfers occur in bilateral arrangements for registries and what (type of) international oversight
would be provided on such transfers?

17Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings
In the second option, ITMOs would be considered as amounts that are reported by countries, possibly in tables,
such as tabular reporting formats. Relevant information about the mitigation outcomes, such as the country of
origin, whether the mitigation outcomes are generated within or outside the scope of the NDC of the originating
country, and in which time periods the mitigation outcomes were generated, would have to be provided through
appropriate formats of reporting. Under this option, countries involving in international transfers may still wish
to operate electronic registries to track unit transfers. However, these registries would be operated under the
responsibility of the countries involved. Different registries may exist for different mechanisms, but reporting on
transfers to UNFCCC would follow common formats.
In principle, both options may provide appropriate means to ensure transparent information and robust
accounting, depending how they are implemented, in particular whether all relevant information is reported in
a consistent and complete manner. Reporting on ITMOs may provide more flexibility to countries to set up their
own registries, suited to their own purposes. However, it might also be more prone to errors; the countries
involved in international transfers would need to report information consistently, and errors or inconsistencies
may need to be resolved through corrections ex-post. Registries or an international transaction log (ITL) as
under the Kyoto Protocol may provide higher assurance that unit transfers are consistently tracked and double
counting is avoided.
4.3 Relation of ITMOs to the scope of the NDC of the transferring country
Most developed countries and a number of developing countries have pledged economy-wide mitigation targets
in their NDCs. These NDCs cover about 58 % of global GHG emissions. However, 108 NDCs, covering about
38 % of global GHG emissions, only cover part of the countries‘ GHG emissions (Graichen et al. 2016). Some
NDCs only include mitigation targets or actions targeting specific sectors or activities, and some NDCs do not
include all GHGs. Whether or not emissions are covered by mitigation targets in NDCs has implications for
robust accounting. In particular, in order to avoid double claiming, the application of “corresponding adjust-
ments”, as referred to in paragraph 36 of decision 1/CP.21, would not be necessary on the side of the transfer-
ring country if the relevant emission sources are not covered by its NDC (see section 5.2 below).
Parties could consider two options for defining the scope of ITMOs in relation to the NDC of the transferring
country:
▸ ITMOs represent only mitigation outcomes that are generated within the scope of the NDC of the transferring
country; or
▸ ITMOs represent mitigation outcomes that may be generated both within and outside the scope of the NDC of
the transferring country.
The first approach is simpler for accounting purposes but more limiting, as it would only enable transfers from
mitigation outcomes generated within the scope of NDCs. While most global GHG emissions fall within the
scope of NDCs, many Least Developed Countries (LDCs) do not have economy-wide mitigation targets and would
thus have only limited access to cooperative approaches under Article 6.2. Under this approach, these countries
would have to use Article 6.4 to address emission sources outside the scope of their NDC. One argument suppor-
ting this interpretation could be that the adjustments, referred to in paragraph 36 of decision 1/CP.21, should
be “corresponding”; this could be interpreted as requiring adjustments on two sides and, hence, to be only
applicable to transfers of mitigation outcomes generated within the scope of NDCs.
One consideration for limiting the scope of cooperative approaches to emission sources covered by NDCs could
be the incentives for countries to ensure environmental integrity in quantifying mitigation outcomes. Countries
with ambitious mitigation targets have incentives to ensure the environmental integrity of mitigation outcomes
generated within the scope of their mitigation targets. If a country overestimates mitigation outcomes and
transfers them to another country, it would have to compensate for the transfer in order to still achieve its
mitigation target, by either further domestic mitigation action or acquiring mitigation outcomes from other
countries. By contrast, if the mitigation outcomes are not included within the scope of the mitigation outcomes,
countries could transfer overestimated mitigation outcomes without infringing their ability to achieve their
mitigation targets, so they do not have incentives to ensure environmental integrity (Kreibich and Obergassel
2016; Schneider et al. 2016).

Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings 18
This point relates to the question whether and what type of international guidance on environmental integrity
may be provided under Article 6.2. If no or only general international guidance is provided, defining ITMOs as
mitigation outcomes that are generated within the scope of NDCs may provide a higher assurance of environ-
mental integrity. It would imply that those countries that do not have economy-wide emission targets would
need to engage with the Article 6.4 mechanism for engaging in international transfers from emissions sources
not covered by their NDC. This could be seen to provide for higher assurance of environmental integrity given
that emission reductions from the Article 6.4 mechanism are generated under international oversight.
Another reason for limiting cooperative approaches to mitigation outcomes generated within the scope of NDCs
could be avoiding disincentives for governments not to move over time to economy-wide emissions targets, as
envisaged under Article 4.4 of the Paris Agreement. If countries can engage in cooperative approaches for
mitigation outcomes generated outside the scope of their targets, they might accrue less revenues from ITMO
transfers if they expand their target to an economy-wide level. By contrast, limiting international transfers
under Article 6.2 to emission sources within the scope of NDCs would provide incentives broaden the scope of
mitigation targets in the future.
The second approach would enable a broader participation in cooperative approaches under Article 6.2;
countries that do not yet have economy-wide targets could transfer ITMOs originating from all emission sources,
within or outside the scope of their NDC. For accounting purposes, this approach would require distinguishing
between two types of ITMOs: those generated within and those generated outside the scope of the NDC of the
transferring country.
4.4 Use of ITMOs by the acquiring country
Article 6.2 refers to the “use of ITMOs towards NDCs”. This provision clarifies that ITMOs can be used for
compliance purposes, to achieve NDCs; it could also be interpreted such that the “construct” of an ITMO only
“exists” under the Paris Agreement in the context of its use, i.e. if two conditions are met: the mitigation
outcome is (a) internationally transferred, and (b) used by the acquiring country to achieve its NDC. This would
imply that any domestic units, such as from ETSs, do not represent ITMOs (Marcu 2016). For international
linking of ETSs, it would imply that only the net flow of units from one system to the other may be accounted
for. This also suggests that the accounting for ITMOs could be delinked from the registry systems operated by
the underlying mechanisms, such as the ETS registries. Allowances in ETS registries may flow forth and back
between two internationally linked ETSs, while the net flow may be separately accounted for, ex-post, as ITMOs.
International carbon market mechanisms have also been used for other purposes, beyond compliance. Interna-
tional mechanisms, such as the CDM, have been used as a tool to achieve emission reductions domestically (i.e.
without international transfers). For example, South Korea recognizes certified emission reductions (CERs) from
domestic projects under its ETS. Mechanisms can also be used for voluntary offsetting of emissions by govern-
ments, the private sector, individuals, or non-governmental organizations, or for the verification of mitigation
outcomes from climate finance, e.g. by purchasing and cancelling carbon market units as part of resultsbased
climate finance programmes.
This raises the question whether ITMOs could also be generated and used beyond achieving NDCs. The narrow
definition of ITMOs as mitigation outcomes that are both internationally transferred and used by the acquiring
country would not necessarily limit the scope and purpose of the underlying market mechanisms. For example,
a bilateral crediting mechanism, such as the Joint Crediting Mechanism (JCM) established by Japan, could
operate its own registry system and the units generated from the mechanism may be partially internationally
transferred, and partially used for various purposes, including voluntary cancellation. However, only those
units that are internationally transferred and used by another country towards achieving its NDC would be
considered as ITMOs under the Paris Agreement.
An alternative approach could be defining the scope of ITMOs broader, including functions beyond achieving
NDCs, such as voluntary cancellation. This approach may provide for broader uses of ITMOs; however, as
pointed out above, such uses could also be pursued with the underlying market mechanisms, without conside-
ring such uses as ITMOs in the context of Article 6.2. Defining ITMOs more broadly may also imply a broader
scope of accounting, because it may involve tracking and reporting the different uses of ITMOs, in order to
reconcile accounting between transferring and acquiring countries.

19Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings
In summary, Parties could define ITMOs in at least two ways:
▸ ITMOs represent only mitigation outcomes that are both internationally transferred and used by the acqui-
ring country towards achieving its NDC;
▸ ITMOs represent mitigation outcomes that are internationally transferred and that may be used for different
purposes, such as voluntary cancellation.
4.5 Mechanism type
The term ITMO does not imply what type of mechanism may underline the international transfer. This could
potentially include
▸ trading mechanisms, such as international linking of ETSs;
▸ crediting mechanisms, possibly either under the governance of Parties under Article 6.2 or under UNFCCC
governance if emission reductions resulting from the Article 6.4 mechanism are considered as ITMOs;
▸ other types of government-to-government transfers which may or may not involve a market mechanism (e.g.
approaches similar to Green Investment Schemes implemented under the Kyoto Protocol).
Article 6.2 does not seem to limit the type of mechanisms that could be pursued.
4.6 Fungibility of ITMOs
How ITMOs are defined could have implications on their fungibility, i.e. meaning whether they could be mutu-
ally substituted in place of one another. Full fungibility would only be provided if Parties agree that ITMOs are
an international compliance unit. This would at least require that they have the same metric – presu-
mably t CO2eq –, that countries apply the same set of GWP values to account for their NDCs, and that countries
apply common time frames for mitigation targets. ITMOs of the same vintage (for the same time frame) might
then be fully fungible.
In practice, mechanisms operated under Article 6.2 may have different features and groups of countries may
apply different scopes, rules and standards for international transfers. It is thus unlikely that ITMOs will be fully
fungible, even if the conditions above are met.
4.7 Relationship to Article 6.4
The relationship between the cooperative approaches under Article 6.2 and the Article 6.4 mechanism is one of
the issues that require further clarification in the negotiations ahead. Article 6.4 refers to “mitigation
outcomes”, whereas Article 6.4 refers to “emission reductions”. How they could relate depends on how other
aspects of ITMOs are defined and how the scope of the Article 6.4 mechanism will be defined.
The provisions in the Paris Agreement suggest that emission reductions from the Article 6.4 mechanism could,
but do not necessarily have to, be internationally transferred and used by another Party to achieve its NDC. The
purpose of Article 6.4 could be broader, promoting mitigation more generally, allowing to use the mechanism as
a tool to achieve domestic emission reductions or for purposes such as voluntary cancellation or delivering
resultsbased climate finance.
One possible interpretation is that emissions reductions generated under the Article 6.4 mechanism would be
considered as ITMOs, whenever they meet the definition of an ITMO – which could include various options, as
discussed above. The main difference between Article 6.2 and Article 6.4 would then be how the mitigation
outcomes are generated: under Article 6.2 they are generated by mechanisms operated by Parties or non-gover-
nmental organizations, and under Article 6.4 they are generated under UNFCCC oversight. This interpretation
may also imply that the same accounting rules are applied to international transfers under Article 6.2 and
Article 6.4. Most Parties seem to support this interpretation in their submissions to the UNFCCC.

Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings 20
Another possible interpretation could be that emission reductions generated under Article 6.4 are treated and
accounted for under a separate track and are not considered as ITMOs, even if they were internationally trans-
ferred and used towards achieving a NDC.
In summary, drawing on our analysis of the different possible interpretations of what an ITMOs is, there could
be several options for the relationship between emission reductions generated under the Article 6.4 mechanism
and ITMOs, including at least:
▸ Emission reductions generated under the Article 6.4 mechanism are considered as ITMOs if they are (a)
internationally transferred and (b) used by the acquiring country to achieve its NDC;
▸ Emission reductions generated under the Article 6.4 mechanism are considered as ITMOs if they are (a)
internationally transferred, (b) used by the acquiring country to achieve its NDC, and (c) covered by the
scope of the NDC of the transferring country;
▸ Emission reductions generated under Article 6.4 are always considered as ITMOs;
▸ Emission reductions generated under Article 6.4 are never considered as ITMOs.
5 Avoiding double claiming
Double claiming of emission reductions occurs if the same mitigation outcome is counted twice towards achie-
ving NDCs: once by the country where the emission reductions occur, through reporting of its reduced GHG
emissions (or other indicators used to track progress), and once by the country using the mitigation outcome
towards achieving its NDC.
The Paris Agreement includes provisions to avoid double claiming with regard to both the cooperative approa-
ches under Article 6.2 and the Article 6.4 mechanism:
▸ Article 6.2 requires countries to apply “robust accounting to ensure, inter alia, the avoidance of double
counting, consistent with guidance adopted by the CMA”. Paragraph 36 of decision 1/CP.21 specifies that
the guidance under Article 6.2 should ensure that double counting is avoided “on the basis of a correspon-
ding adjustment by Parties for both anthropogenic emissions by sources and removals by sinks covered by
the NDC”.
▸ Article 6.5 clarifies that emission reductions resulting from the Article 6.4 mechanism shall only be used by
one Party to demonstrate achievement of its NDC.
Both provisions aim to address double claiming. Corresponding adjustments can avoid double claiming
between countries by appropriately accounting for the net transfer of mitigation outcomes between countries.
Article 6.5 establishes the general objective of avoiding double claiming. How the two provisions relate and
whether the same or different sets of rules should apply to them is one of the key questions for the negotiations
ahead. Regardless of how this will be approached, a similar set of rules will be required to effectively address
double claiming. Developing one set of coherent accounting rules for all transfers under Article 6 might be a
simpler approach. We therefore focus our analysis on the application of corresponding adjustments under
Article 6.2, noting that the substantive issues are equally applicable to international transfers of emission
reductions resulting from the Article 6.4 mechanism.
How corresponding adjustments should be implemented, in particular in the light of the diversity of NDCs, will
be one of the key aspects in the negotiations on guidance under Article 6.2. Below we explore several important
aspects.
5.1 Should corresponding adjustments be applied to reported emissions or
emission budgets?
Corresponding adjustments could, in principle, be implemented in two ways:
1. Adjusting the reported emissions and removals (or possibly other indicators used to track progress towards
NDCs), or

21Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings
2. Adjusting the emissions budget corresponding to the mitigation target (or possibly budgets in non-GHG
metrics).
To illustrate the two approaches, we assume two countries A and B that both have economy-wide absolute
emission targets for the same basket of GHGs and for the same time period (either the same single year or the
same multiyear period). We also assume that both countries express their targets in metric tonnes of CO2
equivalent and apply the same GWPs.
Country A (the transferring country) has projected BAU emissions of 100 M t CO2eq and communicated in its
NDC to limit its emissions to 80 M t CO2eq. Country B (the acquiring country) has projected BAU emissions of
110 M t CO2eq and communicated to limit its emissions to 70 M t CO2eq. Hence, the two countries together
pledged to limit their total emissions to 150 M t CO2eq. The two countries engage in a cooperative approach
involving the transfer of mitigation outcomes of 30 M t CO2eq from country A to country B.
The first approach is illustrated in Figure 2 below. Under this approach, country A adds the transferred mitiga-
tion outcomes to its reported GHG emissions, whereas country B subtracts them. Country A reduces its emis-
sions by 50 M t CO2eq, enabling it to transfer 30 M t CO2eq to the acquiring country; it adjusts its reported
emissions by adding the amount transferred, resulting in an adjusted emissions level of 80 M t CO2eq, which
equals its emissions target. Country B reduces its emissions only by 10 M t CO2eq and achieves the remainder of
the required emission reduction by using the ITMOs from country A; it adjusts its reported emissions by subtrac-
ting the ITMOs transferred, resulting in an adjusted emissions level of 80 M t CO2eq, which equals its emissions
target. In sum both countries still emit 150 M t CO2eq; double claiming is avoided.
BAU
emissions
(100)
Emission
reduction
(50)
Actual
emissions
(50)
ITMO
(30)
Adjusted
emissions
(80)
Country A
(Transferring country)
BAU
emissions
(110)
Emission
reduction
Actual
emissions
(100)
ITMO
(30)
Adjusted
emissions
(70)
Country B
(Acquiring country)
Emissions target (80)
Emissions target (70)
ITMO transfer
reported
reported
Figure 2: Application of corresponding adjustments to reported emissions
The second approach is illustrated in Figure 3. The figure starts on the left hand side from the emissions budget
corresponding to the mitigation target. Under this approach, country A adjusts its emission target by subtrac-
ting the amount of mitigation outcomes transferred from its emission budget, resulting in a downward adjust-
ment from 80 to 50 M t CO2eq. Country B adds the transferred mitigation outcomes to its emissions target,
resulting in an upward adjustment from 70 to 100 M t CO2eq.

Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings 22
BAU
emissions
(100)
Emission
reduction
(50)
Adjusted
emissions
budget
(50)
ITMO
(30)
Emissions
budget
(80)
Country A
(Transferring country)
BAU
emissions
(110)
Emission
reduction
Adjusted
emissions
budget
(100)
ITMO
(30)
Emissions
budget
(70)
Country B
(Acquiring country)
Actual emissions
Actual emissions
ITMO transfer
Figure 3: Application of corresponding adjustments to emission budgets
The two approaches have an equivalent outcome and both effectively avoid double claiming. The second
approach is applied under the Kyoto Protocol: unit transfers are subtracted from the Parties‘ assigned amount,
unit acquisitions are added. The language in paragraph 36 of decision 1/CP.21 refers to corresponding adjust-
ments for “emissions by sources and removals by sinks”. This seems to point to the first approach illustrated in
Figure 2.
The first approach could be perceived as changing GHG inventories. Indeed, GHG inventories should reflect the
actual emissions of a country, reported in accordance with relevant IPCC Guidelines and independent of any
accounting for transferred mitigation outcomes. The application of corresponding adjustments should therefore
be clearly separated from GHG inventory estimates, for example, by using different tables to report on corres-
ponding adjustments. The second approach could be perceived as changing the target level or ambition. As for
adjustments to the assigned amount under the Kyoto Protocol, corresponding adjustments to the emissions
budget should therefore be clearly separated from the communication and quantification of the mitigation
target.
In principle, the two countries would not necessarily have to apply the same approach. For example, the
transferring country could add the transferred mitigation outcomes to its reported emissions, while the acqui-
ring country could add them to its emissions budget. Respectively, the transferring country could subtract the
transferred mitigation outcomes from its emissions budget, while the acquiring country subtracts them from its
reported emissions. Theoretically, it is even conceivable that one country applies both approaches at the same
time; for instance, country A could engage with countries B and C in cooperative approaches and might agree
bilaterally with country B to adjust reported emissions and agree bilaterally with country C to adjust emission
budgets. If implemented appropriately, the parallel implementation of the two approaches could be possible
without infringing robust accounting. This would imply that some countries may need to apply both approaches
at the same time, i.e. adjusting the reported emissions and the emissions budget. In practice, the application of
the two approaches in parallel would make the tracking and reconciliation of corresponding adjustments more
complex.
International guidance under Article 6.2 could include different provisions with regard to the general approach
towards corresponding adjustments. The guidance could:
▸ Establish one of the two approaches as being applicable to all Parties;
▸ Require each Party to select one of the two approaches and to apply it consistently to all ITMOs;

23Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings
▸ Allow Parties to apply any of the two approaches in a cooperative approach but require that the same
approach be applied by the two Parties involved in the international transfer consistently; or
▸ Allow any Parties to apply any of the two approaches in any international transfer.
The first option would be the simplest one. It would avoid complexity and facilitate transparent tracking and
reconciliation of ITMOs and corresponding adjustments. Agreeing internationally on one of the two approaches
does not limit the ability of countries to engage in cooperative approaches, as both approaches are equivalent
and have the same implications for Parties. In this regard, the other options do, in practice, not provide more
flexibility to Parties. Moreover, one could argue that paragraph 36 of decision 1/CP.21 points to the adjustment
of reported emissions and removals, rather than mitigation targets in NDCs. For these reasons, we recommend
that all Parties adjust the reported emissions and removals (or possibly other indicators used to track progress
towards NDCs).
5.2 In which circumstances do corresponding adjustments need to be
applied?
Double claiming in the context of international transfers occurs if all of the following conditions apply
(Schneider et al. 2015):
1. The mitigation outcome falls within the scope of the mitigation target in the NDC of the transferring country;
2. The mitigation outcome is reflected in the GHG inventory of the transferring country (or in other indicators
used to measure progress towards achieving its NDC);
3. The acquiring country accounts the acquired mitigation outcome to achieve the mitigation target in its NDC,
by applying a corresponding adjustment;
4. The transfer of the mitigation outcome is not accounted for by the transferring country, i.e., the transferring
country does not apply a corresponding adjustment.
Conversely, double claiming does not occur, and hence corresponding adjustments would not need to be
applied, if one of the above conditions does not apply. A range of scenarios are possible. First, the transferring
country would not need to apply a corresponding adjustment if the mitigation outcome does not fall within the
scope of its mitigation target. In such cases, clarity of NDCs is important to be able to identify whether a mitiga-
tion outcome is generated within or outside its scope. For trading mechanisms, such as ETSs, it is usually
straightforward to identify whether emission sources are covered. For crediting mechanisms, this can raise
practical challenges, as crediting programs often credit reductions that occur upstream or downstream of where
the mitigation action takes place. In some instances, the installations where the reductions occur are not known
or they could be located in other countries (Schneider et al. 2015).
Second, the mitigation outcomes could not be reflected in GHG inventories or other indicators used to measure
progress. Emission reductions from mitigation actions are often automatically reflected in GHG inventories.
Take, for example, a wind power project. By feeding electricity into the grid, the wind power plant reduces fossil
fuel consumption in other power plants connected to the grid. If fossil fuel consumption statistics are used to
prepare that country’s GHG inventory, then the reductions from the wind farm will be automatically reflected in
the GHG inventory. In some instances, however, more advanced inventory methods (IPCC Tier 2 or 3) are needed
for mitigation actions to be reflected in GHG inventories. This holds true particularly for non-CO2 gases. Take,
for example, a country that uses a simple Tier 1 default emission factor for estimating N2O emissions from nitric
acid production. In this case, the emissions impact of a crediting mechanism targeting N2O emissions from
nitric acid production would not show up in the GHG inventory; the project would impact the average emission
factor from nitric acid production, which, however, is not reflected as a lower emission factor in the GHG
inventory. This issue has also been referred to as “visibility” of emission reductions in GHG inventories (Prag et
al. 2013).
If the mitigation outcomes were not reflected in the GHG inventory, theoretically, the transferring country would
also not have to apply a corresponding adjustment in order to avoid double claiming. In practice, this case may
be rarely relevant. Moreover, all countries are encouraged to improve their GHG inventories over time and more
advanced methods usually allow reflecting the emission reductions from specific actions.

Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings 24
Enabling countries not to apply corresponding adjustments in such situations could also create disincentives for
countries to improve GHG inventories. For these reasons, not applying corresponding adjustments in such
situations may not be advisable.
And third, corresponding adjustments are not necessary on the side of the transferring country, if the acquiring
country uses the mitigation outcomes for other purposes, such as delivering resultsbased climate finance, but
does not account them towards achieving the mitigation target in its NDC. Jurisdictions, entities or non-govern-
mental organizations from two countries could decide to engage in international transfers of mitigation
outcomes, while the countries may not account for them towards their NDCs. For example, any net transfers
between the international linking between the ETSs in California and Quebec are currently not internationally
accounted for by the United States and Canada. In these cases, emission reductions are not double claimed –
only the country that has transferred a net amount of allowances to the other country would account for the
emission reductions from such transfers, through its reported GHG emissions. This might be a simple and
practical option for instances where only small amounts of mitigation outcomes are transferred between
countries.
In summary, corresponding adjustments on the side of the transferring country do not appear necessary if the
mitigation outcomes:
▸ are not generated within the scope of the mitigation target in the NDC of the transferring country; or
▸ are not accounted by the acquiring country towards achieving its NDC.
5.3 How can the diversity of NDCs be addressed?
In Figure 2 and Figure 3 above, we made several assumptions with regard to how emission targets are expressed
in NDCs. In practice, the mitigation targets or actions communicated in NDCs are rather diverse (Graichen et al.
2016). This diversity poses considerable challenges for accounting for ITMOs (Hood et al. 2014). How to ensure
robust accounting in the light of the considerable diversity of NDCs is subject to further research. In this discus-
sion paper, we briefly point to key challenges, principles and approaches to address this challenge.
Generally speaking, the diversity of NDCs can be addressed in two broad ways:
▸Ensuring compatibility of NDCs: Accounting for international transfers is greatly facilitated if the mitiga-
tion targets of the countries involved are expressed in similar ways and have similar features. Compatibility
of NDCs could be achieved in different ways: first, countries could decide to convert (part of) their NDCs in a
way that it becomes compatible with a country they wish to engage in cooperative approaches. A group of
countries could also agree to formulate their NDCs in consistent ways, in order to facilitate robust accounting
of international transfers among them. Second, international guidance under Article 6.2 could require a
certain level of compatibility to ensure robust accounting, e.g. by establishing eligibility criteria for partici-
pation in international market mechanisms or by requiring that certain features (e.g. GWP values) need to be
common between countries engaging in an international transfer (Kreibich and Hermwille 2016). Third,
international rules under Article 4, in particular with regard to transparency, clarity and understanding of
NDCs, could help clarify the scope of NDCs. And forth, international rules might facilitate that NDCs have
similar features from the onset, such as common time frames, as envisaged under Article 4.10, or common
metrics, as envisaged under paragraph 31(a) of decision 1/CP.21.
▸Conversion of corresponding adjustments: If the mitigation targets or actions of two countries involved in
cooperative approaches are not expressed in the same way, the corresponding adjustments (or mitigation
outcome) could be appropriately converted.
Which approach is more suitable, may depend on the context. The diversity of NDCs raises several challenges
for implementing corresponding adjustments:
▸GWP values: In their NDCs countries intend to use different set of GWP values to account for their mitigation
targets, including values from 2nd, 4th and 5th IPCC assessment report (Graichen et al. 2016). Section 5.4
discusses possible approaches to address different GWP values when implementing corresponding adjust-
ments.

25Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings
▸Non-GHG mitigation targets: Many NDCs include a GHG emissions target, often in combination with other
non-GHG mitigation targets. A number of countries, however, communicated only non-GHG mitigation
targets in their NDCs, such as energy efficiency or renewable energy targets.
Section 5.5 discusses possible approaches to address international transfers under non-GHG mitigation
targets.
▸Target period: NDCs have different target years or periods. Many countries have submitted NDCs with a
single target year, mostly 2030. International transfers between NDCs with different target time frames can,
in some instances, increase global GHG emissions. In principle, robust accounting for the target periods
could be addressed if two countries involved have defined their NDC for the same target year or period and if
only mitigation outcomes generated in that period would be transferred among them. However, this option
may not always be compatible with international linking of ETSs which use multi-year emission budgets and
usually allow banking of units between years. Converting single-year into multi-year emission trajectories or
targets could be another robust approach to ensure compatibility of NDCs (Lazarus et al. 2014).
▸Targets covering part of the economy: Most countries communicated in their NDCs mitigation targets
which cover only part of their economy; they include only some sectors of the economy, only some GHGs, or
– rather exceptionally – only cover part of the countries‘ geographical area (Graichen et al. 2016). Where
mitigation targets cover only part of the economy, it is important to identify whether a mitigation outcome is
generated within or outside the scope of the NDC.
▸Reference level: Most countries express their GHG targets as reductions compared to a future hypothetical
BAU scenario. Others express them based on emissions intensity (e.g. per unit of GDP). Several communi-
cated a reduction compared to a historic base year (e.g. X % below year Y), and a few have fixed an absolute
target (e.g. carbon neutrality by year Y). To apply corresponding adjustments, the reported progress or
mitigation targets need to be expressed – at least ex-post – in quantitative terms (see section 3.1).
▸Conditional targets: Many countries have communicated NDCs that are subject to support from other
countries. Targets may be partially or entirely conditional on climate finance, access to international market
mechanisms, technology transfer and capacity building. If corresponding adjustments are made to mitiga-
tion targets, they could be applied to either unconditional or conditional targets, which has different conse-
quences for the aggregated mitigation outcome from both countries.
▸Non-quantitative targets: Most NDCs include quantitative mitigation targets, including GHG emission,
renewable energy or energy efficiency targets. Some NDCs, in particular from LDCs, only include non-quanti-
tative actions, such as promoting renewable energy. It is unclear whether and how corresponding adjust-
ments could be applied in this case on the side of the transferring countries.
5.4 How could the use of different GWP values in NDCs be reconciled?
In Figure 3 and Figure 4 in section 5.1 above, we assumed that the two countries apply the same GWP values.
The scientific understanding of the GWP of gases has advanced over time and the GWP values depend on the
current concentrations of these gases in the atmosphere. Therefore, GWP values are updated in each IPCC
assessment report, sometimes leading to significant revisions compared to previous estimates. In their NDCs,
countries use different sets of GWP values from the 2nd, 4th and 5th IPCC assessment reports (Graichen et al.
2016).
The use of different GWP values exacerbates robust accounting for ITMOs, as illustrated with the following
example: Assume a transferring country that uses a GWP of 28 for CH4, as included in the 5th IPCC assessment
report, to account for its NDC. The country transfers a mitigation outcome of 100 t CH4 from an emission
reduction project under a crediting programme to an acquiring country, which uses a GWP of 21 for CH4, as
included in the 2nd IPCC assessment report.
To transfer the mitigation outcome, the transferring country converts it into t CO2eq, using its own GWP value of
28, resulting in an amount of 2,800 t CO2eq (100 times 28). The transferring country applies a corresponding
adjustment and adds this amount to its reported emissions. If the acquiring country would apply the same
corresponding adjustment and subtract 2,800 t CO2eq from its reported emissions, the aggregated emissions
from both countries could change. The subtraction of 2,800 t CO2eq could, for example, allow the acquiring
country to emit 133 t CH4 more (2800 divided by 21), which would result in an aggregated net increase of
emissions from both countries by 33 t CH4.

Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings 26
Transferring t CO2eq with different GWP values of the countries involved could lead to both higher or lower
aggregated emissions compared to achieving emission reductions domestically. The impact depends on the
GWP values applied and how the acquiring country uses the mitigation outcomes.
To avoid increases or decreases of aggregated emissions due to such transfers, an appropriate conversion of
corresponding adjustments could be explored. Under this approach, each country would apply a different value
of corresponding adjustments to the same international transfer, consistent with its GWP values. In the example
above, the transferring country would calculate a corresponding adjustment of 2,800 t CO2eq (100 times 28),
whereas the acquiring country would apply a corresponding adjustment of 2,100 t CO2eq (100 times 21). In
other words, the value of the corresponding adjustments is converted to reflect the differences in GWP values.
This provision would ensure that the transferred mitigation outcome has the same emissions impact if the
acquiring country would take the same type of mitigation action, i.e. if it would reduce the same gases domesti-
cally instead of acquiring the ITMO. It could thus be argued that the adjustments would better “correspond”,
though the values applied are different.
Using different corresponding adjustment values might be feasible in instances where the exact composition of
GHGs of the transferred mitigation outcomes is known, such as in the case of emission reductions from a project
capturing and using landfill gas for electricity generation. This is, however, not always the case. Many ETSs do
not only address CO2 emissions but also other GHGs. The European Union (EU) ETS includes, for example, N2O
emissions from nitric and adipic acid production.
If the EU ETS were linked to an ETS in another country, and if the two jurisdictions would wish to account for
the net transfer of allowances towards achieving their NDCs under the Paris Agreement, they would need to
apply corresponding adjustments. ETS allowances, however, represent a permit to emit and do not correspond
to specific emission reductions. For each allowance transferred, a t CO2eq of emissions is reduced in the trans-
ferring jurisdiction, because the overall amount of allowances available to the entities in that jurisdiction is
lowered. However, the exact emission source and GHGs reduced are not known; the emission reductions could
include CO2 or non-CO2 gases. Without identifying the composition of GHGs of the mitigation outcome, however,
the application of two different adjustment values is not possible. Similar practical challenges could arise from
crediting programmes, which sometimes use simple default emission factors that include different GHGs from
different sources.
For both international linking of ETSs and international crediting programs, simplified estimates of the approxi-
mate composition of GHGs could be a practical – though less accurate – approach. For example, the average
composition of GHGs in reported emissions under ETSs could be used as a proxy for the emission reductions
induced through international transfers of ETS allowances.
Alternatively, all countries or a group of countries engaging in international transfers could agree to use
common GWP values for accounting for their NDCs. This would avoid any indirect effects on aggregated emis-
sions that may result from the transfer of mitigation outcomes under different national GWP values. This
approach is thus significantly less complex and would considerably facilitate accounting for international
transfers, but requires coordination and international agreement on which GWP values should be applied. The
provisions of the Paris Agreement can be interpreted to support the use of common GWP values:
paragraph 31(a) of decision 1/CP.21 establishes that the guidance to account for Parties‘ NDCs under Article
4.13 should ensure that Parties account for emissions and removals in accordance with “common metrics
assessed by the IPCC”.
Finally, Parties could also decide to neglect this effect. Given that the aggregated mitigation outcome could
increase or decrease as a result of different GWP values, one could argue that the aggregated effect from all
transfers may balance to some degree and might thus not be very significant. In this case, a simple approach
could be that the GWP values of the transferring country are used to determine the CO2eq of a mitigation
outcome.
In summary, this accounting challenge could be addressed in several ways:
▸Common GWP values for all countries: Parties could internationally agree to apply a consistent set of GWP
values to mitigation targets over time, for instance, to apply the latest 100-year GWP values from the 5th
IPCC assessment report to targets in the period 2021 to 2030.

27Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings
▸Common GWP values for the countries involved in a cooperative approach: A group of countries
wishing to engage in international transfers could agree among themselves to use the same GWP values to
account for their NDCs. Parties could also internationally agree, e.g. as part of guidance under Article 6.2,
that two countries engaging in a cooperative approach should apply the same GWP values to account for
their NDCs. This may require some countries updating their NDCs.
▸Conversion of corresponding adjustments: The guidance under Article 6.2 could allow countries to
convert the corresponding adjustments to reflect differences in GWP values, possibly using simplifications to
estimate the composition of GHGs from mitigation outcomes transferred.
▸Application of the GWP values of the transferring country: The guidance under Article 6.2 could specify
that the GWP values of the transferring country be applied to convert mitigation outcomes into t CO2eq. This
would neglect the effect that use of such outcomes by a country with different GWP values could lead to
higher or lower aggregated GHG emissions.
The first option would be the simplest and would facilitate implementing cooperative approaches under Article
6.2. It would ensure compatibility of NDCs from the onset. It may also overall facilitate comparability of GHG
mitigation targets and accounting for NDCs under the Paris Agreement. Conversion of corresponding adjust-
ments faces practical challenges and is more complex and less accurate, but would provide the flexibility to
countries to use different sets of GWP values.
5.5 How could corresponding adjustments be applied to international
transfers under non-GHG mitigation targets?
Applying corresponding adjustments for international transfers between countries with different metrics of
mitigation targets is a particular accounting challenge. A first challenge is that transfers of non-GHG metrics,
such as MWh of renewable electricity, do not necessarily involve the same mitigation outcome in terms of GHG
emissions and removals: producing one MWh of electricity in country A may generate a larger or smaller
mitigation outcome than producing a MWh in country B, depending on the composition of the power plants in
the electricity grids. A transfer of one MWh may thus lead to different mitigation outcomes in the two countries
involved (see section 4.1 above).
A second challenge arises if the two countries involved use different metrics for their mitigation targets.
Assume, for example, a transferring country which communicated only a non-GHG mitigation target to expand
its renewable power generation capacity and an acquiring country with a GHG target. Assume further that the
acquiring country funds a new wind power plant and purchases emission reductions credits generated by that
plant. The acquiring country also accounts the credits as ITMOs, expressed in t CO2eq, towards its NDC. In that
case, corresponding adjustments could not be applied in the same metrics.
In principle, these challenges could be addressed through two options:
▸Conversion of non-GHG mitigation targets: Any non-GHG mitigation targets could be converted into corre-
sponding GHG emission targets. This would enable both countries to make a corresponding adjustment for
an ITMO in t CO2eq. It may require updating the NDC or providing additional information how already
communicated targets are converted in their metrics.
▸Conversion of corresponding adjustments: The two countries could convert the corresponding adjust-
ments such that they are consistent with their metrics of mitigation targets and, at the same time, corres-
pond to the same mitigation outcome.
One could argue that the first option is supported by paragraph 36 of decision 1/CP.21, because the correspon-
ding adjustments should be applied to “emissions” or “removals”, and not to other metrics. In this regard,
international guidance under Article 6.2 could specify that countries should express or convert their non-GHG
mitigation targets in GHG metrics if they wish to engage in international transfers for mitigation outcomes that
are generated within the scope of their NDCs.

Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings 28
The second option is illustrated in Figure 4 below. We assume in the figure that country A has a mitigation target
to expand its renewable power capacity to 100 MW. The country wishes to transfer the mitigation outcome from
a 20 MW wind power plant to country B, through a bilateral crediting mechanism. Country B purchases a
corresponding amount of credits generated by the 20 MW wind power plant. The amount of credits is calculated
consistent with recognized standards, e.g. by monitoring the amount of electricity generation from the plant
and multiplying it with a grid emission factor of country A. The emission reductions vary from year to year,
subject to level of wind power generation and changes in the grid emission factor. Country B has an absolute
GHG emissions target and wishes to account for the mitigation towards achieving its target.
To accommodate the different metrics of mitigation targets, the two countries could apply a pair of correspon-
ding adjustments, expressed in different metrics, but implying the same mitigation outcome. For instance,
country A could subtract 20 MW from its reported level of installed renewable power capacity and country B
could subtract a corresponding amount of emission reductions from its reported emissions. The two adjust-
ments by the transferring and the acquiring country would “correspond” to the same mitigation outcome,
although two different metrics are used. To ensure robust accounting under this option, adequate methods and
approaches to convert mitigation outcomes are important.
Actual
renewable
capacity
installed
(120 MW)
Renewable
power
capacity
target
(100 MW)
Adjusted
renewable
power
capacity
installed
(100 MW)
ITMO
Country A
(Transferring country)
BAU
emissions
Emission
reduction
Actual
emissions
ITMO
Adjusted
emissions
Country B
(Acquiring country)
Emissions target
ITMO transfer and corresponding adjustment conversion
20 MW
renewable
capacity
X tonnes of
emission
reductions
reported
Figure 4: Application of corresponding adjustments for an international transfer between a country with
a renewable power target and a country with a GHG emissions target
5.6 Should corresponding adjustments apply to emission reductions
generated under Article 6.4?
In section 4.5 above we discussed how ITMOs relate to emission reductions resulting from the Article 6.4
mechanism. Depending on the definition of the nature of ITMOs, emission reductions generated under the
Article 6.4 mechanism could be:
▸ Considered as ITMOs if they are (a) internationally transferred and (b) used by the acquiring country to
achieve its NDC;
▸ Considered as ITMOs if they are (a) internationally transferred, (b) used by the acquiring country to achieve
its NDC, and (c) covered by the scope of the NDC of the transferring country;
▸ Always considered as ITMOs; or
▸ Never considered as ITMOs.

29Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings
Under the first three options, the approaches for corresponding adjustments under Article 6.2 would automati-
cally apply to emission reductions resulting from the Article 6.4 mechanism. Under the last option, a different
set of accounting rules may apply.
Using the same set of accounting rules provides several advantages. It would be less complex. And importantly,
the issues that have to be addressed, such as avoiding double counting, are the same for any type of internati-
onal transfers, independent of whether the mitigation outcomes are generated under a UNFCCC mechanism
with international oversight or under different governance arrangements. As the ultimate requirements are
likely to be similar, the emerging rules are also likely to be similar.
A case for different accounting rules could be made if the scope of Article 6.2 and Article 6.4 were clearly
different; for instance, if Article 6.2 would only cover mitigation outcomes that fall within the scope of mitiga-
tion target of the transferring country and if Article 6.4 would only address emission reductions that are not
included in the scope of the mitigation targets. In this case, corresponding adjustments by the transferring
country would only be applicable under Article 6.2 but not under Article 6.4. This, however, would limit the
scope of both approaches.
5.7 How could double claiming with ICAO or IMO be avoided?
Under the UNFCCC and applicable IPCC Guidelines, emissions from international aviation and maritime trans-
port are reported by countries as memo items, but not included in their total national GHG emissions. The Paris
Agreement does not explicitly refer to emissions from international aviation and maritime transport. Since these
emissions are clearly anthropogenic, they are implicitly included in the scope of Article 4.1 of the Paris Agree-
ment. However, drawing upon the approach in the IPCC Guidelines for reporting of GHG inventories, countries
did not include these emissions in the scope of their NDCs.
Indeed, efforts are underway – though at different paces – to address these emissions under the ICAO and the
International Maritime Organization (IMO). The CORSIA, recently adopted by ICAO, allows using emissions
units generated from mechanisms under the UNFCCC and the Paris Agreement for offsetting the CO2 emission
growth beyond 2020. IMO may also pursue offsetting emissions from international maritime transport in the
longerterm. Using emission offsets under ICAO and IMO would result in double claiming if the emissions
reductions are also accounted towards the NDCs. This raises the question how such double claiming can be
avoided. The ICAO resolution requires that emission units are eligible, provided that “they align with future
decisions, including on avoiding double counting”.
Double claiming of emission reductions could occur if an airline under ICAO (or a shipping company under
IMO) would use a mitigation outcome that is also used by a Party to achieve its NDCs. This can occur if the
mitigation outcome falls within the scope of the NDC of the transferring country and if the transfer and use
under ICAO or IMO would not be reflected appropriately through a corresponding adjustment by the transfer-
ring country.
Corresponding adjustments to avoid double claiming between mitigation targets in NDCs and obligations under
ICAO or IMO could be implemented similarly to corresponding adjustments for international transfers between
countries: countries transferring mitigation outcomes for use under ICAO or IMO would need to add a corres-
ponding adjustment to their reported progress, or subtract a corresponding adjustment from their emissions
budget. Such adjustments would only be necessary if the mitigation outcome falls within the scope of the
countries‘ NDC.
An important practical and legal question is whether the Paris Agreement includes elements that give interpre-
tation to avoiding double counting with ICAO and IMO. Article 6.2 applies to mitigation outcomes that are used
by Parties to achieve NDCs; this raises the question whether the article is applicable to any transfers for the
purpose of offsetting emissions from international aviation or maritime transport. Article 4.13 requires coun-
tries to ensure the avoidance of double counting in the context of accounting for their NDCs. This provision
could be interpreted to be broader in applicability, as to avoiding double counting between the countries‘ NDC
and mitigation actions by other countries or under other international treaties. This interpretation may also be
supported by the fact that the scope and objective of the Paris Agreement includes all anthropogenic emissions
including those from international aviation and maritime transport.

Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings 30
The challenge of avoiding double claiming between UNFCCC and ICAO or IMO does not only apply to the Paris
Agreement but also to the Kyoto Protocol, should units generated under the Kyoto Protocol be used under ICAO
or IMO. For example, ERUs from JI may need to be cancelled or retired in specific accounts when used for
compliance under ICAO or IMO, to avoid double claiming with targets of Annex I countries with a commitment
inscribed in Annex B of the Kyoto Protocol. A further practical challenge is that effectively avoiding double
claiming requires coordination between different regimes: the UNFCCC and ICAO, and the UNFCCC and IMO.
6 Conclusions
This discussion paper explored some aspects of robust accounting for international transfers under Article 6 of
the Paris Agreement. A key feature of the Paris Agreement is the national self-determination of contributions. As
a consequence, current NDCs show a large diversity in several aspects, including how mitigation targets are
expressed, which sectors and gases they cover, which time frames they are applicable to, and which methods
and metrics they employ. This diversity of mitigation targets in NDCs makes accounting for international
transfers more complex, compared to the framework of the Kyoto Protocol where mitigation targets were
expressed as economy-wide absolute emission budgets for defined time periods and a defined basket of GHGs.
In developing international rules on robust accounting of international transfers under Article 6, the diversity of
NDCs could be addressed in two generic ways:
▸ by developing rules that aim to reflect the diversity of NDCs and enable international transfers between diffe-
rent types of NDCs; or
▸ by agreeing internationally, among groups of countries, or bilaterally on common features that make NDCs
more compatible for international transfers.
These approaches can be combined and Parties may have to carefully balance when to pursue which approach.
On the one hand, common features should not infringe on the self-determination of NDCs. On the other hand,
the more diverse the NDCs are, the more complex and prone to errors may robust accounting become. This
paper identified a number of options for both approaches.
The Paris Agreement provides for some elements that may, over time, moderate the current diversity of NDCs
and make accounting for international transfers under future NDCs less complex. Article 4.10 requests Parties
to consider common time frames for NDCs. Article 4.4 requires economy-wide absolute emission reduction
targets for developed countries and encourages developing countries to move over time towards economy-wide
emission reduction or limitation targets in the light of different national circumstances. Paragraph 31(a) of
decision 1/CP.21 suggests that the guidance under Article 4.13 should ensure that Parties account for emissions
and removals in accordance with common metrics by the IPCC. If mitigation targets are applicable to common
time frames, economy-wide, and expressed in common GHG metrics, accounting for international transfers
would be already greatly facilitated compared to the current diversity of NDCs.
Finally, an important question is how the general accounting provisions under the Paris Agreement relate to the
specific provisions for international transfers under Article 6. We recommend exploring a tiered or modular
approach, with general accounting provisions being applicable to all countries for the purpose of accounting for
their NDCs, and specific provisions required for robust accounting of international transfers being applicable to
those countries wishing to engage in international transfers.

31Robust Accounting of International Transfers under Article 6 of the Paris Agreement – Preliminary Findings
7 References
Cames, M., Schneider, L. (2016). Defining the Essentials. ICAO’s offsetting mechanism: avoiding double
counting of emission reductions. In: Carbon Mechanisms Review 3/2016.
http://www.carbon-mechanisms.de/en/CMR_03_2016
Hood, C., Briner, G., Rocha, M. (2014). GHG or not GHG: accounting for diverse mitigation contributions in the
post-2020 climate framework. Organisation for Economic Cooperation and Development and International
Energy Agency, Paris
Graichen, J., Cames, M., Schneider, L. (2016). Categorization of INDCs in the light of Art. 6 of the Paris Agree-
ment. Discussion paper. Umweltbundesamt, Berlin, Germany
Kreibich, N., Obergassel, W. (2016). Carbon Markets After Paris. How to Account for the Transfer of Mitigation
Results? JIKO Policy Paper No 1/2016. Wuppertal, Germany
Kreibich, N., Hermwille, L. (2016). Robust Transfers of Mitigation Outcomes. Understanding Environmental
Integrity Challenges. JIKO Policy Paper No 2/2016. Wuppertal, Germany
Levin, K., Rich. D., Finnegan, J., Dagnet, Y. (2014). Ex ante Clarification, Transparency, and Understanding of
Intended Nationally Determined Mitigation Contributions. WRI Working Paper,
www.wri.org/publication/ex- ante-clarification-transparency-and-understanding-intended-nationally-deter-
mined
Lazarus, M., Kollmuss, A., Schneider, L. (2014). Single year mitigation targets: Uncharted territory for emissions
trading and unit transfers. Stockholm Environment Institute Working Paper 2014–01.
http://www.sei-international.org/ publications?pid=2487
Marcu, A. (2016). Carbon Market Provisions in the Paris Agreement (Article 6). CEPS Special report No 128,
January 2016, Brussels, Belgium.
Prag, A., Hood, C., Aasrud, A., Briner, G. (2011). Tracking and Trading: Expanding on Options for International
Greenhouse Gas Unit Accounting after 2012. Organisation for Economic Cooperation and Development and
International Energy Agency, Paris. http://dx.doi.org/10.1787/5k44xwtzm1zw-en
Prag, A., Hood, C., Barata, P.M. (2013). Made to Measure: Options for Emissions Accounting under the UNFCCC.
OECD/IEA Climate Change Expert Group Paper No. 2013(1). Organisation for Economic Cooperation and
Development and International Energy Agency. http://dx.doi.org/10.1787/5jzbb2tp8ptg-en
Schneider, L., Kollmuss, A., Lazarus, M. (2015). Addressing the risk of double counting emission reductions
under the UNFCCC. In: Climatic Change, Volume 131, Issue 4 (2015), Page 473-486. DOI: 10.1007/s10584-015-
1398-y
Schneider, L., Kollmuss, A., La Hoz Theuer, S. (2016). Ensuring the environmental integrity of market mecha-
nisms under the Paris Agreement. SEI Policy brief, Seattle, October 2016,
https://www.sei-international.org/publications?pid=3025
United Nations Framework Convention on Climate Change (UNFCCC) (2012). Various Approaches, Including
Opportunities for Using Markets, to Enhance the Cost-Effectiveness Of, and to Promote, Mitigation Actions,
Bearing in Mind Different Circumstances of Developed and Developing Countries: Technical Paper.
FCCC/TP/2012/4

German Emissions Trading Authority (DEHSt) at the German Environment Agency
Bismarckplatz 1
D-14193 Berlin
www.dehst.de/EN | emissionstrading@dehst.de