Japan Suggests Fast and Loose Definition of What Might Make Emission Credits Under Paris Climate Deal (1)

By Mathew Carr

June 11, 2021 (LONDON): Japan provides alternative definition of additionality, which is the term used in carbon markets to describe what a green project needs in order to be able to generate carbon credits.

IE – Only projects deemed additional to the status quo should get credits. Defining what’s status quo is not easy.

JAPAN: If an activity exceeds the certain emission reduction level which is required by law, regulation, or another legally binding mandate in the host Party, that activity can be deemed additional. Furthermore, as long as the project can demonstrate its contribution to the implementation and achievement of the host Party’s NDC [NATIONALLY DETERMINED CONTRIBUTION] and the LTS [LONG-TERM STRATEGIES] as mentioned in the above (1) by applying corresponding adjustments, the project activity can be deemed as generating additional emission reductions.

Investors are saying countries without strong climate policy won’t get capital: https://carrzee.org/2021/06/11/massive-investment-will-flow-to-governments-who-get-it-right-on-climate-41-trillion-speaks/

The EU is worried there will be too many emission credits: https://carrzee.org/2021/06/11/eu-sees-big-risks-in-international-carbon-trading-under-paris-suggests-5-year-period-to-limit-supply/

SEE LINK FOR JAPAN’S SUBMISSION:
https://www4.unfccc.int/sites/SubmissionsStaging/Documents/202106111551—Japan_Article%206%20of%20the%20Paris%20Agreement_Enabling%20ambition%20in%20Article%206%20instruments_202106.pdf

Cut and paste (apols for formatting imperfections):

Japan’s submission on Article 6 of the Paris Agreement
Enabling ambition in Article 6 instruments
June 2021

Introduction
Japan welcomes the invitation from the SBSTA Chair to voluntarily submit further views on the
enabling ambition in Article 6 instruments. In the following, Japan presents its views on this subject.
Overview
It is essential that Article 6 promotes higher ambition in NDCs of each participating Party
including a host Party. For this purpose, the following items should be incorporated in developing a
methodology for the Article 6.4 mechanism. Mitigation outcomes generated from cooperative
approaches referred to in Article 6.2 can also contribute to higher ambition by, among others, setting a
conservative baselinesin each scheme.
Items to be incorporated in the methodology section of the rules, modalities and procedures for
the Article 6.4 mechanism (RMPs)
In developing the methodology section of RMPs, those items such as (1) principles, (2) baseline
approaches, (3) standardized baselines, and (4) additionality should be clearly explained, by
considering examples from existing mechanismsincluding the CDM. Each item is addressed below in
more detail.
(1) Principles
It is necessary to indicate what principlesform the basis for a methodology development. Taking
into account the principles in existing mechanisms as well as requirements arising from the Paris
Agreement, the following elements need to be included in the principles for a methodology
development in the Article 6.4 mechanism;
・Contributing to host Party’s emission reductions and removals.
・Setting baselines below a business as usual (BAU) level for ensuring environmental integrity.
・Selecting baseline approaches, assumptions, parameters, data sources and key factors so that
baselines will be below a BAU level, while ensuring transparency
・Contributing to the implementation and achievement of host Parties’NDCs with applying accounting
rules for Article 6.4 emission reductions and removals. (How to operationalise this principle in an
actual methodology development should be further elaborated by the Supervisory Body (SB) in
consultations with a host Party.

Page 2
・Contributing to the implementation and achievement of host Parties’long-term strategies(LTS) by
applying accounting rules for Article 6.4 emission reductions and removals. (How to operationalise
this principle in an actual methodology development should be further elaborated by the SB inpage
consultations with a host Party.
・Accounting for all material emissions that are significant and reasonably attributable to an Article
6.4 project activity from both inside and outside of the project boundary.
(2) Baseline approaches
The baseline approaches which are already defined in the modalities and procedures of the CDM,
should be defined in the RMPs as well by taking into consideration the following points, based on
experiences from existing mechanisms(eg. CDM1, Joint Crediting Mechanism2 and Verified Carbon
Standard3). How to operationalise those approaches in an actual methodology development should be
further elaborated by the SB.
・The definition of “performance-based approach”
Since “performance-based approach” is defined in the presidential draft texts on Article 6.4
presented at COP25 in multiple ways, the definition needs to be sorted out based on experiences of
existing mechanisms In order for raising ambition, notions of best available technology (BAT) and
benchmarks should be included in the approach.
・Menu and hierarchy
Multiple baseline approaches have been applied according to different types of projects under
existing mechanisms. As various project types are also expected in the Article 6.4 mechanism, it
would be appropriate to provide a menu method as well as a hierarchy method from which certain
baseline approaches are chosen as appropriate.The baseline approaches to be considered in a menu
method and a hierarchy method should include those approaches as described in the presidential
draft texts.
(3) Standardized Baseline
Standardized baselines may be developed by the SB at the request of a host Party, or may be
developed by a host Party and approved by the SB. Standardized baselines should be established at the
highest possible level of aggregation in the relevant sector of the host Party.
Definition of regional BATs and “performance-based” baselines for developing standardized
baselines should be further elaborated by the SB.

[notes at bottom of page 2]
1 For CDM, Decision 3/CMP.1, Modalities and procedures for a clean development mechanism as defined in Article 12 of the Kyoto
Protocol, ANNEX, Modalities and procedures for a clean development mechanism, Para. 48, FCCC/KP/CMP/2005/8/Add.1
2 For JCM, reference emission can derived from, for instance performance of equipment, standards, and bench mark as described
in JCM Guideline for Developing Proposed Methodology. https://www.jcm.go.jp/rules_and_guidelines
3 For VCS, types of baseline approaches includes (1) performance method, (2) activity method, which is described in the
standardized methods under VCS, https://verra.org/project/vcs-program/methodologies/standardized-methods/


Page 3


(4) Additionality
As the additionality test under the CDM has required complicated demonstration and has
imposed significant burdens on project participants, a similar approach should be avoided. If an
activity exceeds the certain emission reduction level which is required by law, regulation, or another legally binding mandate in the host Party, that activity can be deemed additional. Furthermore, as long as the project can demonstrate its contribution to the implementation and achievement of the host Party’s NDC and the LTS as mentioned in the above (1) by applying corresponding adjustments, the project activity can be deemed as generating additional emission reductions.

(Emphasis added)

Photo by Stephan Streuders on Pexels.com

(Adds links)

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