Spoiler alert: good progress, getting closer.. but we’re not there yet
We provide a quick update on the progress achieved at COP29 this week with concern to finalizing the framework for Article 6.4 ITMO transactions.
- “So what happened?” The progress that was achieved on the first day of COP29 concerning Article 6.4 means the principal “rules of the game” for a multilateral carbon credit mechanism are now agreed. Before, Paris Agreement compliance carbon credits or ITMOs (Internationally Transferred Mitigation Outcomes) could only be developed as pilot activities under Article 6.2. These activities required bilateral agreement between host and buying countries. The multilateral framework created through Article 6.4 opens up the possibility of ITMO transactions between all countries that are signatory to the Paris Agreement.
- “Right. And what does that mean for e-mobility companies?” On average, ITMO transactions return substantially higher price points to operators, OEMs and investors in e-mobility activities compared to the voluntary carbon market. This is due to the compliance nature of the ITMO instrument which enhances the integrity and quality of the transaction from the viewpoint of buyers. The improved price points mean ITMO projects can make a real difference in accelerating the e-mobility transition, which is why Zeroca focuses on such projects.
- “Great! Can we start tomorrow?” Contrary to what many LinkedIn posts would have you believe, multilateral Article 6.4 ITMO transactions will not be starting tomorrow. Methodologies for e-mobility projects will have to be developed and approved. Even if based on methodologies already existing today, this will take time. These methodologies are necessary for Article 6.4 ITMO projects to be validated and for emission reductions under these projects to be certified. In the meantime, it is possible to (i) transform old CDM projects (referring to projects under the old multilateral framework of the Kyoto Protocol) into ITMO projects, and (ii) prepare program registrations on the basis of the expected requirements of Article 6.4 methodologies.
The Zeroca team is following ongoing discussions about top-down methodology revisions and proposals very closely. These discussions and the resulting choices concerning methodology development have implications for the speed with which Article 6.4 projects in e-mobility can be developed. We have several Article 6.2 programs under development and builds on substantial experience in e-mobility methodologies dating back to the CDM framework. We can support you in navigating the possibilities that now lie ahead and develop carbon credit projects that offer value to all parties in the transaction. Are you an operator, OEM or investor in e-mobility? Reach out to discuss!
