AIM Carbon: NBS Under Article 6.2 of the Paris Agreement Hold Great Potential, But Much Work Remains | AIM Carbon
earthEN

AIM Carbon: NBS Under Article 6.2 of the Paris Agreement Hold Great Potential, But Much Work Remains

AIM Carbon: NBS Under Article 6.2 of the Paris Agreement Hold Great Potential, But Much Work Remains

Combating climate change and its adverse effects is currently one of humanity's most pressing challenges. To achieve the Paris Agreement's goal of limiting global temperature rise to within 1.5°C above pre-industrial levels by 2100, an additional 19 billion tons of CO2e (carbon dioxide equivalent) must be removed from the atmosphere annually through emission reductions and sequestration by 2030.

Currently, there are two primary methods for reducing greenhouse gas emissions globally. The first is technological, which includes measures like improving energy efficiency, developing electric transport, producing eco-friendly stoves, and implementing nature-based climate projects. The second method is nature-based solutions (NBS). According to analysis by AIM Carbon, nature-based projects have a significantly greater potential for removing greenhouse gases from the atmosphere compared to technological solutions. Clearly, achieving this target is impossible without the widespread adoption of NBS projects. However, these projects are currently underutilized in achieving the Paris Agreement's goals.

Out of 86 bilateral agreements concluded under Article 6.2 of the Paris Agreement, which allows countries to trade emission reduction outcomes on both bilateral and multilateral bases, 72% of these agreements have not yet initiated any projects. If we examine the requirements of the main buyers qualified under this article, such as Switzerland, Japan, or Singapore, we see that NBS projects are not a priority, at least not at present. For example, Switzerland has defined the following set of projects:

  • Increasing energy efficiency in households (clean cookstoves, etc.)
  • Using renewable energy in households and industry
  • Electric transport
  • Reducing methane emissions in agriculture

Japan has a similar project portfolio structure. Regarding Singapore, it sets permissible project categories for each country with which it has a bilateral agreement. Generally, Singapore accepts all projects except for nature-based solutions and some others, as forests are not considered carbon sinks in their net-zero strategy. According to Igor Akhmerov, CEO of AIM Carbon, the current state of the market is due to several factors, including a high level of buyer distrust in the quality of climate project implementation.

"The NBS market has great potential for substantial and sustainable growth, but realizing this potential requires several steps: establishing a unified international legal framework, ensuring transparency in inter-country interactions, and adopting uniform standards for project verification, regardless of type. However, these steps cannot be achieved without close cooperation between government institutions, businesses, and NGOs," Akhmerov stated.

At present, existing and announced projects under Article 6.2 of the Paris Agreement are expected to provide an annual supply of 3 million tons of CO2e. According to IETA data, the market volume under Article 6.2 is projected to reach approximately 3 billion tons of CO2e annually by 2030. This means that, considering the current supply of 3 million tons of CO2e, only 1% of the potential demand for 2030 is covered. This is far less than what needs to be achieved if we are to meet the Paris Agreement goals and effectively combat global warming.