The Economic Potential of Article 6 of the Paris Agreement and Implementation Challenges

This technical paper investigates the potential economic and environmental outcomesassociated with the use of Article 6 of the Paris Agreement by participating countries.The extent to which countries use Article 6, and how they use it, will be informed by design choices agreed upon by negotiators in forthcoming Conference of the Parties (COP) meetings, particularly the next one to be held at COP 25 in Chile and by the agreements made between participating parties. We use the Global Change Assessment Model (GCAM), an integrated assessment model, to quantify the economic potential of Article 6. We go on to discuss real world considerations and potential implications of design choices currently under consideration by negotiators. We find that Article 6 has the potential to reduce the total cost of implementing nationally determined contributions (NDCs) by more than half (~250 billion dollars/year in 2030), or alternatively facilitate the removal of 50 percent more emissions (~5 gigatonnes ofcarbon dioxide per year [GtCO2/year] in 2030), at no additional cost. We note, however, that careful framing in both the design and implementation of Article 6 is essential. A poorly designed and implemented framework could frustrate the achievement of Paris goals, whilea well-designed and implemented framework could further them. We conclude by identifying gaps in the research that would be useful to address before COP 25 in Chile