Climate ambition is often thought of in terms of the stringency of emission reduction commitments, expressed by countries under the landmark Paris Agreement as Nationally Determined Contributions (NDCs). While the NDCs that have been pledged by countries are important, they are only the first step.
To truly assess progress in reducing global climate pollution, it is necessary to look behind country pledges to understand exactly how their emissions are counted and reported. We need consistent accounting rules and transparent reporting to ensure the world is on track.
The details of accounting and transparency may sometimes sound boring and technical. But the content of these rules is as important as countries’ headline climate targets, since the headline numbers are only as good as our ability to ensure countries are clearly reducing emissions and counting those reductions accurately.
Fortunately, these same accounting and transparency rules – if done right – can also help unlock the potential of carbon markets to drive investment and innovation up, and pollution down.
The importance of avoiding double counting
If countries are to meet their climate goals, the risk of “double counting” emissions reductions must be avoided by finalizing clear and unambiguous international guidance during negotiations to be concluded this year under Article 6 of the Paris Agreement. Article 6 establishes a framework for international carbon market cooperation under the Paris Agreement, but its success depends on cooperating countries only counting their emissions reductions once. The principle is simple.
- Suppose emissions reductions in country A — say, from replacing a coal-fired electric power plant with a wind farm — generate credits that are sold to emitters in country B (or an international airline under ICAO’s carbon offset program CORSIA) and used to comply with their own emissions targets.
- The atmosphere doesn’t care whether the emission reductions took place in country A or B, so long as emissions go down overall.
- Of course, in keeping track of emissions reductions, it’s important not to count the same emissions reductions twice. Double-counting would mean total emissions could go up, not down.
- If country B (or an international airline) claims the credits against its own emissions target, country A can’t do the same.
This sounds like common sense. But it’s surprisingly contentious in the negotiations.
So far, countries have not agreed on the simple, transparent double-entry bookkeeping standards that would be sufficient to prevent such double counting. Ensuring that credits from existing UN systems like the Clean Development Mechanism (CDM) are not double counted will also be critical. Countries can avoid re-creating the errors from the CDM by ensuring that all transfers of emissions reductions from any country are transparently reported and “added back” to that country’s emissions account. This simple process can help avoid double counting.
Laying the foundation for markets to reduce carbon pollution
Well-designed carbon markets are an important tool that can help countries drive down carbon pollution faster, farther, and more cost-effectively, enabling deeper ambition in NDCs at no additional cost. More than half of the world’s countries are using, or plan to use, carbon markets to stimulate the innovation and investment needed to meet their pollution reduction goals.
No-double-counting is the bedrock of carbon markets: carbon markets break down if the same ton of emission reduction can be counted by both the buyer and seller. That’s why it’s important to get the rules right this year — and lock them in going forward. A no-double-counting principle is one of those “rules of the road” needed to help ensure that bottom-up markets work smoothly.
The Paris Agreement’s rulebook should articulate clear procedures — on accounting, transparency, and monitoring, reporting, and verification (MRV)— that rule out “double counting” of emissions reductions. To ensure the integrity and credibility of the climate regime, and keep the atmosphere whole, emissions reductions achieved in one country and transferred elsewhere must only be counted once.