Carbon Credits Under the Paris Agreement

The First Carbon Credits Under the Paris Agreement 

Context: The United Nations has issued the first carbon credits under Article 6.4 of the Paris Agreement, marking a major milestone in the global carbon market. The credits were awarded to a clean-cooking initiative being implemented in Myanmar.

Facts : 

1. A carbon credit is a tradable unit that represents the reduction, prevention, or removal of one metric tonne of carbon dioxide (CO₂) or its equivalent greenhouse gas emissions from the atmosphere.
2. Under Article 6.4 of the Paris Agreement, carbon credits are issued through a UN-supervised mechanism aimed at directing international investment toward credible and sustainable climate mitigation projects.

Nations and Entities Involved:

• Host Nation: Myanmar, with the project focused on households in the country’s central Dry Zone, including parts of the conflict-affected Sagaing Region.
• Partner Nation: Republic of Korea (South Korea).
• Governing Authority: The Article 6.4 Supervisory Body established under the Paris Agreement’s international carbon crediting framework.

How the Project Works?

1. Implementation at the Community Level: The initiative promotes the use of clean-cooking stoves in place of traditional wood-burning stoves, improving fuel efficiency and reducing household emissions.
2. Monitoring Emission Reductions: Lower dependence on firewood helps reduce deforestation and indoor air pollution, while the resulting emission savings are measured and converted into carbon credits.
3. Verification and Credit Issuance: Emission reductions are assessed using updated scientific methodologies, and the UN validates the results before issuing credits.
4. International Transfer of Credits: A share of the generated credits is transferred to South Korea to meet its emissions trading commitments, while the remaining credits contribute toward Myanmar’s climate targets under its Nationally Determined Contributions (NDCs).

Key Features and Design Safeguards:

1. Shift from the Clean Development Mechanism (CDM): The project is among the earliest initiatives to move from the Kyoto Protocol’s CDM framework to the Article 6.4 mechanism established under the Paris Agreement.
2. Stricter Accounting Standards: Revised methodologies apply more conservative emission calculations, ensuring that only genuine and measurable reductions are credited.
3. Appeal and Review Mechanism: A mandatory 14-day review period allows governments, communities, and other stakeholders to challenge crediting decisions if concerns arise.
4. Environmental and Social Benefits: In addition to lowering greenhouse gas emissions, the project contributes to better public health outcomes, supports women, and promotes sustainable use of natural resources.