Modelling the Economic Benefits of Article 6
A Research Project by IETA and the Center for Global Sustainability at the University of Maryland
Since 2019, IETA has partnered with researchers from the the Center for Global Sustainability (CGS) at the University of Maryland to produce a number of studies about the potential of international carbon market approaches. This project is aimed at enhancing the effectiveness of the Paris Agreement by identifying how Article 6 implementation could encourage businesses to accelerate climate action and nations to advance more ambitious commitments.
Over time, the project has received financial support from the Carbon Pricing Leadership Coalition (CPLC), Chevron, the European Bank for Reconstruction and Development (EBRD), the Government of Germany, the Government of Norway, the Government of the United Kingdom, the Institute for Global Environmental Strategies (IGES), Shell, the Swedish Energy Agency (SEA), and the World Bank.
Read more about the model used, individual studies, and how to get involved below. Do not hesitate to contact us if you would like to contribute to the further development or have questions regarding the project.
Modelling the Economics of Article 6: A Capstone Report (NEW - 2023)
Research over the past four years has increased understanding and quantified the role Article 6 of the Paris Agreement could play in facilitating the achievement of climate targets. This capstone report aims to summarise and bring new light to the opportunities available to countries participating in cooperative approaches under Article 6. The report highlights that:
-- READ THE FULL REPORT HERE --
Findings from Modelling Runs: The Impacts of Dropouts and Club Composition (2023)
In a recent presentation, the economic modelling analysis was expanded to consider the impact of certain countries dropping out or collaborating through separate clubs. Key messages from the analysis showed that:
The Potential Role of Article 6 Compatible Carbon Markets in Reaching Net-Zero (2021) Executive Summary
This report was prepared by IETA and the Center for Global Sustainability (CGS) at the University of Maryland with the aim to explore the implications of achieving net-zero targets through Article 6 cooperation, compared to alternative scenarios in which all Parties independently reduce emissions linearly to zero. The report compares carbon prices, the flow of Internationally Transferred Mitigation Outcomes (ITMOs), and associated annual financial transfers under the cooperative implementation of net-zero targets. Results finds that:
The results were reviewed in virtual workshops throughout 2021, involving experts from several governments, non-governmental organizations, academic institutions, and businesses. Additional workshops have since been conducted reflecting the impact of certain countries not participating in Article 6 cooperation, the implementation of carbon clubs and new commitments following COP26 in Glasgow.
The Economic Potential of Article 6 of the Paris Agreement and Implementation Challenges (2019)
This report was prepared in close partnership with the Carbon Pricing Leadership Coalition (CPLC) and investigated the potential economic and environmental outcomes associated with the use of Article 6 of the Paris Agreement by participating countries. The report, which was produced in advance of the adoption of the Article 6 rulebook at COP26 in Glasgow, outlined the following results:
The findings, interpretations, and conclusions expressed in these papers are those of the authors alone and do not necessarily reflect the views of either the research sponsors or the authors’ home institutions.
THE GCAM MODEL
The main analytical tool of the project is the Global Change Analysis Model (GCAM), a highly detailed integrated model of energy, economy, agriculture, and land use, which has also been deployed to create scenarios for IPCC assessments. Its main features are:
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