Recent Development and Scale-up on Article 6 of the Paris Agreement and the Joint Crediting Mechanism (JCM)

Decarbonizing technologies are key in the drive to meet the goals of the Paris Agreement, as they play critical roles in implementing the aims of Article 6. To date, the Joint Crediting Mechanism (JCM) has partnered with 29 countries, which together are involved in more than 250 JCM projects. At this side event, JCM partner countries provided updates on their efforts to implement Article 6, including the status of implementation of the JCM.

Moderator Jun Watanabe, Overseas Environmental Cooperation Center (OECC), set the scene, noting that the JCM has been promoting diffusion of decarbonization since 2013, even before the Paris Agreement was adopted in 2015.

Yutaka Matsuzawa, Vice-Minister for Global Environmental Affairs, Ministry of the Environment, Japan (MOEJ), opened the event by stressing that implementation of Article 6 could produce major emission reductions by 2030 and stimulate economic growth. He noted that COP 26 outcomes included guidance for cooperative approaches to recognize the transfer of emission reductions and rules for crediting emission reducing activities, which will help avoid double-counting. Accordingly, he noted that countries are progressing on legal frameworks to ensure these rules are upheld. He then invited JCM partner countries and the Asian Development Bank (ADB) to provide updates on their progress and examples of project implementations through the JCM.

Kohei Kiname, MOEJ, provided an overview of the JCM, in which Japanese companies and the government offer technology and financial support to partner countries to implement mitigation measures, with greenhouse gas (GHG) reductions shared as JCM credits. To date, more than 250 projects in 29 partner countries are using the JCM to achieve reductions and invigorate economies through projects ranging from renewable energy to energy efficiency and transportation, Kiname said.

Virender Kumar Duggal, ADB, underscored that the ADB is taking a two-pronged strategy in its carbon market programme: providing technology and capacity-building support to implement carbon market mechanisms; and mobilizing finance through carbon trust funds to incentivize investment. He pointed to assistance provided through the Japan Fund for the Joint Crediting Mechanism, which has mobilized USD137 million in grant funding for the adoption of low-carbon technologies. Duggal emphasized that technologies must be specific to each country’s context and that the Fund is sending a “price signal” about carbon markets to other countries.

During the ensuing panel discussion, JCM partner countries provided updates on changes to their legal frameworks to align them with COP 26 outcomes.

Puttipar Rotkittikhun, Director of the Carbon Credit Certification Office, Thailand Greenhouse Gas Management Organization (TGO), highlighted revisions to the memorandum of cooperation between Thailand and Japan that specifies how issued credits deriving from emission reductions can be used toward Nationally Determined Contributions (NDCs) in both countries while avoiding double counting.

Otgontsetseg Luvsandash, JCM Secretariat between Mongolia and Japan, Climate Change Research and Cooperation Centre, underscored that Mongolia is aiming for 22.7% reduction in GHG emissions by 2030, with net zero emissions by 2050. As part of these commitments, she added, Mongolia is, inter alia, developing regulations for carbon markets, investing in carbon market infrastructures, and enhancing coordination with countries. Luvsandash pointed to current priorities, including formalizing the authorization entity for overseeing Internationally Transferred Mitigation Outcomes and finalizing methodology to avoid double counting emissions reductions.

Cahyadi Yudodaohono, Head of Indonesia’s JCM Secretariat, Coordinating Ministry for Economic Affairs, highlighted a set of presidential and ministry-level regulations to implement carbon pricing and accelerate renewable energy development. Yudodaohono offered an overview of 54 current projects, ranging from cold storage and electric heat pumps to street lighting and biomass projects.

In a second round of interventions by panelists, Watanabe asked what projects are expected to be implemented under the JCM.

Rotkittikhun pointed to, inter alia, projects focusing on carbon capture and storage, offshore wind power, and energy efficiency in buildings and power generation. Luvsandash noted that JCM projects are already providing 57 megawatts of power and that additional projects, such as more efficient boilers and central heating, will further enhance energy efficiency, while other key projects include green hydrogen and mini-grid distribution systems. Yudodaohono emphasized that JCM is in line with just energy transition goals and that projects will aid in the early retirement of coal power plants and the development of geothermal power.

Duggal stressed that JCM partner countries and their projects are sending a price signal and building trust in carbon markets, which will help draw investors to them. ADB’s support of the JCM, he added, has developed a “good body of knowledge” that has been shared in ADB publications.

Closing the event, Kiname stressed the progress that partner countries are making on Article 6 and that “it’s very important to know that each country has a different background and different perspectives for moving forward, especially in terms of what kind of projects they want to implement.”

Organizers: OECC, MOENV

Contact: Kunihiko Kobayashi | kunihiko.kobayashi@oecc.or.jp

Website: https://www.jcm.go.jp/