Republic of Korea. Submission on Art 6.2 and 6.4 of the Paris Agreement

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1 Republic of Korea Submission on Art 6.2 and 6.4 of the Paris Agreement The conclusion of the SBSTA 46 invites Parties to submit their views on the content of the guidance (Article 6, paragraph 2) and the content of the rules, modalities and procedures (Article 6, paragraph 4), including the structure and areas, issues and elements to be addressed. The Republic of Korea welcomes the opportunity to submit its views on matters relating to Article 6, paragraph 2 and 4 of the Paris Agreement, pursuant to the request made in the conclusion of SBSTA Approach for the guidance of Art 6.2 and the rules, modalities and procedures (RMP) of Art 6.4 The guidance of Art 6.2 and the rules, modalities and procedures of Art 6.4 shall deal with the issuance, transfer and use of mitigation outcomes (MO) and emission reduction (ER). In addition to the guidance under Art 6.2 and the rules, modalities and procedures of Art 6.4, the guidance necessary in relation to reporting and review of units (Article 13) and another guidance concerning the use of units towards the achievement of NDCs (Article 4.13) are needed. Korea is of the view that in order to avoid overlaps among the discussions and further the progress on the implementation of the Paris work programme, the guidance under Art 6.2 and the rules, modalities and procedures under Art 6.4 shall provide the standards and guidelines focusing on the issuance, transfer and use of units. And the guidance in relation to reporting and review of units should be a part of the guidelines for the biennial report under the transparency framework under Art 13. Furthermore, the rules, modalities and procedures concerning the use of units towards the achievement of NDCs should also be reflected in the guidance under Art

2 2. Headings and elements of Art 6.2 A. Purpose and Principles The purpose of the guidance under Art 6.2 is to provide standards and guidelines necessary for the implementation of various types of cooperative approaches. - Parties could design and implement a sub-mechanism under Art 6.2 with bilateral or multilateral agreements. Such a sub-mechanism, in its operationalization, shall be consistent with the guidance under Art 6.2 The principles defined in Art.6 including, inter alia, promotion of sustainable development and environmental integrity, and avoidance of double counting under Art. 6 are applied to the guidance under Art 6.2. Parties shall adhere to the principles when designing and implementing a sub-mechanism. B. Definition and concept ITMO : it is a unit for the international transfer under Art 6.2 and 6.4. An ITMO denotes a mitigation outcome (MO) generated under Art 6.2 or emission reduction (ER) generated under Art 6.4, which has been internationally transferred. 1 MO and 1 ER are equivalent in terms of unit, which is 1 tco2e. (1 MO = 1 ER = 1 ITMO = 1 tco2e.) Environmental Integrity : the use of cooperative approach shall not result in higher GHG emissions compared to the situation without the use of it. Sustainable Development : mitigation activities under Art 6.2 shall contribute to and be consistent with Sustainable Development Goals and objectives of the host country. Assessment of sustainable development might be substituted by approval of the host country. Avoiding Double Counting : double counting can occur in relation to the issuance, transfer, and use of MO under Art 6.2. Parties that design and operate a sub-mechanism under cooperative approach shall establish and implement measures for avoiding double counting 1. 1 Double issuance occurs when more than one unit of mitigation outcome is issued for one unit of emissions reduction under two or more schemes. To prevent double issuance, Parties intending to operate sub-mechanisms are required to have in place a review system to verify that a proposed project has not been registered under other schemes. Double transfer occurs when one unit of mitigation outcome is transferred to two or more acquiring Parties. Parties are required to establish a unit-tracking system to avoid double transfer. Double usage occurs when mitigation results are used by two or more Parties towards the achievement of their respective NDC. In order to avoid double usage, Parties should carry out corresponding adjustments. 2

3 C. Scope and type of Activities The scope of activities shall be defined by an agreement between Parties participating in sub-mechanism. Activities may include project, program, policybased measures and others. The scope of activities under cooperative approaches could be coextensive with the scope of activities under Art 6.4. Various activities which reduce emissions by sources and removals by sink. D. Participation requirement Parties that intend to participate in cooperative approach shall meet, inter alia, the following requirements. The information concerning the requirements needs to be reported under the transparency framework. - Having submitted NDCs - Having established National Registry - Having established a designated national authority(dna) E. Governance Parties shall establish national institutions including designated national authority in order to maintain sub-mechanism under cooperative approach. And Parties shall provide relevant information on sub-mechanism to the public. F. Issuance, transfer, use of Mitigation Outcome A sub-mechanism shall issue MOs in accordance with the guidance under Art 6.2. First, a sub-mechanism shall operate in conformity with the scope and type of activities. Second, a sub-mechanism shall demonstrate that its operations are in accordance with environmental integrity and sustainable development and report any relevant information under the transparency framework. Third, information on mitigation activities such as project description, participating entities, location, etc. should be open to the public in order to prevent double counting including double issuance, double transfer and double usage. International transfers and acquisitions of ITMOs shall be recorded by both the transferring Party and the acquiring Party in a national tool (double entry book keeping). The specific contents and format of reporting shall be defined in the modalities, procedures and guidelines (MPGs) for the biennial reports under the transparency framework. To avoid double counting that may arise in relation to the use of ITMOs towards the achievement of NDCs, the acquiring Party has to subtract the volume of ITMOs from its GHG inventories, and the transferring Party has to add the volume of ITMOs to its GHG inventories (corresponding adjustment). 3

4 Corresponding adjustment is relevant and important with respect to both accounting for NDCs and cooperative approaches. In relation to accounting for NDCs, corresponding adjustment should take into account the diversity, such as type and target year/period, of NDCs, as different NDCs may require different approaches to corresponding adjustment. In regard to cooperative approaches, corresponding adjustment should be done in such a way that the use of ITMOs for the achievement of NDCs is cost-effective. Otherwise, Parties have little incentive to engage in cooperative approaches. And use of cooperative approaches should be supplementary to domestic mitigation efforts. In order to develop detailed guidance for corresponding adjustment, these different cases of corresponding adjustment should be taken into consideration, and the guidance for corresponding adjustment should be developed in accordance with the principles of transparency, accuracy, completeness, comparability and consistency (TACCC). Korea suggests that joint consultations between experts involved in SBSTA 46 agenda sub-item (10 a&b) and those involved in APA agenda item 3(c) be taken place to develop different approaches to corresponding adjustment 2. G. Infrastructure Parties shall establish and maintain a National Registry to supervise the issuance, transfer and use of units. National Registry shall be linked with International Transaction Log in accordance with the rules and procedures defined by the Secretariat. Designated National Authority shall consider and determine whether mitigation activities under cooperative approach contribute to the sustainable development of the host country. Parties shall designate an entity as their Designated National Authority, and the same entity may serve as DNA under Art 6.2 and Headings and elements of Art 6.4 A. Purpose and Principles The purpose of the rules, modalities and procedures is to provide the standards and guidelines for the implementation of mechanism under Art 6.4. The principles defined in Art.6 including, inter alia, promotion of sustainable development and environmental integrity, and avoidance of double counting under Art 6 shall be applied to the guidance under Art Korea is of the views that market mechanism shall be designed with flexibilities to accommodate different NDCs under the Paris Agreement. And the nature of NDC must not be changed for the use of market mechanism. 4

5 B. Definition and concept Emission Reduction : GHG reductions generated from mitigation activities under Art 6.4 ITMO : it is a unit for the international transfer under Art 6.2 and 6.4. An ITMO denotes a mitigation outcome (MO) generated under Art 6.2 or emission reduction (ER) generated under Art 6.4, which has been internationally transferred. 1 MO and 1 ER are equivalent in terms of unit, which is 1 tco2e. (1 MO = 1 ER = 1 ITMO = 1 tco2e.) Environmental Integrity : the use of mechanism under Art 6.4 should deliver an overall mitigation in global emissions. Sustainable Development : mitigation activities for emission reduction under Art 6.4 shall contribute to and be consistent with Sustainable Development Goals and objectives of the host country. Assessment of sustainable development might be substituted by approval of the host country. Avoiding Double Counting : double counting can occur in relation to the issuance, transfer, and use of ER under Art 6.4. Parties shall establish and implement measures for avoiding double counting 3. C. Scope and type of Activities The Scope of activities may include projects and programs based on the preferential base. The scope may be further expanded after the establishment of a Supervisory body. Activities which reduce emissions by sources and removals by sink are applicable for ER under Art 6.4. D. Participation requirement Parties that intend to participate in mechanism under Art 6.4 shall meet, inter alia, the following requirements. The information concerning the requirements needs to be reported under the transparency framework. - Having submitted NDCs - Having established National Registry - Having established a designated national authority(dna) 3 The definition of double counting is the same as the one used in section 2. B. 5

6 E. Governance (CMA) CMA shall consider and adopt the rules, modalities, and procedures for the mechanism established under Art 6.4. (Supervisory Body) SB shall supervise the implementation of the rules, modalities and procedures, approve Project Design Document, new methodologies of activity and issuance of units, and operate the Registry under Art 6.4 (Designated National Authority) Designated National Authority shall consider and determine whether mitigation activities contribute to the sustainable development of the host country. (Designated Operational Entity) DOE shall assess the feasibility of mitigation activities and verify monitoring report F. Issuance, transfer, use of Emission Reduction Supervisory Body shall develop detailed rules, modalities, and procedures on the issuance of units. Such rules, modalities, and procedures shall be considered and adopted by CMA. International transfers and acquisitions of ER shall be recorded by both the transferring Party and the acquiring Party in a national tool (double entry book keeping). The specific contents and format of reporting shall be defined in the guidelines for the biennial reports under the transparency framework. To avoid double counting that may arise in relation to the use of ITMOs towards the achievement of NDCs, the acquiring Party has to subtract the volume of ITMOs from its GHG inventories, and the transferring Party has to add the volume of ITMOs to its GHG inventories. G. Infrastructure Supervisory Body shall establish and maintain the Registry under Art 6.4 to supervise the issuance, transfer, and use of units. Registry shall be linked with International Transaction Log. Parties shall designate an entity as their Designated National Authority, and the same entity may serve as DNA under Art 6.2 and 6.4. H. Others The registered CDM projects valid after 2020 shall continue to be valid after reassessment in accordance with relevant rules, modalities, and procedures under Art

7 4. Expectation and timeline for the process In order to complete the development of the guidance under Art 6.2 and the rules, modalities and procedures under Art 6.4 before COP 24, their headings and elements should be agreed at SBSTA 47 At SBSTA 49, a decision with three Annexes containing the guidance under Art. 6.2, 6.4, and 6.8 shall be adopted by the CMA Technical works in the form of additional workshop and technical papers should take place in order to fulfill the mandate in a timely manner. 7