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Technology Collaboration Programme by IEA

Integrating CCS in international cooperation and carbon markets under Article 6 of the Paris Agreement

Paul Zakkour, Greg Cook, Andrew Howard

Citation: IEAGHG, "Integrating CCS in international cooperation and carbon markets under Article 6 of the Paris Agreement", 2023-01, January 2023.

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Publication Overview

This work assesses the status of and outlooks for international cooperation under Article 6 of the Paris Agreement and considers how approaches could support the deployment of carbon capture and storage (CCS). It provides an up-to-date look at the Article 6 rules, the types of markets and mechanisms that could evolve, and the units that could be traded. It then considers how Article 6 could apply to CCS through linked emissions trading systems, crediting systems and alternative approaches.

Publication Summary

  • Article 6 of the Paris Agreement is an enabler that will help countries cooperate in order to meet global emissions reductions targets by using international carbon markets, allowing transfers of emission reductions between countries and providing a framework for greenhouse gas emissions to be balanced globally,
  • CCS has been consistently noted as a key technology for achieving deep and sustained cuts in atmospheric CO2 levels, with geological storage critical for meeting the goals of the Paris Agreement,
  • CCS could be incorporated into Article 6 through emissions trading or crediting, within compliant or voluntary markets, through governmental transfers of mitigation outcomes, and through CCS-specific approaches,
  • These actions may be national conditional measures, or supplementary to national measures,
  • This study looks at three core models for CCS cooperation under Article 6:
    1. Linked carbon pricing policies between countries (a representation of the mainstream climate policy approach of today),
    2. Voluntary (or partially regulated) system of storage targets for fossil fuel producers (a more novel concept someway from actual implementation),
    3. Multilateral “CCS club” of Parties to the Paris Agreement (another more novel concept).
  • It is uncertain if technology neutral market-based mechanisms (such as in model 1) can deliver significant amounts of geological CO2 These mechanisms are poorly suited to support the deployment of higher cost mitigation techniques such as CCS without supplementary measures (such as targeted support and incentives),
  • Carbon markets could lead to some near-term deployment of low-cost CCS projects, even under low carbon prices,
  • Carbon storage unit (CSU) based policies (such as in models 2 and 3) could provide a supplementary mechanism to ensure geological CO2 storage is included in more mitigation options,
  • A top-down, country-led approach (as in model 3) could be more effective in enhancing geological storage. However, gaining agreement to adopt storage targets across multiple countries could be challenging,
  • Model 2 may be more practical for implementation when bolstered by a few pioneering countries,
  • An approach based on CSUs could help to provide additional financing for CCS and enhance progression in Nationally Determined Contributions (NDCs),
  • The likelihood of a CSU mechanism being implemented remains highly uncertain but all models described can be considered as actions to help utilise CCS.

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