In this policy paper published by IKEM for COP26, with support from Therme One Health and the One Health Research Center, analysis shows that the private sector could help unlock ambition and achieve cost-effective emission reductions on the way to reaching the climate goals of the Paris Agreement. In order to best achieve private sector engagement through Article 6.4 of the Paris Agreement, market mechanisms must be designed to increase private-sector trust in their functionalities. The rulebook of the Paris Agreement must be robust while allowing for a strong degree of flexibility, striking a balance between market incentives and environmental integrity.
Parties to the Paris Agreement (PA) acknowledge the importance of the private sector in achieving the climate goals of the PA, seeing that the private sector can serve as a provider of financial flows and innovative technology. One of the important ways to leverage this potential of the private sector to unlock greater ambition to achieve cost-effective emission reductions is through the market mechanisms enshrined in Art. 6 of the PA. Specifically, the crediting mechanism mentioned in Art. 6.4 explicitly calls for the engagement of the private sector.
Though no negotiable agreement has been reached yet with past engagements, it is crucial to note that the potential to incorporate provisions into the rulebook to provide investment opportunities for the private sector must be robust with flexible rules and there must be a striking balance between market incentives and environmental integrity as the negotiations continue to take shape.
The rulebook must be designed to:
