Operationalizing Authorizations
under Article 6Hari Gadde
World Bankhgadde@worldbank.org
July 31, 2024

The Process• Establish domestic arrangements for authorizing the use of ITMOs• Application of corresponding adjustment (CAs)• Development of a registry system for ITMOs recording and tracking• Reporting under Article 6.2 (Initial Report, Annual Information and Regular
information as a part of Biennial Transparency Report)• The review by Article 6 technical experts
Decision 2/CMA.3 Para 18 (g): Provide, for each cooperative approach, a copy of the authorization by theparticipating Party, a description of the approach, its duration, the expected mitigation for each year of itsduration, and the participating Parties involved and authorized entities; (in the Initial report)

Reference: Decision 2/CMA.3 Guidance on cooperative approaches referred to in Article 6, paragraph 2, of the Paris Agreement,
https://unfccc.int/sites/default/files/resource/cma2021_10_add1_adv.pdf#page=11

Carbon Asset Development Process

Country considerations forauthorization• Policy/NDC linkage (outside/inside; conditional/unconditional): Rwanda,Jordan, Ghana, Vanuatu• Strategic priorities (Positive/whitelists): Ghana, India, Zambia, Zimbabwe• Cost of mitigation (Price of credits): Almost all• Developmental benefits: Rwanda, Mozambique, Kenya and few others inAfrica

Operationalization considerations forauthorization

Legal/regulatory options:policy frameworks (Ghana,Rwanda, Jordan, Kenya);operational manual(Cambodia); Decrees(Colombia)

Limits on volumes (case bycase; pre-determinedamount)

Authority: PA DNA, Prime
Minister office, cabinet
approval, Minister’s office

Use of credits: NDC,CORSIA, VCM, compliancemarkets in other countries

Key Elements

PMIF is developing
the template forthe authorization
letter• Date of Authorization• Mandate for Authorization - Represents government/ serves
as DNA• Authorized Participant – Recognizes participant and activity
generating mitigation outcomes and, if applicable, thestandard under which units are issued• Pre-conditions for Authorization - Mentions or implies that
requirements for authorization are satisfied• Period and Volume – Sets out the period for which theauthorization is valid and the maximum volume of ITMOsauthorized• Implications of Authorization & Confirmations Commitment to transfer units, application of correspondingadjustments, reporting requirements• Use of Units – Mentions use for Article 6/ other mitigation
purposes/ other specific uses
• Additional Considerations• Unforeseen circumstances• Transfer of authorization

Sample Letter of Authorization (1/2)
On behalf of the Government of [Name of Country], I have the pleasure to inform youthat “[Name of Program]” (“Program/Project”), with ID number [ID or serial number ofProject], was authorized as a mitigation activity under [Article 6.2 of the ParisAgreement/ Other Mechanism] on [Date].

MandateParticipant
Mechanism

The Government of [Name of Country] confirms that:a)[Name of Country] has ratified the Paris Agreement on [Date] and submitted its
Nationally Determined Contribution (NDC);b)

The Program/Project is inside the scope of [Name of Country]’s NDC;c)

The Program/Project contributes to sustainable development in [Name of Country];d)

The participation of [Name of Country] in the proposed Program/Project and theassociated mitigation activity is voluntary;e)

The transferred mitigation outcomes (MO) under the Program/Project shall not be
used by the Government of [Name of Country] to demonstrate achievement of its
own NDC; andf)

The Government of [Name of Country] shall follow all requirements of the Paris
Agreement, including reporting, preventing double counting, and undertaking
Corresponding Adjustments, as needed.

Preconditions
based on theParis
Agreement

Confirmation

Sample Letter of Authorization
The Government of [Name of Country] authorizes the [Project/Program Implementing
Entity] to coordinate, manage, and implement the Program/Project ascoordinating/managing entity, and to enter into agreements for the transfer of [up toMaximum Volume of MOs of] MOs generated by the Program/Project [during TimePeriod for generation of MOs]. This authorization shall remain valid until [last date orperiod of validity].
[The Government of [Name of Country] recognizes that the InternationallyTransferred Mitigation Outcomes (ITMOs) from the Program/Project [may/will] beused for meeting [NDC target/for other uses] in [Name of Country using the MO].][These ITMOs will be issued into [Name of Registry]]. Detailed project information isavailable at [weblink].
Through this letter, the Government of [Name of Country] commits that it shallsupport transfer and accounting of mitigation outcomes from the Program/Project, inline with the requirements of the Paris Agreement.

Volume andDuration

Use of units

Confirmation

Useful considerations for countries• Contents: What is the minimum set of elements the letter should include to provide confidence
to market participants?
• Timing: Do participants have a preference/ practical experiences related to the timing ofauthorization? Are flexible timelines helpful?
• Validity: Some countries have proposed authorizations that expire at certain intervals (e.g., everyyear) while others cover the whole NDC period.
• Endorsement/Approval: Is it useful to consider project approval/endorsement by governments
without corresponding adjustment?
• Others?

What is more needed?
• Means of verification for countries• Useful to assess the compliance of the criteria set based on the info/data that activity participants provide• Submission to UNFCCC• Only Ex-post assessment by A6 TER• A6 TER only checks the ‘consistency’ of the information provided; but not the ‘adequacy or appropriateness’ of theinfo for the underlying cooperative approach and the activities• Useful to develop the guidance for countries• Strategic guidance for countries on various aspects of carbon markets participation