Translations:Paris Agreement/41/en

Linkage of carbon trading systems and ITMOs

Paragraphs 6.2 and 6.3 establish a framework to govern the international transfer of mitigation outcomes (ITMOs). The agreement recognizes the rights of parties to use emissions reductions outside of their own borders toward their NDC, in a system of carbon accounting and trading. This provision requires the "linkage" of carbon emissions trading systems – because measured emissions reductions must avoid "double counting", transferred mitigation outcomes must be recorded as a gain of emission units for one party and a reduction of emission units for the other, a so-called "corresponding adjustment". Because the NDCs, and domestic carbon trading schemes, are heterogeneous, the ITMOs will provide a format for global linkage under the auspices of the UNFCCC. The provision thus also creates a pressure for countries to adopt emissions management systems – if a country wants to use more cost-effective cooperative approaches to achieve their NDCs, they will have to monitor carbon units for their economies.