Article 6 Corresponding Adjustments Key accounting challenges for Article 6 transfers of mitigation outcomes

The operationalization of Article 6 is one of the main gaps in the Paris Agreement rulebook adopted at COP24 in Katowice. While Parties have made progress in the various negotiation rounds, several
crunch issues remain that will need to be concluded during COP25 in Santiago, Chile.

One main issue is the notion of ‘corresponding adjustments’ that are to be made to prevent double counting. Making a corresponding adjustment means that when Parties transfer a mitigation
outcome internationally to be counted toward another Party’s mitigation pledge, this mitigation outcome must be ‘un-counted’ by the Party that agreed to transfer it.

While this seems straightforward, questions around how and when a corresponding adjustment should be applied
remain contentious.
This internal discussion paper intends to provide background information on these issues, while taking into account African country contexts. The paper seeks to capture and analyze the various options, definitions and questions coming out of the latest negotiations at SB50 in Bonn, and establish a basis for the upcoming negotiations at COP25.

It should be noted that the negotiations on the translation of paragraph 77d of decision 18/CMA.1 into reporting formats – that specifies reporting guidelines and provides basic rules for corresponding adjustments – have been “put on hold” subject to agreement on Art. 6 modalities and procedures. Parties disagree with regard to the legal status of para 77d in the absence of an Article 6 decision, some Parties insist it would be fully applicable and others insist it would remain in abeyance.