Strengthening private sector engagement in Eastern Africa with the growing momentum to participate in Article 6

There has been growing interest and momentum from private sector stakeholders to participate in international carbon markets following COP 26 in Glasgow, which finally adopted the guidance and rules for Article 6 of the Paris Agreement after six years of negotiations. 

While the fundamental rules of Article 6 are now agreed upon, the specific details for their operationalization are still to be determined in a subsequent work programme.  Private sector actors are reaching out to Governments for guidance on implementing cooperative approaches and voluntary carbon market activities, the transition of Clean Development Mechanism (CDM) activities to Article 6 and requesting authorization for international transfer of mitigation outcomes. On the other hand, the public sector actors have significant capacity-building requirements on their institutional, infrastructure, and legal frameworks to fit the new Article 6 provisions.

Given the foregoing, the Eastern Africa Alliance on Carbon Markets and Climate Finance, with support from the GIZ Global Carbon Markets Program, commissioned by the German Ministry of Economic Affairs and Climate Action, together with the UNFCCC-Regional Collaboration Centre, Kampala held a regional private sector workshop on 16-17th March 2022 in Entebbe, Uganda. The main purpose of this workshop was to discuss and analyze the relevance of COP26 Outcomes for Article 6 implementation, CDM transition, and voluntary carbon markets (VCM) in Eastern Africa. It brought together more than 60 participants, including, private and public sector actors, representatives from development partner agencies, multilateral institutions, and civil society from Eastern Africa and beyond.

Participants presented case studies of CDM and Article 6 pilot projects and innovative projects, for example in e-mobility, that could potentially participate in these market mechanisms, to synthesize lessons learned and discuss how these can inform future Article 6 VCM activities.

The key messages from the session are as follows;

  • Article 6 implementation will be a learning-by-doing process. Participants expressed the need to maintain public-private dialogue to build knowledge on the new markets and share experiences on what works and what may not.
  • Whereas uncertainty remains on advancing technical rules and procedures for Article 6, it is essential for the private sector to accelerate the deployment of carbon market activities already while public institutional capacity is being established.
  • There is a need to strengthen Designated National Authorities’ capacities to effectively manage and monitor Article 6 activities and regional institutions to undertake validation and verification audits. 
  • Capacity building for the private sector is needed to transition CDM activities, develop Article 6, and acquire authorization for the international transfer of ITMOs.
  • Pilot projects are a practical approach to shaping the elements of Article 6 while building host country capacity.

The workshop was closed with remarks from the Representative of the Ugandan Government who emphasized the importance of public-private sector cooperation in ensuring rapid development of the Article 6 landscape and realization of country NDC targets.