Germany‘s carbon market cooperation with Ukraine: Prospects for engaging with Article 6 of the Paris Agreement

This paper discusses the current readiness of Ukraine to engage in carbon market options that the provisions of Article 6 of the Paris Agreement may present. Engagement readiness is discussed for three indicators: enabling conditions present in the country to participate in markets; feasibility of maintaining robust accounting and MRV to ensure the quality of generated reductions and transparency of transfers; and the compatibility of the country’s Nationally Determined Contribution (NDC) to maintain the environmental integrity of Article 6 and strengthen mitigation ambition of the Paris Agreement. The paper argues that both the cooperative approaches under Article 6.2 and the mechanism based on baseline and crediting instruments under Article 6.4 could be viable for Ukraine to participate in the post 2020 international carbon market. These assessment results are based on solid analysis of empirical evidence from interviews, insights from project workshops and literature review regarding various factors discussed under the three indicators.

Basing on the assessment, recommendations are provided on how Germany could further support Ukraine to participate in Article 6. Several entry-points are identified such as supporting MRV capacity building to ensure its sufficiency and compatibility with Article 6 requirements; providing political, technical and financial support for the creation of a specialised body responsible for climate policy issues; enhancing dialogue with broader stakeholders within the country; and conducting further studies on mitigation potential in various sectors. The case study also highlights the need for detailed and demand-driven, tailor-made technical exchange on the design and linking of emissions trading systems, which would support Ukraine’s potential participation in Article 6.2.

Main report and further case studies

• Germany’s international cooperation on carbon markets: Status and prospects in select partner countries

• Germany‘s carbon market cooperation with Ethiopia: Prospects for engaging with Article 6 of the Paris Agreement

• Germany‘s carbon market cooperation with Viet Nam: Prospects for engaging with Article 6 of the Paris Agreement

• Quick Facts on Article 6 - Market Mechanisms