The pace and scale of our response to the climate crisis is mission-critical, as underscored by the most recent call to action by leading climate scientists. Climate action can and must become a powerful unifier on the international stage. But this requires governments, businesses and investors to forge new partnerships and agreements collaboratively, invest intentionally in testing innovative approaches in order to drive finance towards activities that deliver the highest level of emission reductions possible.
IETA estimates that carbon markets could halve the costs of countries reaching their emissions reductions targets by 2030. The new carbon market under Article 6 of the Paris Agreement has a central role to play here.
Article 6 is a clause in the Paris Agreement that sets the rules for international cooperation between countries to meet their emission reduction targets. Following the approval of this rulebook at COP26 in Glasgow, the Thai and Swiss governments have come together to authorise the first Article 6 programme in Asia: the Bangkok E-Bus Programme.
This trailblazing programme is one of the first under Article 6 and will introduce around 2,000 electric buses (e-buses) in the Bangkok Metropolitan Area – a move that will help avoid around 500,000 tonnes of CO2 by 2030 and significantly improve air quality in a congested megacity like Bangkok. It provides, in effect, a blueprint for what the effective implementation of Article 6 could look like both for countries and the global climate, and it highlights the benefits of international cooperation between governments and the private sector.
The potential of Article 6
The authorisation of the Bangkok E-Bus Programme is the latest step forward following the signature of the cooperation agreement by the Ministers of Environment of both Thailand and Switzerland in June 2022. It represents the culmination of years of work from both Thai and Swiss governments, KliK Foundation, Energy Absolute, and South Pole – a true example of the transformational capacity of carbon markets to bring together a full ecosystem of partners and reduce carbon emissions cost-effectively.
Central to this agreement are Internationally Transferred Mitigation Outcomes, or ITMOs. ITMOs are the units of trade or international carbon credits under Article 6. Article 6 provides a framework whereby one country (Thailand, in this example) which requires financing for climate solutions is able to credibly and transparently cooperate with another country (here, Switzerland) which is seeking to achieve more cost-effective emission reductions.