UK Law and Practice Contributed by: Ruth Knox and Julian Wolfgramm-King, Paul Hastings LLP
2.5.2 Article 6.4 – The Paris Agreement Crediting Mechanism DESNZ is the Designated National Authority to deal with the Paris Agreement’s Article 6.4 mechanism. Links to Existing Carbon Market Mechanisms UK Government issued a consultation in April 2025 on raising integrity in the voluntary carbon and nature markets, in which it emphasised the importance of tackling leakage risks (ie, the displacement of nega - tive environmental impacts to outside the supply area) through standards such as those set out under Article 6.4 Paris Agreement. In the consultation paper, the UK government explicitly recognised that project developers of mitigation activ - ity (eg, engineered or nature-based removals) within the UK may wish to sell credits generated in the UK through PACM. The UK would need to put in relevant governance arrangements to enable such trading. In March 2026, DESNZ published a statement that “high integrity voluntary carbon and nature markets can support that ambition by mobilising private finance into additional emissions reductions and removals, restoring ecosystems, and spurring innovation, while reinforcing the primacy of deep decarbonisation and nature restoration”. 2.5.3 Article 6.8 – Non-Market Approaches While the UK intends to meet its NDC target through reducing emissions domestically, it reserves the right to use voluntary co-operation under Article 6 of the Paris Agreement. Such use could occur through the linking of the UK emissions trading scheme to another emissions trading system or through the use of emis - sions reductions or removals units. At London Climate Action Week 2025, the government launched the Coa - lition to Grow Carbon Markets in partnership with Sin - gapore and Kenya. The Coalition seeks to develop incentives and the UK will support supply, through its commitment of technical assistance at COP30 to a Global Green Growth Institute programme to facilitate Article 6 access. If the UK were to use voluntary cooperation under Article 6 of the Paris Agreement, its position is that such use would be accounted for in accordance with relevant decisions adopted by the CMA.
The UK firmly opposes the inclusion of emissions avoidance as an additional Article 6 activity that can generate A6.4ERs (including avoided fossil fuel extrac - tion) to safeguard environmental integrity and prevent a disconnect between Article 6.4ERs and Article 6.2 reporting and accounting requirements. The UK has also asked for a CMA-level decision on the minimum information to be provided in an Article 6.4 authorisa - tion statement to ensure adequate tracking of author - ised Article 6.4ERs, including the application of corre - sponding adjustments. The UK has also noted that the Article 6.4ERs should be marked if they are authorised for use towards an NDC, or are authorised for use towards other international mitigation purposes, in a manner that enables linking to tracking information. The UK has concerns that Article 6.4 authorisation statement revisions could create significant account - ing and reporting complications, in turn posing risks to environmental integrity, and so has welcomed further technical work on the types of revisions that could be permitted. The UK’s position is that there are other levers beyond the Article 6 mechanism which are better suited to address conservation activities, including Article 5 of the Paris Agreement and the voluntary carbon market. Formal Bilateral Agreements Relating to Co-Operation on Achieving Mitigation (Including Role of the Private Sector) Climate finance In the UK’s Biennial Finance Communication to the UNFCCC submitted in December 2024 (the “Bien - nial Communication”), the UK pledged to increase its International Climate Finance (UK ICF) contribution from GBP5.8 billion over the 2015 to 2021 period to GBP11.6 billion over the 2021 to 2026 period. On 19th March 2026, UK government announced a replace - ment commitment of around GBP6 billion over the next three years. ICF4 includes GBP6.7bn of non- Overseas Development Aid public finance through UK Export Finance, British International Investment and guarantees to multilateral development banks. The UK has also reduced its pledge to the Green Climate Fund to GBP815mn as part of a wider decision to cut overall aid spending to 0.3% of gross national income to fund higher defence spending.
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