The Paris Agreement is the world’s most significant climate accord, with commitments from nearly every country. Among its provisions, Article 6 stands out as a framework for international cooperation on carbon markets. For businesses, especially in emerging economies like Vietnam, Article 6 creates both responsibilities and opportunities to participate in global emission reduction efforts.
What Is Article 6 of the Paris Agreement?
Article 6 provides mechanisms for countries to collaborate in reducing greenhouse gas emissions. It allows the transfer of emission reductions—called Internally Transferred Mitigation Outcomes (ITMOs)—between countries to meet their climate targets.
There are three main parts:
- Article 6.2: Countries can trade ITMOs with each other through bilateral or multilateral agreements.
- Article 6.4: Establishes a new global carbon credit mechanism supervised by the UNFCCC, replacing the old Clean Development Mechanism (CDM).
- Article 6.8: Focuses on non-market approaches like technology transfer, finance, and capacity-building.
Why Article 6 Matters for Enterprises
Access to International Carbon Markets
Businesses can generate carbon credits through renewable energy, forestry, or agricultural projects and sell them internationally under Article 6.
Attracting Foreign Investment
Projects aligned with Article 6 often attract international investors who seek certified emission reductions to offset their footprints.
Competitive Advantage in Exports
Exporters benefit from demonstrating compliance with global carbon rules, especially as trade partners introduce carbon border taxes.
Innovation and Green Technology Adoption
Enterprises are encouraged to adopt low-carbon technologies to qualify for carbon credit generation under the Article 6.4 mechanism.
Opportunities for Vietnamese Businesses
Vietnam’s abundant renewable energy resources, agricultural base, and forestry potential position it well to benefit:
- Renewable projects (solar, wind, biomass) can generate ITMOs.
- Sustainable agriculture (low-emission rice, smart irrigation) may qualify for credits.
- Forestry protection supports REDD+ and creates long-term revenue streams.
With the government’s carbon market roadmap to 2030, enterprises that align with Article 6 mechanisms will be early winners.
Challenges to Overcome
- Complex regulations: Businesses must navigate strict verification and certification processes.
- High upfront costs: Developing projects under Article 6 requires significant investment.
- Capacity gap: Many SMEs lack knowledge about carbon accounting and reporting standards.
Article 6 of the Paris Agreement is a game-changer for enterprises worldwide. It not only supports global climate goals but also creates new markets, investment channels, and competitive opportunities. For Vietnamese businesses, early adoption and alignment with Article 6 mechanisms will be critical to thriving in the emerging low-carbon economy.
FAQ
What is the purpose of Article 6 in the Paris Agreement?
It enables countries to cooperate through carbon trading and non-market approaches to meet climate targets.
How can enterprises benefit from Article 6?
By generating and selling carbon credits, attracting investors, and gaining competitiveness in export markets.
What are ITMOs?
Internationally Transferred Mitigation Outcomes—carbon credits exchanged between countries.
Is Article 6 already in effect?
Yes, rules were finalized at COP26 in Glasgow, and countries are beginning implementation.
What role does Vietnam play in Article 6?
Vietnam is preparing to link its future carbon market with international mechanisms under Article 6.