Considerations for CDM Methodology Concepts to Article 6.2

Investment Rating - The report does not explicitly provide an investment rating for the industry under consideration. Core Insights - The Clean Development Mechanism (CDM) has developed over 250 project-based methodologies that can inform baseline-setting methods under Article 6 of the Paris Agreement to ensure environmental integrity and increased mitigation ambition [8][9] - The transition from the Kyoto Protocol to the Paris Agreement requires reassessment of CDM methodologies to align with new requirements, focusing on ambition-raising and addressing key risks such as over-crediting and perverse incentives [9][10] - Article 6.2 aims to facilitate cooperative actions to reduce global greenhouse gas emissions, necessitating operational rules and procedures to be established promptly [11][12] Summary by Sections Introduction & Objectives - Article 6.2 of the Paris Agreement is designed to contribute to global GHG emissions reduction through cooperative mechanisms [11] - The operationalization of Article 6.2 is urgent to meet global temperature goals [11] Considerations for Article 6.2 Baselines - Baseline determination is crucial for Article 6.2, requiring methodologies that are transparent, credible, and below business-as-usual levels [16][18] - The report emphasizes the need for performance-based approaches in setting baselines, including best available technologies and ambitious benchmarks [17][18] Managing Risks with Article 6.2 Baselines - The report identifies risks such as over-crediting and the need for robust baseline settings to mitigate these risks [18][30] - It suggests that baselines should reflect future policy impacts and not incentivize short-term gains over long-term decarbonization [31][32] Testing Article 6.2 Concepts with CDM Methodologies - The report discusses the adaptation of existing CDM methodologies to align with Article 6.2 requirements, emphasizing the need for simplicity and predictability in baseline setting [43][44] - It highlights the importance of considering the unique circumstances of different countries and sectors when applying baseline methodologies [56] Conclusions - Article 6.2 baselines must evolve beyond CDM methodologies to effectively support NDC achievement and ambition-raising [56][57] - The report advocates for a phased approach to baseline setting, starting with simpler methods and transitioning to more complex ones as capacity improves [57]