This paper Outside In? Using International Carbon Markets for Mitigation Not Covered by Nationally Determined Contributions (NDCs) Under the Paris Agreement outlines key issues and options relating to these questions. Whether, and how, such mitigation outcomes should be internationally transferred and accounted for raises many issues of capacity, fairness, breadth of mitigation, and incentives for making progress in the scope and ambition of NDCs over successive NDC cycles.
The paper first explores what is meant by mitigation inside and outside the scope of NDCs and finds that this is, in itself, not an easy issue to resolve (section 2). The paper then systematically identifies and examines the key advantages and disadvantages cited for allowing for the international transfer and use towards NDCs of mitigation outcomes generated outside of NDCs (section 3). This is followed by an identification and analysis of options for addressing concerns with allowing such mitigation outcomes to be internationally transferred and used (section 4), before drawing conclusions (section 5).
The analysis addresses both Article 6.2 and Article 6.4 and assumes that emission reductions resulting from the mechanism established under Article 6.4 are accounted for under the framework of Article 6.2, even though this approach is not supported by all countries. The paper does not consider a purely domestic context, i.e. the possibility that mitigation outcomes from outside a country's NDC would be used by that country in achieving its own NDC. Likewise, the use of carbon markets for the voluntary offsetting of emissions is not considered. Lastly, the paper focuses on mitigation outcomes generated under crediting programmes because, to date, all emissions trading systems fall within the scope of NDCs.