On March 25, 2022, the Global Green Growth Institute (GGGI), together with the Ministry of Environment held an inter-ministerial workshop introducing key decisions to be taken as part of Cambodia’s preparations for carbon trading under Article 6 of the Paris Agreement.
Cambodia recognizes climate change as a major challenge in its development journey and is one of the 10 countries in the world most vulnerable to climate change. Despite historically low contributions to global greenhouse gas emissions, Cambodia is one of a handful of developing nations to have submitted both its the Updated Nationally Determined Contribution (NDC) and Long-Term Strategy for Carbon Neutrality (LTS4CN) to UNFCCC. These documents communicate targets and pathways to reduce greenhouse gas emissions and transition to a green economy. However, achieving these goals comes with a financial price. The Updated NDC estimates the cost of transition at US$ 5.8 billion by 2030. This is where Cambodia and Article 6 meet.
The “rulebook” for Article 6 of the Paris Agreement, finalized in Glasgow at COP26 in November 2021, details new guidance and rules for cooperation on achieving the goals of the Paris Agreement through international carbon trading. Managed appropriately, such cooperation can incentivize green investment in Cambodia’s economy by providing an additional revenue stream for activities that support Cambodia’s international climate commitments.
Since 2020, under the “Mobilizing Article 6 Trading Structures” (MATS) Program, GGGI has partnered with the Ministry of Environment to build capacity and understanding of Article 6 instruments, and support the necessary decisions to be taken across ministries to strategically align carbon trading with mitigation and development strategies.
“We are in this room today to consider developing our Article 6 engagement strategy and structures to be put in place that will allow Cambodia to integrate carbon finance revenues into our NDC, LTS4CN and other mitigation and green growth planning”, said H.E. Tin Ponlok, Secretary of State of the Ministry of Environment.
This workshop is one of an on-going series tailored to build inter-ministerial knowledge and understanding of Article 6 carbon finance mechanisms. The aim is to come to robust Article 6 authorization criteria which will support project developers and demonstrate to potential buyers that Cambodia is ready to become a world leading trading partner.
During the workshop, participants shared their knowledge and experience of previous engagement in carbon market mechanisms, what concerns they have and where knowledge and capacity gaps exist. All of this feedback is invaluable in enabling first trades under Article 6.