The cooperative approach under Article 6 of the Paris Agreement requires reliable and trusted bookkeeping systems in form of a registry. On behalf of the Swedish Energy Agency (SEA), INFRAS analysed the potential of blockchain based technologies – and developed a registry system together with its IT partner “Cosmos”.
Article 6 of the Paris Agreement creates a new framework for market mechanisms: Countries can cooperate to achieve their Nationally Determined Contributions (NDCs) to reduce greenhouse gas emissions. However, emission accounting systems for Article 6 mechanisms are heterogenous. This leads to challenges in assessing, tracking, and comparing actions of different countries. Therefore, the cooperative approach under Article 6 requires the establishment of robust institutional settings, regulatory frameworks and reliable and trusted information systems.
Building a registry infrastructure for Article 6 transactions
Digital solutions can improve data collection procedures and digitize the process of monitoring, reporting and verification (MRV) of international transactions. On behalf of the Swedish Energy Agency (SEA) consortium of scientific institutions led by INFRAS analysed options for establishing registry systems. The study focused on the potential of blockchain based technologies.
Potentials and challenges of blockchain technologies
“Blockchain, distributed ledger technology (DLT) and other digital innovations for electronic registry systems and MRV may provide numerous benefits compared to the use of a conventional centralized database”, Jürg Füssler, managing partner at INFRAS, explains: “Blockchain/DLT entries are immutable. This increases security especially in the context of countries with weaker institutional capacities and governance settings. Additionally, blockchain/DLT systems may also be better suited to connect different registry systems. This allows for the linking of a multitude of heterogenous carbon markets.”
First experiences with developing a simple demo registry system
The study summarizes findings and preliminary conclusions that are based on an initial analysis of the requirements of future Article 6 registries. Furthermore, it shares the experiences from the development of a simple demo registry system by IT partner “Cosmos” as well as from a technical workshop with the SEA and project team. Jürg Füssler: “The results underline the need of international cooperation and agreeing on jointly developing a robust pilot system.”