Spatial & Multisectoral Impacts of Paris Agreement Article 6 under
Different Equity-driven Emissions Mitigation Pathways
Abstract
Article 6 of the Paris Agreement on greenhouse gases enables countries
to cooperate in implementing their nationally determined contributions
(NDCs) towards emission reduction. Current national policies may fail to
deliver on the “well below 2℃” climate goal & international
cooperation through carbon markets under Article 6 is expected to
enhance flexibility in mitigation options, make it cost-effective and
enhance mitigation ambition overall. As countries prepare for the
Glasgow Conference of Parties (COP26), the rules for such mechanisms are
expected to be finalized. We analyze three questions: What is the
aggregate & spatial distribution of economic efficiency gains &
financial flows between Global North & South with Article 6? What is
the impact of limits on inclusion of nature-based solutions? What are
the multisectoral dynamic effects on technology deployment & capital
investment in the Global South? We use the GCAM (Global Change Analysis
Model) integrated assessment model & an 8-scenario matrix with two
emission trajectories achieving carbon neutrality based on equity
principles. In each case, we measure the geographic distribution of
economic gains till 2050 between a pathway where countries move
independently or participate cooperatively in a global carbon market. We
analyze the spatial and multisectoral impacts on electricity asset
stranding & investments in different mitigation options, including CCS
(carbon capture & sequestration), electric vehicles, energy efficiency
& renewable energy technologies. Employing limits on land area engaged
for mitigation from fossil fuel sources, we showcase the sensitivity of
these results to nature-based solutions. We find that in contrast to the
popular notion that the Global South will inevitably gain through such
global carbon market transfers, the story is more intricate. There is
also a noticeable impact of limiting nature-based solutions for
countries in Latin America & Sub-Saharan Africa. Further we show
differences in deployment of low-emissions technologies in the near
term. This has implications for technological growth & incentives for
mitigation. This study provides insights for design of future global
markets or regional carbon clubs & shows equity tradeoffs in achieving
economic efficiency in climate change mitigation.