26 COM/ENV/EPOC/IEA/SLT(2021)2
3 Overview of issues and potential
high-level criteria for the possible transition of CDM activities
This section provides an overview of the issues relevant to the possible transition of CDM activities to the Article 6.4 mechanism from the draft Presidency texts from COP25. It also outlines a set of high-level criteria that could be used to guide the decisions at the level of the CMA and, to the extent needed to support the possible transition, of the CMP.
3.1. Overview of issues related to the possible transition of CDM activities in latest negotiation texts and CDM EB decisions The three iterations at COP25 of the draft Presidency text on the RMP of Article 6.4 (UNFCCC, 2019[2]; UNFCCC, 2019[3]; UNFCCC, 2019[4]) present many common substantive elements relating to the possible transition of CDM activities to the new mechanism. These elements indicate that a transition of CDM activities is possible, but the conditions of such a transition, as well as the issues of baseline methodologies under the Article 6.4 mechanism and additionality need further elaboration. The following sub-sections explore areas of convergence in the draft Presidency texts from COP25 and focus on a few outstanding issues.
3.1.1. Areas of convergence in latest negotiation texts on the eligibility criteria for transitioning CDM activities There are several areas of convergence in the current texts relating to a possible transition. A key one is that the process for the possible transition is neither automatic12 nor mandatory13, and would be subject to certain conditions. In particular, the host Party of each eligible CDM activity physically located within its territory is to decide whether or not to approve the transition, subject to any eligibility criteria agreed by the CMA, to any domestic criteria that the host Party might have established in addition to CMA criteria, and potentially to validation and verification by a DOE. The PPs of an eligible CDM activity must also express their wish that their activity transitions.14
12
An option for an automatic transition for small-scale activities was also discussed at COP25, but it was not reflected in the draft Presidency texts. 13
Because participation in the CDM and the Article 6.4 mechanism is voluntary, and the possible transition was not mandated by the Paris Agreement nor by any CMP or CMA decisions. 14
In case of PoAs located within the territory of multiple Parties, the PoA would need to receive the approval of each of the host Parties, unless a special rule is adopted to allow the PoA to transition only for the jurisdictions where the
Unclassified
