Nationalisation Risk: Will Host Countries Hedge Their Bets Between Article 6 and the Voluntary Carbon Markets?

Legal Updates
Nationalisation Risk: Will Host Countries Hedge Their Bets Between Article 6 and the Voluntary Carbon Markets?
6 December 2022

COP27 has affirmed the view that country authorisation frameworks are a critical issue in making Article 6 markets operational. Countries will have to enact legislation to establish or put in place a national control or authorisation framework (National Framework) to facilitate or enable them to (i) comply with their Paris Agreement reporting obligations under Articles 4, 6 and 13 of the Paris Agreement, and (ii) determine how they will manage and organise their greenhouse gas (GHG) abatement opportunities within an NDC and across future NDCs.

If they wish to participate in Article 6, countries will also have to develop an authorisation framework for approvals of mitigation outcome activities. Voluntary carbon market (VCM) mitigation or removal projects are likely to be impacted by this legislation.

SSEK partner Denny Rahmansyah and associates Aldilla Stephanie Suwana and Albertus Jonathan Sukardi have contributed to a joint report with HFW, Talwar Thakore & Associates (TT&A) and Adnan Sundra & Low to look at the legislative developments for National Frameworks in Indonesia, India and Malaysia. These three countries were chosen in light of announcements by their national or subnational governments on the introduction of a National Framework or a sub-national framework in those jurisdictions.

Denny Rahmansyah, Partner, SSEK: “Indonesia has established both a National Framework and an Authorisation Framework, but both are relatively new and there is still uncertainty around the setting-up of domestic carbon trading schemes. SSEK is pleased to participate in this report and help shed some light on the approaches being taken by Indonesia and the market opportunities here.”

Contributors include:

HFW: Peter Zaman, Jefferson Tan, Rochelle M., Christopher Ong

SSEK Legal Consultants: Denny Rahmansyah, Aldilla Stephanie Suwana, Albertus Jonathan Sukardi

Talwar Thakore & Associates (TT&A): Gautam Saha, Punita Gupta, Akshita Alok

Adnan Sundra & Low: Putri Norlisa Najib, Wong Mei Ting


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