At the Global Green Growth Week 2024, the Global Green Growth Institute (GGGI) launched the Carbon Transaction Facility (CTF) in a high-profile event inaugurated by GGGI’s President of the Assembly and Chair of the Council, H.E. Ban Ki-Moon. The CTF offers a comprehensive solution to scaling up international carbon trading under Article 6 of the Paris Agreement, addressing major challenges in market development. The Carbon Transaction Facility is the first of its kind, standing as the only international facility solely focused on expanding Article 6-aligned carbon markets
Through the CTF, GGGI will be able to extend its Article 6 activities through a collection of single and multi-donor funds aimed at increasing host country readiness and facilitating transactions of Internationally Transferred Mitigation Outcomes (ITMOs). The CTF aims to catalyze up to USD 500 million solely for ITMOs purchasing by 2030.
The multi-donor fund, named the Article 6 Readiness Facility, will mobilize up to USD 50 million for readiness support activities to GGGI Member States and Partner Countries. The readiness component will allow GGGI to more than double the scale of its support for capacity building, technical assistance, institutional strengthening and international knowledge exchange activities in its Member States and partner counties. At the same time a pipeline of potential mitigation activities for trading will also be developed.
Under the umbrella of the CTF, GGGI will also act as trustee for several carbon trust funds which will enable sovereign parties to purchase ITMOs from mitigation activities, enabling host countries to put into practice the support received from the Readiness Facility. Together this will, in the most practical way, help open up Article 6 aligned international carbon markets, increasing climate ambition.
H.E. Ban Ki-moon, President & Chair of GGGI, remarked during the inauguration “Bilateral cooperation under Article 6 of the Paris Agreement and specifically the Carbon Transaction Facility offers an important solution for implementing climate action. It allows host countries that are willing to go ‘above and beyond’ their unconditional commitments to receive payments for taking climate action that otherwise would not have been possible.”
Frank Rijsberman, Director-General of GGGI, added that “I am pleased that GGGI has been able work collaboratively to make the CTF a reality. GGGI plays a pivotal role in catalyzing green growth by helping our Members embrace innovative mechanisms like carbon pricing. By unlocking access to new streams of finance, GGGI enable countries to invest in sustainable development, accelerating their transition to greener economies and unlocking new areas of growth.”
Representatives from the CTF’s participants were also present at the launch event. Alison Carlin, Manager of the Climate Change and Environment Policy Unit at the Ministry of Foreign Affairs and Trade of New Zealand, represented the first participant to join the CTF with funding to the Article 6 Readiness Facility. New Zealand has been a partner of GGGI for several years, with programs in the Pacific and in Southeast Asia supporting countries to achieve low-emission climate-resilient development pathways. New Zealand recognizes Article 6 cooperation as a valuable tool for achieving greater global mitigation ambition in order to achieve the long-term temperature goals of the Paris Agreement.
Sandra Lindström, Head of International Climate Cooperation at the Swedish Energy Agency, was present as the first participant to establish a Carbon Trust Fund under the CTF, named the Article 6 Climate Cooperation Fund (ACCTIF). “Through ACCTIF, we are scaling up Sweden’s engagement in the carbon market, aiming to accelerate green growth development worldwide. GGGI brings valuable experience to this field and has relevant expertise to work with countries where mitigation activities can be implemented” added Sandra Lindström.
Guri Stooras, representing Norwegian Ministry of Climate and Environment, the most recent participant to join the Article 6 Readiness Facility, added “We’ve been working with GGGI for many years and value their expertise a lot. We are thrilled about the launch of the CTF, which is a milestone towards the operationalization of Article”
Fenella Aouane, Director of Carbon Pricing at GGGI, commented on the next steps for the CTF: “We are delighted to have received such interest in the CTF and I’m enormously grateful for the continued trust our CTF Participants have put in us. With the funding received and the first activities now approved we will be ramping up our activities to help countries to prepare for, and to start, Article 6 aligned trading. Indications for COP29 and agreement on Article 6 looks promising, so our timing couldn’t be better.”
The Article 6 Readiness Facility Committee has already approved two readiness projects at its first Annual Meeting, covering activities in Rwanda and Sri Lanka that will start this year.
