Switzerland and Thailand have made history with a new development on the carbon markets scene. The two countries have completed the transfer of the first ever Article 6.2 carbon credits, marking the first deal for emissions reductions under the Paris Agreement.
Article 6.2 sets out a system of national accounting for greenhouse gas emissions, with common principles that countries can adopt to allow cross-border exchanges of carbon credits. The credits are known as Internationally Transferable Mitigation Outcomes (ITMOs).
The carbon credits are purchased from the Swiss-based KliK Foundation which announced the deal on Jan. 8. The organization bought 1,916 ITMOs from the Thai company Energy Absolute Public Co. Ltd. for the Bangkok E-Bus Program.
The credits are based on the CO2 reductions from the Bangkok E-Bus Program that aims to convert the fleet of private operators in the Bangkok Metropolitan Area from internal combustion engines to electric vehicles.
“The ITMOs will be used by the KliK Foundation to fulfill its compensation obligation under the Swiss CO2Act. Switzerland intends to use these internationally transferred mitigation outcomes towards its target under the Paris Agreement. To avoid double counting, Thailand has committed to adjust its greenhouse gas inventory by the amount of mitigation outcomes transferred to Switzerland,” the companies said in a joint statement.
Under Article 6.2, countries can benefit from emission reductions counted toward their own domestic targets, known as Nationally Determined Contributions (NDCs), or they can sell emission reductions generated in the country’s borders to other countries to put them toward their own NDCs.