Some observations about how NDC structure can influence carbon trading through Article 6

By Dr Anna Clements, Gamos Ltd.

Nationally Determined Contributions (NDC) under the Paris Climate Agreement are systematically reviewed and revised. 2025 is the year in which countries are encouraged to submit the third revision to their NDC – ‘NDC3.0’. We at MECS have been eagerly waiting to see countries include clean cooking, and even eCooking in these important documents. An NDC effectively outlines targets and plans for reducing carbon emissions. Several countries have submitted their NDC3.0 containing specific targets for eCooking – shout out to Cambodia, Nepal and Nigeria. Kenya mentions eCooking in narrative text in their NDC3.0, and Uganda and Indonesia reference eCooking in their NDC updates from 2022. As emissions from cooking contribute 2% of global GHG emissions and one quarter of global black carbon emissions, cleaning up emissions from cooking is a key pathway to net zero.

But recently, we’ve realized we need to pay closer attention – we’ve noticed that the structure of an NDC can have a strong influence on how (or whether) that country wants to trade carbon through Article 6 to support clean cooking projects. By looking at a few examples, we are struck by how it all comes down to the detail when it comes to Article 6 for clean cooking – and that detail is not only in the Article 6 frameworks and policy but can also be in how a country writes its NDC. We hope that, as more countries work on their revised NDC, these reflections might help think through the implications of various structures as they relate to engagement in Article 6 for clean cooking.

The interesting case we found, is Ghana, and how their NDC from 2021 is structured. The NDC is split into 2 targets:

• Unconditional targets: what Ghana commits to meet on its own using only its domestic resources.
• Conditional targets: what Ghana thinks it can achieve with external support – this is the higher end of ambition.

The NDC itself states that, out of the 34 mitigation measures, there are 9 unconditional and 25 conditional programmes of action, and for 13 adaptation measures, there are 7 unconditional and 6 conditional programmes of action (page 9). (It is slightly confusing that, while the numerical split is stated in the NDC, the actual activities themselves are not listed there, but appear in the Carbon Framework and another published list from the Carbon Market Office). The interesting move Ghana then makes, within its Carbon Framework regulation, is to ban Article 6 projects for unconditional activities. For example, allowable mitigation activities that are to contribute to the unconditional target include energy efficient lighting in households, various aspects of transport, and switching powerplants from oil to gas (see Annex 2, pg 139). Carbon savings from these activities will not be approved for international transfer. Example activities under the conditional target include clean cooking, as well as biogas plants, other energy efficient appliances, and renewable energy (same reference). Ghana states that no projects in the ‘Unconditional’ areas are allowed to trade carbon through Article 6. Instead, it states that authorizations for ITMOs will be granted for activities under the ‘conditional’ areas¹.

So essentially there is an early, go/no-go gate for projects hoping to trade carbon through Article 6. It makes sense for Ghana – by effectively creating a ‘red list’ out of the activities that it wants to contribute to its unconditional NDC target, it ringfences these and increases confidence that it will meet its unconditional NDC. It’s a system to ensure it doesn’t trade too many credits through Article 6 and find itself with too few to count towards its own NDC². It is also quite helpful for us all – it’s a very clear, transparent way to communicate what projects it is happy to authorize through Article 6, and which it isn’t. We are of course very glad that clean cooking is on the conditional side – as if it wasn’t, cooking projects supported by trading ITMOs in Ghana wouldn’t be possible – and given the huge potential for this mechanism to support the clean cooking transition, this would be a huge shame.

Just to look at a few contrasting examples – Kenya is one of the countries that has already submitted its revised NDC this year. The structure of its NDC is quite different to Ghana’s; Kenya sets a single mitigation target (35% below BAU by 2035), and then the conditional/unconditional split comes in to how that target is to be financed. It says 19% of the target is to be financed domestically, and the rest though external support. There are no prescribed activity areas split by conditional/unconditional domains, and so Kenya’s NDC does not weigh in on Article 6 eligibility. Instead, Kenya lays out Article 6 engagement in its Climate Change (Carbon Markets) Regulations (2024), which states that projects must align to a positive list. This positive list system is how Kenya plans to indicate what activities are eligible for Article 6 trading (however, a positive list has yet to be publicly published, and instead projects currently proceed on a case-by-case basis).  

Nigeria has also just submitted its revised NDC – and while it sets ambitious clean cooking targets (such as 55% of urban households, 27% rural households, and 37% commercial institutions cooking with electricity by 2035), there is also nothing in the NDC that lays out Article 6 eligible or ineligible activities. In fact, neither does Nigeria have a positive list, so, like Kenya (though Kenya clearly intends to have a positive list at some point), project activities are judged on a case-by-case basis.

What are the implications of these different choices? For both a country like Ghana (stipulates Article 6 eligible activities through the conditional/unconditional split) and (when the positive list is published), Kenya, there is a clear delineation of eligible activities and ineligible activities, just in different ways. Clarity on eligible activities is important for potential project stakeholders, increasing confidence that a government will approve a project for Article 6. Buyers and developers are also interested in assuring that the credits their project is exporting are definitely surplus to the host country’s requirements, such that there’s no possibility that, in later years, a country might need to reshape a project to ensure enough credits go towards its own targets. In comparison, Nigeria’s NDC doesn’t indicate in what areas the country is interested to trade carbon internationally, and the lack of positive list doesn’t provide this information later.

What is quite neat about the Ghana structure is that it indicates explicitly, related to activities, how the country plans to safeguard their carbon trading to ensure they meet their targets. By having a ‘red list’ of activities in the NDC, who’s generated carbon cannot be traded, Ghana can be confident that they will meet their unconditional NDC, and we would presume this doesn’t need quite so much constant evaluation and vigilance on a project-by-project basis compared to a country that leaves it open.

In general, an updated NDC is helpful for project stakeholders, as it gives a clear, early signal of carbon ambitions up to 2035 – giving buyers and project developers confidence. But countries are approaching NDC and carbon regulations in very different ways, some of which are likely to give more or less confidence and assurance for potential projects. We are now aware we need to pay much closer attention to how an NDC is structured, and whether the structure opens or closes the Article 6 door for clean cooking projects. We hope many more countries will be able to take advantage of Article 6 to accelerate the transition to clean cooking for their populations – much as Malawi has done . And if anyone else spots any interesting links between NDC structure and Article 6 projects for clean cooking, we’re keen to hear about it!

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Footnotes:

¹ A comment on how this interacts with the ‘positive list’: On top of this, Ghana still has a ‘positive list’ in its Carbon Framework (page 53) – a list of activities deemed eligible for approval for Article 6 trading. This conditional/unconditional split exists in addition to the positive list – and the positive list is a subset of conditional activities. You can still do an Article 6 project in an area WITHIN the conditional activities but OUTSIDE of the positive list – but it’s likely approvals would take longer and be a more arduous process.

² Ghana has an additional safeguard, which is that 10% of any ITMOs generated are kept in a buffer and not traded, again to avoid overselling and not meeting their unconditional targets.

Author’s note: ChatGPT was used to assist with the analysis for this blog and in an early draft. However I extensively rewrote that early draft myself.