Case Study

Thailand strengthens Article 6 framework to support national development and international trading

Overview

Thailand wanted to strengthen its Article 6 framework to align global climate action with its own national development goals. Through the delivery of a new Operations Manual and strategic decision-making guidance, Thailand has enhanced its capacity to participate in international carbon markets that support both domestic progress and international commitments.

The Story

Article 6 adoption by the government of Thailand 

Thailand distinguished itself as a global pioneer by becoming the first country to implement cooperative approaches in international carbon trading. This was achieved through a landmark partnership with Switzerland to trade Internationally Transferred Mitigation Outcomes (ITMOs) generated by an electric bus project.

Building on this success, Thailand recognized the need for more robust decision-making frameworks and detailed procedural guidelines to manage future Article 6 collaborations. While recognizing the challenges of the initial experience in this new type of cooperation under Article 6, the nation remained committed to strengthening its national framework. To achieve its national objectives, Thailand focused on developing a comprehensive suite of tools to streamline implementation.

Strategic Development & Key Outcomes

Under the Supporting Preparedness for Article 6 Cooperation (SPAR6C) program, Neyen, in partnership with Kora Climate, was tasked with developing tools to facilitate Article 6 decision-making. Although managed as distinct projects, they fall under the unified SPAR6C umbrella.

The three primary outcomes of this initiative include:

  • Mitigation outcome sharing and levy analysis: An evaluation of options for sharing mitigation outcomes and the application of fees and levies.
  • ITMO Authorization Criteria: A defined set of standards for the formal authorization of ITMOS (carbon credits under Article 6).
  • Operations Manual: A comprehensive guide detailing the procedural steps for execution.

Strategic Implications of Article 6 Implementation

As Article 6 facilitates carbon trading between sovereign nations, it is vital for governments to fully understand the implications of every transaction. Under the Paris Agreement, countries hold a responsibility to meet their Nationally Determined Contributions (NDCs). While Article 6 is designed to help nations fulfill these objectives, it also introduces specific strategic risks.

Thailand recognized that participation required more than just policy and institutional frameworks; it necessitated engagement strategies that foster international dialogue while protecting national interests. To support these strategies, the project focused on developing robust analytical tools and operational manuals.

Establishing the baseline and guiding principles

Before introducing specific tools, the project identified Thailand’s existing policy and legal environment to establish a baseline for decision-making. From this baseline, we developed guiding principles—categorized by environmental, social, and financial integrity—to help Thailand evaluate its options as a sovereign entity.

Before presenting the tools available for Article 6 implementation for Thailand, we identified Thailand’s policy and legal environment to set a baseline of existing decision-making instruments. Based on that baseline, we offered guiding principles to help Thailand assess the tools presented to make decisions as a sovereign country. These principles were grouped as environmental, social, and financial integrity. We highlighted that decisions may have:

We emphasized that Article 6 decisions carry significant implications for:

  • NDC Achievement: Impact on long-term climate planning and the risk of “overselling” mitigation potential.
  • Market Dynamics: Attractiveness to buyer countries and interactions with the Voluntary Carbon Market (VCM).
  • Stakeholder Engagement: Influence on private sector participation and project development.
  • Reputation: The international perception of Thailand’s climate commitment.

Key tools and risk mitigation strategies

The project highlighted several instruments designed to balance national priorities with international trade:
1. ITMO pricing & overselling risks

Strategic pricing of Internationally Transferred Mitigation Outcomes (ITMOs) can serve as a safeguard against overselling. However, because higher prices may reduce market demand, we recommended that specialized pricing strategies be reserved for activities with a high risk of depleting Thailand’s own mitigation potential.

2. Sharing of mitigation outcomes
A primary tool identified is the sharing of mitigation outcomes, where a portion of generated ITMOs is retained for Thailand’s own NDC fulfillment rather than being transferred to a buyer. Retaining a percentage of these outcomes is a widely recognized international practice that prevents the exhaustion of “low-hanging fruit” in national carbon reduction.
3. Share of Proceeds (SOP) and Net Mitigation
Article 6 emphasizes impacts beyond mere emission offsets. While the Share of Proceeds for Adaptation and Overall Mitigation in Global Emissions (OMGE) are mandatory under the Article 6.4 mechanism, they are voluntary under Article 6.2. We recommended that Thailand apply these principles under 6.2 to signal a strong commitment to the global spirit of climate action.
4. Additional implementation instruments

Neyen also explored further tools to provide Thailand with a comprehensive “menu” of options for Article 6 implementation, including:

  • Crediting Periods
  • Fees & Levies
  • Benefit-Sharing Frameworks

By identifying these tools, Thailand is better equipped to understand its options and leverage Article 6 to support its specific national priorities.

Authorization Criteria: Aligning Article 6 with National Development

Authorization is a critical milestone in the Article 6 activity cycle, as it represents a host country’s formal permission for project participants to engage in mitigation activities and transfer ITMOs to another sovereign nation. To ensure this process is well-informed, Thailand sought a structured set of criteria to guide government decision-making. While the Thai government initially developed these criteria, Neyen’s objective was to review and benchmark them against international best practices and provide strategic recommendations.

Assessment and benchmarking

Neyen evaluated 13 specific authorization criteria tailored to Thailand’s established legal and policy environment. Our assessment, guided by the Article 6 Rulebook, involved:

  • Identifying Gaps: Determining which mandatory international requirements were missing.
  • Evaluating Voluntary Disclosures: Noting criteria that were not strictly required but provided for added transparency and aligned with emerging international practice.
  • Establishing Assessment Methods: Defining the “means of assessment” for each individual criterion.
  • Activity Cycle Design: Highlighting a dual-stage assessment process where criteria are evaluated both during project registration (or the initial confirmation stage) and again at the final authorization stage.

Core principles and benefits

The authorization criteria are anchored in national climate objectives and several key pillars:

  • Environmental integrity: Ensuring genuine and verifiable emission reductions.
  • Sustainable development: Contributing to broader social and economic progress.
  • Technological advancement: Encouraging the incorporation of innovative technologies through project implementation.
By applying these rigorous criteria, Thailand ensures that every Article 6 activity contributes to its Nationally Determined Contributions (NDCs), delivers tangible co-benefits beyond carbon reduction, and introduces cutting-edge technology to the country.

Operations Manual: Formalizing Thailand’s Article 6 Activity Cycle

As a country with multiple bilateral agreements already in place with developed nations, Thailand is highly anticipated as a leader in Article 6 implementation. To support this role, Thailand sought to clarify and formalize the activity cycle for all national stakeholders and government decision-makers. Beyond defining the project cycle, the Operations Manual formalizes administrative processes and highlights the necessary legal and regulatory measures for compliance.

Structure of the Activity Cycle

Neyen developed the Operations Manual to provide an extensive description of the mitigation activity cycle stages for Article 6.2, Article 6.4, and Joint Crediting Mechanism (JCM) approaches. The Thai activity cycle is structured into three distinct stages:

  • Pre-Authorization Stage: The initial phase involving project identification and preliminary review.
  • Authorization Stage: The formal authorization process for the transfer of mitigation outcomes.
  • Mitigation Activity Implementation Stage: The ongoing execution, monitoring, and verification of the project.
For each stage, the manual emphasizes the specific scope, core principles, and the distinct responsibilities of both government bodies and relevant stakeholders.

Enhancing market clarity

By establishing this Operations Manual, Thailand has successfully formalized the requirements for mitigation activities intended for the international transfer of carbon credits. This framework provides essential clarity for project developers and international partners, ensuring they understand exactly what to expect when participating in Thailand’s international carbon market.

Drivers of change

Beyond mitigation transfers

Thailand is now fully equipped with the necessary instruments to make informed decisions within the international carbon markets under Article 6 of the Paris Agreement. While Article 6 is often viewed simply as a mechanism for governments to monetize their mitigation potential, its true value lies in fostering international cooperation that creates impacts far beyond basic emission reductions.

By applying these new tools and criteria, Thailand ensures its participation in cooperative approaches contributes to:

  • National Priorities: Aligning carbon trading with sustainable development and the implementation of advanced technologies.
  • NDC Security: Making better-informed decisions regarding the risk of “overselling” to ensure national Nationally Determined Contribution (NDC) fulfilment is never compromised.

Lessons Learned

Collaborating directly with national governments, including discussing options for decisions and their consequences, is the best approach for capacity-building. This approach ensures engagement from government officials and experts because it addresses decisions that need to be made and are about to be made. The setup with different thematic sub-projects also allowed for in-depth discussions of the subject matter, which proved useful for developing policy.

Furthermore, projects involving direct engagement with the national government serve a dual purpose:

Market presence: Establishing a strong, credible reputation within the region.

Strategic growth: Opening significant opportunities for new referrals and long-term partnerships in the climate policy sector.

Additional project information

Client: GGGI

Year: 2024-2025

Partner: KORA Climate