Norwegian Carbon Credit Procurement Program

Under the Kyoto Protocol (2008-2020), Norway’s procurement of carbon credits under the Clean Development Mechanism (CDM) was a supplement to national measures to reduce global greenhouse gas emissions. It made it possible for Norway to undertake more ambitious emission reduction targets than if all the reductions had been taken domestically.

In the first Kyoto Period (2008-2012) Norway had a commitment to limit emissions to 1% of 1990 levels. The commitment was met through domestic measures and net acquisitions by Norwegian participants in the European Emission Trading System (EU ETS).  Norway signed agreements with total deliveries of about 23 million Certified Emission Reductions (CERs) under CDM. About 20 million CERs was used to meet the unilateral target of overachieving Norway's commitment for 2008-2012 by 13%.

In the second Kyoto period (2013-2020), Norway procured carbon credits under CDM from new, not yet commissioned projects, and from vulnerable projects. Norway procured carbon credits to reduce emissions by an average of 16% through the period. This commitment was derived from its target of 30% emission reductions by 2020. The commitment was met through domestic measures and net acquisitions by Norwegian participants in the EU ETS and a small contribution of CDM units from the procurement program. In addition, Norway has acquired about 30 million CERs that represent further emission reductions over and above the commitments under the Kyoto Protocol.

The adoption of the Paris Agreement in 2015, and its Article 6 on Cooperative Implementation, represents a shift in the global carbon compliance market.

Under the Kyoto Protocol only developed countries had to commit to reductions in emissions. Under the Paris Agreement, all Parties have established targets in the form of Nationally Determined Contributions. Article 6 makes it possible for countries to pursue voluntary cooperation in the implementation of NDCs, and other mitigation purposes. The cooperation is governed by the Article 6 rulebook, adopted at UNFCCC COP26 in October 2021. Under this framework a seller country will be able to transfer carbon credits earned from the reduction of greenhouse gas emissions to a buying country. An important principle is that emission reductions should not be double counted for, to not overestimate global emission reductions. This means that only one country may count the emission reductions towards their NDC. An accounting mechanism, “corresponding adjustment,” is therefore established to ensure that double counting does not occur.

Cooperation under Article 6 allows for higher ambitions, faster transition, as well as co-benefits such as technology transfer, livelihood support and job creation. Environmental integrity is an important element under Article 6, and a prerequisite in Norway’s work with cooperative approach. Environmental integrity means that the greenhouse gas emissions do not increase as a result of such transfers, and that the mitigation outcomes generated is calculated by setting a stringent or conservative baseline.

The international transferrable mitigation outcomes (ITMOs) collaborations under Article 6 is intended to contribute towards Norway’s climate neutrality target. The climate neutrality target is part of Norway’s overall efforts internationally to reduce global emissions. It has the potential to increase Norway’s contribution towards combating climate change and enables capacity building on renewable energy and other climate initiatives in developing countries.

Norway is one of several participating countries in the Transformative Carbon Asset Facility (TCAF), an initiative under the World Bank. TCAF was launched in 2015 and seeks to assist and incentivize countries to raise their climate ambitions by implementing economy-wide or sectoral policies and programs that create conditions for private sector investments in low-carbon technologies. TCAF also works to inform the ongoing processes under Article 6 of the Paris Agreement by developing standards and agreements for carbon crediting instruments and transfer of mitigation outcomes in accordance with the Article 6 rulebook.

In addition to its participation in TCAF, Norway is pursuing opportunities for cooperative approaches through the Global Green Growth Institute (GGGI).