Norwegian Global Emission Reduction Initiative

The Paris Agreement Article 6 makes it possible for countries to collaborate on achieving climate targets. Cooperation under Article 6 allows for higher climate ambitions, accelerated green transitions, and other benefits such as technology transfer and job creation. Good environmental integrity and sustainable development are important elements for potential cooperation and a prerequisite for the work of the NOGER Initiative.

Under the Kyoto Protocol (2008–2020), industrialized countries were allowed to collaborate with developing countries to achieve their emission targets.

A significant difference under the Paris Agreement is that all countries have submitted climate targets, including developing countries. This requires strict rules to ensure that emissions are not counted twice, by implementing “corresponding adjustments” between the seller and buyer countries’ emission inventories when carbon credits are transferred.

Since the cooperation rules were established in 2021, there has been a shift in the global carbon market. More countries are now exploring the possibility of engaging in cooperation under Article 6.

Article 6 of the Paris Agreement consists of three elements:

• Article 6.2 facilitates voluntary cooperation between countries on emission reductions to enable higher ambitions. This often involves bilateral cooperation directly between countries. The cooperation should promote sustainable development and environmental integrity.
• Article 6.4 aims to establish a new mechanism where both countries and private actors can cooperate on reducing emissions. The mechanism has its own board that reports to and receives guidance from the Conference of the Parties under the United Nations Framework Convention on Climate Change (UNFCCC).
• Article 6.8 recognizes the importance of non-market-based cooperation for countries to achieve their NDCs. Examples of such cooperation can include contributions to emission reductions, adaptation, financing, and technology transfer. They should also promote public and private cooperation in the implementation of NDCs.

Cooperation under Article 6 of the Paris Agreement should not be confused with the voluntary and unregulated carbon market for the private sector.

Purchasing carbon credits through the NOGER Initiative can help accelerate green growth in developing countries.

The carbon credits can contribute to Norway becoming climate neutral from 2030, as per decision 897 in 2015–2016 by the Norwegian Parliament.

The emission reductions can be used to cover any shortfall in meeting Norway’s 2030 target under the Paris Agreement, in a situation where the cooperation with the European Union does not fully achieve a 55 percent emission reduction.

There are several barriers to private green investments in developing countries. Governments may lack the capacity to regulate and implement policies. The private sector may have limited capacity to carry out measures, and high risk makes it challenging to secure financing. Interest rates and return requirements for investments in countries and areas with high uncertainty are also much higher than, for example, in Northern Europe.

The NOGER Initiative can mobilize private green investments in developing countries by improving the overall policy conditions, thereby enhancing the profitability for private investments and reducing risks.

The NOGER Initiative can also provide direct, results-based financing for projects. This can reduce the risk of investing in emission-reducing measures. Although we only offer payment when the emission reductions are independently verified, this will still act as a security that can make it easier for companies to take risks and possibly obtain loans for larger green investments.

Because the NOGER Initiative contributes to capacity building in the private sector, further indirect emission reductions can also be triggered. These are emission reductions beyond the emission reductions paid for by the NOGER Initiative.

Article 6 of the Paris Agreement sets the framework for countries to cooperate on reducing emissions in a host country, which can then be transferred as carbon credits and used towards another country’s NDC achievement.

Official development assistance (ODA) climate finance aims to contribute to development and emission reductions that can be used towards the recipient country’s own NDC target. The policies and measures used may be similar, but the purpose of the cooperation is different.

Payment for emission reductions under Article 6 does not qualify as ODA according to the rules of the OECD Development Assistance Committee (DAC).

The NOGER Initiative develop and implement cooperation at various crediting levels. The crediting level refers to how the reference pathway for avoided emissions is set. The reference level will be a result of the choice of policies and measures in each activity.

The NOGER Initiative has divided its cooperation into two levels:

Project and program level: This is support given directly to a standalone single measure carried out by private or public entities. This can, for example, be the installation of new technology in a factory or investment in a specific solar park. Support can be given to several, often similar, projects within the framework of a program. For projects and programs, the reference level and monitoring, verification, and reporting are based on the technology to be introduced.

Sector, jurisdiction, and policy level: This is support given to a larger program, often at the national, intergovernmental, or state level. For example, cooperation in a sector can apply to the entire, or parts of, the energy sector (renewable energy), the industrial sector (cement sector), or the agricultural sector. Examples of relevant policies that the NOGER Initiative can support are subsidies, energy efficiency standards, or the introduction of carbon pricing. The reference level, as well as monitoring, reporting, and verification, must cover the entire relevant jurisdiction, policy area, or sector, and crediting for such cooperation can only occur at an overarching level.

The primary goal of the NOGER Initiative is to enhance global emission reductions through cooperation with other countries, contributing towards the Paris Agreement temperature target and relevant Norwegian climate targets. To achieve this the NOGER Initiative aims to:

• Achieve additional emission reductions with strong environmental integrity.
• Ensure that the transfer of mitigation outcomes aligns with international rules and best practices.
• Create lasting impacts, preventing an increase in emissions post-collaboration.
• Build capacity in host countries to incentivize emission reductions.
• Support sustainable development in host countries, in line with environmental and social safeguards.

These are important considerations before the NOGER Initiative enters into new cooperation with countries and programs.

There is zero tolerance for human rights violations and corruption in the financing of activities under the NOGER Initiative.

Programs supported by the NOGER Initiative must be approved by the host country’s authorities in accordance with the regulations under Article 6 of the Paris Agreement. For the programs to succeed in achieving emission reductions, broader ownership by authorities, businesses, and civil society in the host country is also important.

There are strict requirements for measurement, reporting, and independent verification of the emission reductions that have occurred. The NOGER Initiative also practices result-based financing. This means that carbon credits are only paid for when the emission reductions have been implemented, verified, and delivered.

The NOGER Initiative collaborates bilaterally with other countries under Article 6.2 of the Paris Agreement and not directly with private sector actors.

New cooperation usually begins with governments of potential host countries reaching out with a desire for cooperation, proposals for sectors, crediting levels, and possibly specific programs they wish to collaborate on. The implementation and follow-up of new cooperation are developed and managed through third-party actors such as multilateral development banks or international organizations. The requirements under Article 6 of the Paris Agreement are followed up by the NOGER Initiative and the authorities in the host country.

The NOGER Initiative does not have open tenders for private companies with projects that generate emission credits in developing countries but collaborates at the governmental level.

Participation in cooperation under Article 6 of the Paris Agreement requires the establishment of systems at the governmental level, including control, approval, and accounting of emission reductions.

Cooperating countries must also understand the consequences of transferring emission reductions out of the country for their ability to reach their own NDC targets under the Paris Agreement. There is great variation in-between countries and their needs and desires to participate in cooperation under Article 6.

To enable more developing countries to benefit from cooperation under Article 6, the NOGER Initiative will contribute with targeted capacity building. In countries that have established cooperation and the necessary frameworks for Article 6 in place, support for capacity building will be phased out. While all payments for emission reductions, or credits, will be result-based, grants for capacity building are not conditional on verified results.  

To ensure the effective implementation of the work under the NOGER Initiative, external implementing partners will develop programs and manage contracts.

The NOGER Initiative continuously assesses whether cooperation should be expanded to new programs and countries. Any expansion of cooperation can occur with both new and existing implementing partners.

World Bank (WB)

The NOGER Initiative participates with 80 million US dollars in the World Bank’s Transformative Carbon Asset Facility (TCAF). The fund was launched during the climate negotiations in Paris in 2015. Countries such as Sweden, Switzerland, Canada, and the United Kingdom also participate.

The fund develops programs at the sector and policy level that aim to contribute to lasting changes in developing countries. TCAF consists of both official development assistance (ODA) and carbon financing. The emission reductions financed with ODA funds are retained by the host country for use towards their own NDC target. The NOGER Initiative contributes with carbon financing, and the emission reductions financed will therefore be transferred to Norway. So far, one contract has been signed under the fund.

The World Bank is working on developing programs in several countries. Here you can read more about signed programs:

Uzbekistan

TCAF has entered into a cooperation contract with Uzbekistan. Uzbekistan is one of the most energy and emission intensive countries in the world. The cooperation aims to create incentives for the reform of fossil fuel subsidies in Uzbekistan, which will result in lower energy consumption and emissions from fossil fuel energy sources.

Through the cooperation, Uzbekistan will be able to meet its NDC commitment under the Paris Agreement and generate carbon credits that can be sold to Norway, Sweden, and Switzerland. The program will pay for approximately 2-–2.5 million tons of emission reductions.

Global Green Growth Institute (GGGI)

The Global Green Growth Institute (GGGI) is an international organization based in Seoul, Republic of Korea. GGGI assists its member countries in developing policies and investment projects for green growth.

The NOGER Initiative has an agreement with GGGI to develop policy-based programs in Indonesia, Morocco, and Senegal. Such programs reward countries for implementing policy changes that lead to reductions in greenhouse gas emissions, often across an entire sector. This can contribute to larger emission reductions and transformations than individual projects.

GGGI is responsible for developing the programs. The organization has offices in the host countries, ensuring good and close dialogue with the involved authorities. GGGI is working to identify more potential cooperating countries at the policy, sector, program, and project levels.

As the programs become ready for realization and contracts are concluded, GGGI will also manage these. The NOGER Initiative and GGGI have established a separate fund for this management, the Norwegian Article 6 Climate Action (NACA) Fund. The fund is up to 100 million US dollars. The fund can be replenished as new programs are developed and contracts are concluded.

Here you can read more about the individual programs being developed through GGGI and the Norwegian Global Emission Reduction Fund.

Benin

Norway and Benin have signed a bilateral agreement regulating future cooperation under Article 6 of the Paris Agreement. The countries are working on a potential cooperation in the energy sector, the source of more than half of Benin’s carbon emissions.

Indonesia

Norway and Indonesia have signed a Memorandum of Understanding expressing an interest in cooperation. The countries are exploring the possibilities for improving policy incentives for floating solar energy in Indonesia. With its many dams and reservoirs, Indonesia has good conditions for developing floating solar energy.

Jordan

Norway and Jordan will sign a Memorandum of Understanding by the end of 2024. The Government of Jordan has already approved the signing of the document. The countries have discussed opportunities for cooperating on the waste sector, an important source of methane emissions.  

Morocco

Norway and Morocco have signed a Memorandum of Understanding for cooperation. GGGI is developing a program to support decentralized production of renewable energy in Morocco. The goal is to have more households and private actors sell surplus electricity. This energy must be able to be connected to, distributed, and sold on the electricity grid in Morocco.

In 2023, Morocco adopted important legislative changes to support this, but it is currently not profitable for private actors to produce and sell such surplus electricity. In a potential purchase agreement, criteria that limit the program’s coverage area will be specified.

The program will have clear requirements for monitoring, verification, and reporting and will be designed within the framework of Norway’s Western Sahara policy.

Senegal

Norway and Senegal have signed a Memorandum of Understanding. GGGI is developing a program in Senegal to make it easier and more profitable for private actors to produce renewable energy. Ten years ago, the share of renewable energy in the country was almost zero. However, private investors face several barriers to scaling up renewable energy production. These include challenges with access to capital, high startup costs, and a lack of infrastructure and storage capacity.

Producers who qualify can receive subsidies and result-based payments through the program based on the volume of reduced emissions from approved renewable projects.

Zambia

Norway and Zambia have signed a bilateral agreement regulating the potential future cooperation under the Paris Agreement Article 6. Hydro power is the most important energy source in the country. Southern Africa has in the last few years been hit with severe drought, which has made hydro power more unreliable. Norway and Zambia are therefore looking for opportunities for collaboration in the energy sector, to increase access to other forms of renewable energy, such as wind and solar energy.  

Asian Development Bank (ADB)

The Asian Development Bank contributes with advisory services, capacity building, and financing of development projects in Asia and the Pacific Region. In 2022, the bank established a multilateral fund, the Climate Action Catalyst Fund (CACF) aimed at scaling up investments in emission-reducing measures through carbon financing.

The Norwegian Ministry of Climate and Environment has signed a letter of intent with CACF to potentially contribute future financing to the fund.

An important effort to reduce deforestation in tropical forest countries is made through Norway’s International Climate and Forest Initiative (NICFI). Through NICFI, result-based emission cuts from reduced deforestation and forest degradation in developing countries are financed. These emission reductions are retained in the host country’s climate accounts, giving them the right to use the emissions to meet their own NDC targets. They can also be canceled for the benefit of the climate.

Since this is official development assistance (ODA) funds, there is a clear distinction between the purpose of NICFI and the NOGER Initiative. To avoid any overlap in the work and goals of these two initiatives, the NOGER Initiative will not invest in carbon credits from the forestry sector.

Although Norway does not use such forestry sector carbon credits towards its own climate targets, this type of cooperation is very important. To support robust carbon markets where emission reductions from the forestry sector are measured and verified at the regional and national (“jurisdictional”) level, Norway has helped establish the Architecture for REDD+ Transactions (ART) and Lowering Emissions by Accelerating Forest Finance (LEAF). ART ensures credible and traceable emission reductions, while LEAF mobilizes financing to reduce deforestation and support sustainable development in tropical forest countries. This contributes to greater scale and credibility in countries’ climate accounting.

The NOGER Initiative works to accelerate the green transition. Due to the risk of prolonging fossil power production, the NOGER Initiative will therefore not enter into cooperation on the reduction of gas flaring from oil production. In addition, established exceptions from the Norwegian Carbon Credit Procurement Program under the second period of the Kyoto Protocol will be continued. This means that the NOGER Initiative do not enter into cooperation on:

1. Reduction of the HFC gas trifluoromethane (HFC-23) as a by-product of difluoromonochloromethane (HCFC-22);
2. Reduction of nitrous oxide (N2O) from adipic acid production; and
3. Coal-based energy production without CCS.  

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.

Sigrid Valberg

Malin Meyer

John Erik Prydz