Launch of new Appeals and Grievance Procedure under Article 6.4 of the Paris Agreement

The UN Supervisory Body (“SB”) established under Article 6.4 of the Paris Agreement to create a new international carbon crediting mechanism has created an Appeals and Grievance Procedure, which entered into force on 2 May 2024. The procedure allows people affected by decisions made under Article 6.4 to either appeal, or file a grievance against, those decisions.

1. Background

Article 6.4 of the Paris Agreement establishes a new international carbon crediting mechanism. This ‘Paris Agreement Crediting Mechanism’, as it is commonly known, is overseen by a SB of 12 rotating representatives from parties to the Paris Agreement. Under this mechanism, the SB may approve greenhouse gas reduction or removal activities proposed by developers with host government approval (“Approved Activities”). Carbon credits, known as Article 6.4 ERs, will be issued from Approved Activities. Project developers may then transfer those credits to other countries, or companies, to meet Nationally Determined Contributions (NDCs), or corporate climate targets. 

The Appeals and Grievance Procedure allows eligible persons adversely affected by Approved Activities to either appeal decisions of the SB, or request that a grievance be referred to an independent body. This procedure represents a significant evolution in global carbon crediting mechanisms. Experiences from the Kyoto Protocol’s clean development mechanism (“CDM”) indicated the desirability of a review body, particularly where the SB’s decisions potentially impinge upon the rights and interests of private entities and parties. Various stakeholders have long identified the CDM’s absence of a review procedure as one of the mechanism’s fundamental shortcomings. 

2. The Appeal Mechanism

Eligible persons: There are four categories of persons (which can be individuals, communities or organisations) that have legal standing to appeal a decision of the SB concerning an Approved Activity:

1. stakeholders eligible to participate in the activity’s local stakeholder consultation, under the applicable standard;
2. the activity’s participants, as identified in its project design document;
3. the designated national authorities (“DNAs”) of the host country, as well as any other country authorising the activity; and
4. the DNAs of the host countries where additional methodological requirements have been applied. 

These persons may file appeals, either individually or jointly. An appealable decision may be subject to multiple appeals, provided no person is involved in more than one appeal. 

Grounds of appeal: The grounds of appeal are as follows:

1. the SB exceeded its authority; 
2. the SB’s application of standards or procedures were either incorrect or unreasonable and, if correctly applied, would have resulted in a materially different outcome; 
3. the SB made an error in relation to a material fact which may have affected the decision on its merits; or 
4. the information provided by the designated operational entity (“DOE”) or the activity participants, which formed a basis for the decision, contained an error or misstatement materially affecting that decision. 

Procedure and timings: An eligible person must file an appeal form within 28 days of the decision’s publication on the UNFCCC website, along with a detailed statement of the relevant facts and arguments that form the grounds for the appeal. 

Fee: A fee of USD30,000 is payable on filing of an appeal, unless (a) the appeal is for vulnerable groups (including local communities and indigenous people) and the fee waiver is approved by the SB, or (b) the appeal is by a DNA of the host government against the application of party-specific elements of methodological products that apply to that host party. Though this fee is refundable if the appeal is successful, its size may dissuade unexempted appellants, unless they participate in a class action. 

Appeal tribunal: Three experts (appointed from a pre-approved roster) decide the appeal, with one member designated as the chair. The roster members must meet regularly to ensure consistency and coherence in their rulings.

Decision: A ruling is to be given within 14 days after publication of the appeal on the UNFCCC website. In making a decision, the tribunal is required to take into account only certain specified written information, which includes: 

(A) the appeal form; 

(B) the SB’s decision under appeal and any background or reasoning they provided for that decision; and 

(C) any clarifications provided by the DOE involved in the Approved Activity, a methodological expert panel, or any other relevant individual or organisation independent of the appellant. 

At present, the Appeals Procedure is yet to specify any powers or mechanism for either giving, or challenging, live evidence. 

Outcome: An appeal cannot itself overturn a SB decision. The ruling of the appeal will either (a) affirm the decision or (b) remand the matter to the SB for its reconsideration. If the latter, the SB must reconsider its decision within 30 days of the ruling and provide a rationale for its new decision, including an explanation of how they addressed the conclusions of the appeal tribunal.

3. The Grievance Procedure

In procedural terms, the grievance and appeal processes are similar – the grievance process requires submission of a grievance form, including a description of the adverse effects complained of, and suggested remedies. A tribunal will prepare a ruling within 14 days after publication of the grievance on the UNFCCC website. Similarly, there is no mechanism for presenting evidence through a live hearing. However, there is no application fee, no time bar to submit a grievance, and the scope of potential grievances is extensive. 

Eligible persons: An appellant must meet the following requirements to file a grievance (a lower threshold than to bring an appeal):

1. be connected to the jurisdiction, through residence or domicile, where the activity in question is implemented; 
2. have a substantial presence in the geographic area, through their business activity or community-related activity, which is or may be directly affected by the activity in question; and
3. suffer or may suffer direct adverse effects from the implementation or treatment of the activity in question within the activity cycle under the Article 6.4 mechanism, by way of a concrete, tangible and particularised claim of harm to health, property, local environment, or other (social, economic, or environmental) interest. 

Grounds of complaint: This procedure does not include consideration of grievances based solely on the design and operation of the Article 6.4 mechanism, including in relation to its governance, the activity cycle, or the methodology itself. Such grievances may be instead submitted under the alternative procedure governing ‘unsolicited letters to the SB’.

Decision and outcome: Although there is again no ability to overturn a SB’s decision under this procedure, nor any power to give a monetary award, the grievance panel must outline its findings and recommendations, including corrective actions which may address the grievance. Though such recommendations are not binding nor directly enforceable, if the recommendations relate to the DNA, there will be a follow-up enquiry three months later into the actions taken by the national authority, which will lead to the production of a report on findings and the outcome published on the UNFCCC website. Accordingly, this procedure will have an element of moral force.

4. What next for Article 6.4?

Generally, industry participants do not expect the Article 6.4 mechanism to be operational before 2025, given a continuing lack of consensus on critical aspects. In particular, there was no agreement at COP28 (in December 2023) as to what projects would be eligible under Article 6.4, including emissions avoidance and engineered removal activities. Countries also failed to agree guidance on baseline contraction factors, or whether Article 6.4 ERs could be amended or revoked once issued. Further, it is notable that there is no express reference to human, cultural, environmental, social, or other rights in the Paris Agreement Crediting Mechanism, despite several submissions at COP27 (in November 2022) supporting the express inclusion of these. We expect further discussion, and potential resolution, of these issues at COP29 in Baku later this year.
 

[1]UN Body adopts historic human rights protections for carbon market mechanism | UNFCCC