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The 26th session of the Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCCC), was held in Glasgow, United Kingdom, from 31 October to 13 November. The meeting was conducted 18 months after the decision on 1 April 2020 to postpone COP26 due to the COVID-19 pandemic. According to data released by the UNFCCC Secretariat on 23 November, the number of registered COP26 participants (including in-person and online participants) totaled approximately 40,000. Apart from national delegations, many non-governmental actors such as NGOs, companies, and research institutes participated in the conference. COP26 was the most high-profile COP since COP21, when the Paris Agreement was adopted. This is due to the high anticipation around countries' announcements on new and strengthened reduction targets and on new cooperation and alliances aiming to reduce greenhouse gas emissions globally by 2030.

The World Leaders Summit, held during the first week, was attended by UN Secretary-General António Guterres and more than 130 heads of state, including U.S. President Biden. From Japan, Prime Minister KISHIDA Fumio participated in the summit. Designating the period up to 2030 as a "critical decade", he called on all parties to take ambitious climate change measures. In addition, Minister of the Environment YAMAGUCHI Tsuyoshi attended ministerial-level meetings during the second week. Upon two weeks of negotiations, an agreement was reached on key issues that had been on the agenda since COP24, such as the implementation guidelines for Article 6 of the Paris Agreement, the reporting formats for the transparency framework of Article 13, and common time frames for the implementation of NDCs under Article 4, resulting in the completion of the Paris Rulebook. The agreement on rules for Article 6 drew the most attention out of these outcomes. This agreement, initially intended to be reached at COP24 in Katowice, Poland, in 2018, was ultimately concluded three years later due to conflicting opinions among countries and the postponement of COP26 caused by the spread of COVID-19.

Article 6 of the Paris Agreement covers the trading of carbon credits, currently attracting attention both in Japan and abroad. Article 6 outlines three approaches in Article 6.2, Article 6.4, and Article 6.8. Article 6.2 sets out guidelines for countries to cooperate bilaterally and multilaterally to lead emission reduction projects, to be internationally transferred into credits contributing to achieving the supporting country's national emission reduction targets. Article 6.2 also applies to the Joint Crediting Mechanism (JCM), a crediting mechanism operated by the Government of Japan, through which Japan has established partnerships with 17 countries (Mongolia, Bangladesh, Ethiopia, Kenya, Maldives, Vietnam, Laos, Indonesia, Costa Rica, Palau, Cambodia, Mexico, Saudi Arabia, Chile, Myanmar, Thailand, and the Philippines). Guidelines on the use of internationally transferred credits for emission reduction targets were adopted under Article 6.2. Other than Japan, Switzerland and Sweden have also implemented pilot projects under the Paris Agreement's Article 6. The use of this Article to provide assistance to developing countries is predicted to increase. Article 6.4 sets forth a new crediting mechanism to be established under the United Nations as the successor to the CDM. Rules, modalities, and procedures that will form the basis of this new UN crediting mechanism were adopted at COP26. Article 6.8 presents non-market approaches that provide support for adaptation, finance and technology. Negotiations at COP26 mainly focused on Article 6, including rules to avoid double counting of internationally transferred emission reductions, treatment of CDM activities and credits under the Kyoto Protocol, adaptation support through Article 6, and methods for calculating credits. In particular, during the second week of negotiations, Japan made key contributions which were instrumental to reaching an agreement on implementation rules. Specifically, three contributions were made.

The first contribution is Japan's proposal of a rule on avoiding double counting. The avoidance of double counting under Article 6.4 of the Paris Agreement was one of the political issues that countries could not agree upon in the past COPs. At COP26, some countries expressed concern about the application of corresponding adjustments designed to avoid double counting for Article 6.4. In the second week, discussions were held at the political level, and Japan made a concrete proposal that was supported by many parties broadly. It was that "only the emission reductions that are given 'authorization' by the host country implementing the project under Article 6.4 can be used to achieve nationally determined contributions (NDCs) under the Paris Agreement and international aviation sector targets, and that corresponding adjustments be applied to these". This breakthrough proposal led to the conclusion of Article 6 negotiations.

Secondly, Japan contributed to the discussion on the method of calculating emission reductions in Article 6.4. For the calculation of emission reductions, companies participating in a project calculate their baseline emissions and projected emissions, with the difference between the two calculated as the emission reduction. There are ongoing technical discussions on how to calculate baseline emissions under Article 6.4. Decisions made at this conference reflected a calculation method based on Japan's experience. Specifically, the calculation method applied through the Joint Crediting Mechanism (JCM) in partnership with 17 partner countries since 2013 was reflected in the decision. For the JCM, a conservative baseline calculation method was adopted when calculating emission reductions, including procedures based on the Best Available Technology and benchmarks. By presenting a calculation method based on the JCM experience to date, Japan contributed to rule-making for Article 6.4.

Thirdly, Japan contributed to the discussion on the transition from the CDM to the Paris Agreement, which was another point of discussion at the political level for Article 6.4. The CDM was operated by the CDM Executive Board under the United Nations. To date, more than 7,000 projects have been registered, with approximately 2.1 billion tonnes of credits issued. The number of credits that can be transferred to the Paris Agreement has been continuously discussed by experts. Based on data published by the UNFCCC Secretariat, Japan estimated the number of credits that could be transferred to the Paris Agreement and contributed to deliberations at the expert level toward reaching an agreement, allowing headway to be made in the negotiations. For its contributions, the Government of Japan was awarded the Article 6 Hero award by the UNFCCC Secretariat, albeit unofficially. Japan's leadership and contribution to Article 6 negotiations were highly acclaimed.

Now that an agreement has been reached at COP26 on a general framework of rules for Article 6 of the Paris Agreement, the capacity building and operation experience gained from the JCM, a leading example of a bilateral crediting mechanism, is expected to further contribute to rule-making going forward. Moreover, further contributions to global emission reduction can be expected through the JCM. In particular, the Ministry of the Environment has laid out a plan for three actions with regard to the implementation of Article 6.

The first action is to expand the number of JCM partner countries and strengthen coordinated activities and implementation efforts in cooperation with international organizations. The Government of Japan will accelerate negotiations to expand the number of JCM partner countries from 17 partner countries, mainly in Southeast Asia, designating the Indo-Pacific as a priority region, specifically Pacific Island countries and Southwest Asia. In addition, ahead of the upcoming COP27 to be held in Egypt in 2022, Japan will aim to strengthen the implementation of the JCM in the African region. We will work to formulate projects in partnership with the Asian Development Bank (ADB), the United Nations Industrial Development Organization (UNIDO), and the World Bank, based on existing cooperative relationships. In particular, partnerships with the ADB will be strengthened in the Indo-Pacific region, and cooperation with UNIDO will be strengthened in the African region. Moreover, plans are in place to establish a JCM Trust Fund in the ADB to support additional costs that arise in the introduction of decarbonization technologies.

The second action is the expansion of the JCM driven by private finance. The private is showing an increasing interest in the international emissions trading market as a way to achieve carbon neutrality. A study on JCM project formation using mainly private sector finance will be launched within the Japanese government. Japan's new Plan for Global Warming Countermeasures aims for the JCM to secure emission reductions and removals at the level of approximately 100 million t-CO2 by FY2030 with a public-private collaborations. The study within the government will not only consider the expansion of existing subsidy tools but will also identify implementation challenges for projects mainly financed by the private sector.

The third is to contribute to the global expansion of market mechanisms. Countries participating in Article 6 of the Paris Agreement will need to build the implementation capacity of government officials and business operators. In particular, Article 6 of the Paris Agreement includes new rules on reporting and corresponding adjustments to avoid double counting. In addition, emission reduction calculation methods for Article 6.4 will require the adoption of conservative methods, making it necessary to consider different methodologies from those developed for the CDM to date. The Government of Japan will provide capacity-building support to facilitate the rapid operationalization of Article 6 of the Paris Agreement by fully utilizing the experience and network of the Regional Collaboration Centre (RCC) of Asia and the Pacific, which Japan has been supporting. The RCCs are mainly responsible for raising awareness on the rules of Article 6 among participating host governments and businesses, supporting the establishment of project approval systems in host countries for the transfer of the CDM to Article 6.4 of the Paris Agreement, and supporting the development of methodologies for the mechanisms outlined in Article 6.4. Since 2012, RCCs have been established in six regions and serve as centers providing know-how and resources to support national climate change measures and promote clean development through capacity building, technical assistance, and strategic networking. The RCC for Asia and the Pacific is located within the Bangkok Regional Centre of the Institute for Global Environmental Strategies (IGES), and is expected to collaborate with relevant organizations in the Asia-Pacific region, as well as with RCCs established in Latin America, Africa, and the Middle East.