Switzerland, Ghana approve transfer of Article 6 credits from cookstove project

Switzerland and Ghana have authorized the transfer of cross-border carbon credits from a cookstove project under Article 6.2 of the Paris Agreement.

The Transformative Cookstove Activity project in rural Ghana will distribute 180,000 improved cookstoves, the countries and companies involved said in a joint statement Feb. 29.

Countries can adopt credits, known as Internationally Transferable Mitigation Outcomes, under Article 6.2, which sets out a system of national accounting for greenhouse gas emissions.

The project has been co-developed by ACT Group and Envirofit and supported by the Swiss-based KliK Foundation, who will purchase these ITMOs.

The Ghana Carbon Market Office confirmed the additionality of the mitigation project to its Nationally Determined Contributions, and its agreement to make corresponding adjustments to its national emissions registry. The Ghana Carbon Market Office is part of the country's Ministry for Environment, Science, Technology & Innovation, which focuses on the development on its carbon market.

Article 6 boost

Ghana has emerged as one of the most active host countries under Article 6, and its national carbon market are more developed than some of its African and Asian peers.

The west African country plans to issue its first carbon credits under Article 6.2 of the Paris Agreement in the third quarter of 2024.

In its annual report published Feb. 8, the Ghana Carbon Market office said the first ITMO will be issued in the third quarter and that it intends to authorize at least six more Article 6 projects this year.

This is Switzerland's third authorized activity in Ghana under Article 6.2 of the Paris Agreement, and first fully authorized cookstove activity.

Switzerland is a key player in Article 6 emissions trade. Earlier this year, Switzerland and Thailand completed the transfer of Article 6.2 carbon credits, marking the first ever for deal for emissions reductions under the Paris Agreement.

"The ITMOs achieved with KliK Foundation's financial support will be transferred in accordance with the bilateral climate agreement and used to meet Switzerland's emission reduction target under the Paris Agreement," the statement said. "The 180,000 cookstoves will be sold to smallholder farmers in rural and peri-urban parts of Ghana at a below-cost price subsidized by carbon finance."

High premiums

Article 6.2 activity is likely to see more traction in 2024 after many developing countries expressed their enthusiasm in this trading mechanism at the recently concluded 28th UN Climate Change Conference.

This increase in demand for Article 6.2 aligned credits by both countries and project developers is supporting prices.

Credits with a corresponding adjustment tend to trade at a steep premium of over non-CA credits.

Platts, part of S&P Global Commodity Insights, assesses a wide range of high-quality voluntary carbon credits funding projects that demonstrate additionality, permanence, exclusive claim and co-benefits.

Platts assessed credits for Household Devices at $4.60/mtCO2e Feb. 29.

Household Devices projects include clean cookstoves and clean water access programs. The price for Platts Household Device offsets averaged $5.66/mtCO2e and $9.46/mtCO2e in 2023 and 2022 respectively, S&P Global data showed.