Synergies between climate-related ODA and international mitigation: a South Korean perspective

A6IP

= Article 6 Implementation Partnership;

ACE

= Centre for Energy;

ADB

= Asian Development Bank;

AMI

= Advanced Metering System;

ASEAN

= Association of South-East Asian Nations;

CDM

= Clean Development Mechanism;

CER

= Certified Emission Reduction;

COP

= Conference of the Parties; UN Climate Change Conference;

DAC

= Development Assistance Committee;

EMS

= Energy Management System;

GCF

= Green Climate Fund;

GGGI

= Global Green Growth Institute;

IBRD

= International Bank for Reconstruction and Development;

IDB

= Inter-American Development Bank;

ITMOs

= Internationally Transferred Mitigation Outcomes;

ITR

= International Transfer Readiness;

JICA

= Japan International Cooperation Agency;

JMC

= Joint Credit Mechanism;

KOICA

= Korea International Cooperation Agency;

KSP

= Knowledge Sharing Program;

LEDS

= long-term low greenhouse gas emission development strategies;

MADD

= Mitigation Activity Design Documents;

MATS

= Mobilizing Article 6 Trading Structure;

MOEF

= Ministry of Economy and Finance in Korea;

MOPA

= Mitigation Outcome Purchase Agreements;

MOTIE

= Ministry of Trade, Industry and Energy in Korea;

MRV

= Measuring, Reporting and Verifying;

NDCs

= Nationally Determined Contributions;

ODA

= Official Development Assistance;

OECD

= Organization for Economic Cooperation and Development;

REDD+

= Reducing Emissions from Deforestation and Forest Degradation Plus;

ROK; Korea

= the Republic of Korea;

SPAR6C

= Supporting Preparedness for Article 6 Cooperation;

UN

= United Nations;

UNDP

= United Nations Development Program;

UNEP

= United Nations Environment Program;

UNFCCC

= United Nations Framework Convention on Climate Change;

UNIDO

= United Nations Industrial Development Organization; and

WB

= World Bank.

The market-based approach in Articles 6.2 and 6.4 of the Paris Agreement has received praise for its ability to increase climate change ambition, lower the cost of achieving Nationally Determined Contributions (NDCs) and allow companies in the purchasing country to count reductions made in the host country toward their own NDCs (Strand, 2024). However, the international community has raised concerns about the green washing of Internationally Transferred Mitigation Outcomes (ITMOs), including double counting and emissions leakage (Edmonds et al., 2021; La Hoz Theuer et al., 2019). Amidst this controversy, some parties, including Japan and Switzerland, which have declared their intention to use ITMOs in their NDCs, have been quick to engage with host countries to secure ITMOs or promote international mitigation pilot projects.

In the face of domestic and international criticism of using ITMOs to achieve its NDC, the Republic of Korea (ROK; Korea) has also decided to use international mitigation measures to achieve its NDC. In 2016, Korea set international mitigation as the largest sectoral mitigation target in its national roadmap for greenhouse gas reduction by 2030 (ROK, 2016) at 96 million tons, which is 30% of its total mitigation target. After being criticized for targeting more international reductions than domestic reductions, Korea adjusted its international reductions to 16.2 million tons, 6% of its total target, in its first NDC in July 2018 (ME, 2018). Subsequently, in 2021, when it raised its NDC target, Korea increased its international contribution to 33.5 million tons, or 12% of the total target reduction (ROK, 2021). In its latest NDC revision in April 2023 (ROK, 2023a), Korea also increased its international reductions to 37.5 million tons, 13% of the total target reduction. While Korea has stated that international reductions will supplement domestic reductions (Jung et al., 2022), international reductions in its NDC account for 13% of the total targeted reductions – the second highest after transitions – and appear to be the main source of reductions for the timely implementation of the NDC. As shown in Figure 1, Korea’s international mitigation measures have undergone several changes due to domestic and international controversies.

This study aims to demonstrate that official development assistance (ODA) can effectively secure international mitigation outcomes and that such projects can catalyze innovative financing within development cooperation. This study examines how Korea, which identified international mitigation as the main mitigation instrument in its NDC, uses climate-related ODA to secure ITMOs from its host countries. While ODA cannot directly support the mitigation targets of donor countries due to its restriction from serving national interests (Schneider and Haase, 2023), it can be used for international mitigation in several ways. First, ODA can be used to build Article 6’s readiness in developing countries that host international mitigation projects in the future. Despite growing investor interest, developing countries, often hosts of international mitigation projects, need to strengthen their legal frameworks, institutional capacity and human resources to facilitate Article 6 implementation, including project approval and results transfer (Ahonen et al., 2022a). Focusing on countries that intend to use ITMOs in their NDCs, donors should strategically use ODA to build host countries’ readiness to secure ITMOs. Second, ODA can also be used when intergovernmental discussions and confidence-building are required for international mitigation projects under Article 6. The Kyoto Protocol was a top-down system that imposed mandatory mitigation targets only on 38 developed countries, and the Clean Development Mechanism (CDM) under the Kyoto Protocol was a centralized control system in which an international supervisory body was in charge of approving, registering and managing international mitigation projects. However, under the Paris Agreement, national governments play an important role in transferring mitigation results and implementing projects. In the collaborative approach under Article 6.2, credits are issued under the authority of the host country. In the implementation of mitigation projects under Article 6.4, the Designated National Authority of the host country determines whether the mitigation project is sustainably developed and notifies the supervisory body.

In international development cooperation, international mitigation is expected to serve as a catalyst for innovative development financing. First, multilateral cooperation with international organizations to support developing countries’ Article 6 readiness can lead to the scaling up of development finance and projects in development cooperation (Liang and Liu, 2020). The international community has realized that climate change adaptation and development cooperation are closely linked (Iacobuţă et al., 2022). In its Comprehensive Implementation Plan for International Development Cooperation 2024 (ROK, 2023b), Korea states that it will upgrade its ODA quantitatively and qualitatively in response to global climate change, proposing a scale up of projects through linkages between bilateral and multilateral projects. Second, participation in development cooperation projects, which are pilot projects for international mitigation by Korean companies, is expected to become international mitigation companies in the future, and private financial investment can also bring synergies to international development cooperation. In its plan (ROK, 2023b), Korea shows its intention to upgrade its ODA by overcoming the fragmentation of government-private projects and promoting private investment. International mitigation projects are expected to lead to the upgrading of ODA.

Korea’s National Framework Plan for Carbon Neutrality and Green Growth (ROK, 2023a) calls for alignment with international mitigation models at the outset of green ODA projects to address climate change. This means that from 2023, Korea has considered climate-related ODA projects for international mitigation from the project planning phase. In addition, the detailed guidelines for Article 6 of the Paris Agreement were agreed recently at the UN Climate Change Conference in Glasgow (COP26) in 2021. As the procedure for ITMOs under Article 6 of the Paris Agreement has been determined at COP29 in 2024, many host countries and some acquiring countries are interested in them, but there is still a lack of discussion on ITMOs. Considering these temporal reasons, this study analyzes climate-related ODA projects in Korea in 2023.

Climate-related ODA refers to financial and technical ODA provided by developed countries for greenhouse gas emission reduction and climate change adaptation in developing countries. We assessed 139 climate-related ODAs in Korea in 2023 that meet the Rio Markers’ principal objective of mitigating or adapting to climate change and are categorized as project aid. This study categorized 139 climate-related ODA projects by project characteristics and the World Bank’s (WB) International Transfer Readiness (ITR) to determine whether projects could be linked to international mitigation. This study examines whether Korea is using climate-related ODA as a bridge to international mitigation and how it can increase synergies between development cooperation and international mitigation projects. Article 6 of the Paris Agreement presumes the need for international cooperation in response to climate change (Buchholz and Rübbelke, 2021), and the ITMO of the market approach aims to help each party implement its NDC with more ambitious reduction targets through cost-effective international reductions (Zhang and Liang, 2020). Detailed guidelines for Article 6 of the Paris Agreement were recently agreed at COP29 in 2024, and many host countries and some investment countries have expressed interest in ITMOs, but studies on ITMOs remain limited. In the context, this study is the first to assess climate-related ODA from various perspectives to determine whether it can be used for international mitigation. This study used data on Korea’s climate-related ODA after 2023, when Korea, among the few investing countries, expressed its intention to use ODA as a strategy for international mitigation. This study assessed the potential for climate ODA to be linked to international mitigation based on the characteristics of the projects and international standards for readiness for Article 6 and explored whether international mitigation could become an innovative source of funding for development cooperation, thereby creating synergies between the two fields.

In the international community, there was significant resistance to the recognition of ODA in accounting for Certified Emission Reduction (CER) credits from the CDM under the Kyoto Protocol prior to the Paris Agreement (Espelage et al., 2022). The Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD) concluded that ODA should not be used on a concessional basis to obtain CDM credits that could benefit the donor country (OECD DAC, 2004). In 2008, the Japanese government announced that it would actively use ODA to obtain CERs under the CDM. However, the OECD DAC stated that Japan’s ODA cannot be counted as ODA if it is used to obtain CDM credits, and the Executive Board of the United Nations (UN) refused to recognize reductions from ODA projects as CERs (MOFA, 2008). The international debate on the ineligibility of ODA projects to be recognized as CDM credits under the Kyoto Protocol has led to discussions on achieving NDCs under the Paris Agreement. Canada’s submission to the United Nations Framework Convention on Climate Change (UNFCCC) under Article 6 of the Paris Agreement (UNFCCC, 2021a, 2021b) argued that donor countries cannot use ODA to use ITMOs to meet their NDCs and that funding for ITMOs cannot be included in climate finance. Climate finance refers to financing from various sources including public, private and alternative funding to support mitigation and adaptation measures to address climate change (Hong et al., 2020). While there is international recognition that ODA and climate finance should not be confused (Kissinger et al., 2019), there is no consensus in the international community that climate finance should not be used to implement the ITMOs.

However, in addition to directly funding mitigation projects, ODA can also be used to establish the necessary arrangements for Article 6 implementation in host countries (Schneider and Haase, 2023). This support is sometimes referred to under the general terms of Article 6 readiness or Article 6 capacity-building (Ahonen et al., 2022a). While there is no agreed-upon definition of Article 6 readiness in the international community, Greiner et al. (2020) divide Article 6 readiness into two broad categories. The first is the establishment of an enabling environment for the implementation of Article 6. This includes building a host country’s greenhouse gas (GHG) inventory or monitoring infrastructure, establishing an NDC and building mechanisms to avoid double counting under Article 6. Second, the pilot project activities are aimed at future international mitigation projects. For developing countries, which comprise the majority of host countries, Article 6 readiness, which is largely supported by international organizations and investor countries, is the first step to achieving the 2024 goals.

As an example of donor support for Article 6 readiness, the German government has several Article 6 readiness support programs in developing countries. The German Federal Ministry for Economic Affairs and Climate Action (BMWK) is supporting the building of capacity for Article 6 implementation in Colombia, Pakistan, Thailand and Zambia through the Supporting Preparedness for Article 6 Cooperation (SPAR6C) program in collaboration with the Global Green Growth Institute (GGGI) (Green Growth Knowledge Platform, 2023). SPAR6C supports the four partner countries in developing long-term mitigation plans, strengthening the capacity of governmental institutions to implement their plans and establishing carbon market frameworks. In addition, the Climate Finance Innovators program, run by the German government’s International Cooperation Agency (BMZ-GIZ) to provide developing countries with access to climate finance in support of Article 6 of the Paris Agreement, has supported three partner countries – Ethiopia, Senegal and Uganda – with capacity-building in the preparation of Mitigation Activity Design Documents (MADD) and the publication of the West African Alliance on Carbon Markets and Climate Finance (Jung et al., 2022).

Unlike Germany, which does not intend to use ITMOs to achieve its NDC but supports Article 6 readiness in developing countries, some investor countries are looking to use ITMOs in their NDCs. Switzerland and Japan are notable examples. Switzerland’s support for Article 6 in partner countries is characterized by multilateral cooperation with international organizations to support climate finance. This feature also characterizes climate finance support from European investor countries, notably Norway and Sweden (Ahonen et al., 2022a). These countries together provide climate finance for various Article 6 readiness programs run by the World Bank, including the Partnership for Market Implementation, a capacity support program for developing countries to implement carbon pricing and the Climate Market Club, a pilot project for institutional building under Article 6.2 (WB, 2021a; WB, 2022). In addition to supporting its partner countries’ Article 6 readiness, Switzerland has demonstrated a willingness to leverage ITMOs in its own NDC by investing directly in host country mitigation projects with or without bilateral agreements. Switzerland invested in mitigation projects abroad through the Climate Cent Foundation scheme, which was established by the Swiss business community to account for purchased mitigation credits in its NDC. Switzerland is also establishing a process to purchase ITMOs from partner countries starting in 2021 through the ITMO purchase program of the Swiss Foundation for Climate Protection and Carbon Offsets (Klik) (Greiner et al., 2019). At the governmental level, Switzerland has signed agreements with partner countries such as Ghana, Peru and Chile to promote international mitigation projects.

Japan is a leading investor country that has declared its intention to use ITMOs in its NDC and is actively pursuing an international mitigation strategy, including the launch of the Article 6 Implementation Partnership (A6IP) at the COP27 in 2022 to launch an Article 6 knowledge-sharing and capacity-building platform for developing countries (MOE, 2023). Since 2013, Japan has actively used the Joint Credit Mechanism (JCM), a homegrown market mechanism, to conduct international mitigation projects. The governance of the JCM is characterized by the fact that Japan and partner countries sign an memorandum of understanding (MOU) and establish a bilateral joint committee as a result of negotiations (Ahonen et al., 2022b). The bilateral committee decides on the entire process, from the methodology to the issuance of international mitigation results. Korea’s international mitigation program can be considered similar to Japan’s JCM in that it establishes agreements with partner countries and establishes a joint council with foreign governments to decide on matters for obtaining ITMOs (Presidential Commission on Carbon Neutrality and Green Growth, 2023). As of May 2024, Japan was involved in 119 out of 140 international mitigation pilot projects worldwide and has signed bilateral agreements with 29 countries to implement Article 6 of the Paris Agreement, making it the largest host country for ITMOs among investor countries (UNEP, 2024). Japan ranks second globally in terms of OECD DAC climate-related ODA contributions from 2018 to 2022 (OECD, 2024), and the Japan International Cooperation Agency (JICA) has proposed the development and expansion of partnerships through ODA in 20 global agendas that outline the direction of development cooperation (JICA, 2021).

JICA has structured its Global Agenda on Climate Change into two clusters:

1. promoting the implementation of the Paris Agreement cluster; and

2. co-benefits of climate change clusters, and presented response directions, priority target countries and quantitative performance indicators for each cluster.

It is actively operating two climate cooperation activities by including the linkage between ODA and JCM in its climate change agenda strategy. In particular, the promotion of the implementation of the Paris Agreement demonstrates the potential for future ODA to be linked to international mitigation projects by designing ODA to create a foundation for recipient countries to implement Article 6. In addition, JICA has developed the climate change finance impact tool (Cliamte-FIT) tool to measure GHG reductions from ODA projects and applies it to ODA projects that include GHG reduction components, using Climate-FIT as a measure of the Global Agenda’s performance targets. In this way, Japan is not only actively using ODA to secure ITMOs but also promoting a strategy that can lead to the expansion of its international development cooperation through climate response cooperation with recipient countries. Similar to Korea, Japan is seeking to establish a committee through bilateral agreements with host countries and uses ODA as a springboard for international mitigation projects. As donor countries and various international organizations are using climate finance to support host countries in implementing Article 6 of the Paris Agreement, and some investor countries are using ITMOs for their NDCs, Korea has also declared its intention to use ITMOs for its NDC and ODA to promote international mitigation projects (ROK, 2023a). This study explores the potential for Korea’s climate-related ODA to facilitate international mitigation projects by creating the necessary conditions for host countries to implement Article 6, thereby positioning these initiatives as pilot projects for broader international mitigation efforts.

Korea’s climate-related ODA projects have steadily increased from US$132m in 2018 to US$415m in 2022 in terms of disbursements. This is a significant increase from 7.7% to 16.8% of total ODA. However, over the same period, disbursements of climate-related ODA projects as a share of total ODA in DAC member countries have consistently been around 17% (CRS, 2024). While Korea’s climate-related ODA projects have been increasing in recent years, they are still below the DAC average, and Korea’s share of climate-related ODA projects in DAC member countries has remained small at around 1%.

In 2023, Korea’s climate-related ODA projects, which are the principal objective and project aid type under Rio Marker, totaled 139, according to ODA statistics (ODA Korea, 2024). These projects accounted for about 2.9% of Korea’s total ODA of 4,853 projects. The disbursement amount of the projects is US$105.1m, which accounts for about 3% of the total ODA of US$346.4m. The main recipient countries were concentrated in Asian countries such as Bangladesh and Indonesia. A total of 139 climate-related ODA projects were implemented by eight organizations, with the Korea International Cooperation Agency (KOICA) being the largest contributor by the amount of disbursements and the largest number of projects (72 out of 139).

Of the 139 climate-related ODAs, the top 10 projects with the highest disbursements in 2023 were five by the Export-Import Bank of Korea (EDCF), four by KOICA and one by the Ministry of Trade, Industry and Energy (MOTIE). EDCF’s “Improvement of 10 Aimag District Heating Systems in Mongolia” was the largest project, with a disbursement of US$16.1m. Classified as a mitigation project with a RioMarker principal objective, the project aimed to improve the living conditions of local people as well as reduce CO2 emissions by replacing district heating systems with modern, more efficient heat source plants. The second, third and fourth largest projects by disbursement, “Building the Karian Dam in Indonesia,” “Zanzibar Irrigation Establishment” and “Building the Dauntri Dam in Cambodia,” were all EDCF projects. “Building the Karian Dam in Indonesia” provided a reliable supply of domestic and industrial water to the Jakarta area through the construction of a multipurpose dam, and “Zanzibar Irrigation Establishment” developed irrigation facilities on the island of Zanzibar in Tanzania to improve agricultural productivity and increase the amount of food production for local residents. Also, “Building the Dauntri Dam in Cambodia,” which supported the construction of a new dam in the Dauntri river basin, aimed to improve agricultural productivity by providing a reliable supply of water for local people in Cambodia. These three projects were classified as adaptation projects with a RioMarker principal objective. The fifth largest project by disbursement was KOICA’s “Ethiopia Climate Resilient Forest Landscape Rehabilitation Programme (GGGI).” It was an overlapping project with RioMarker principal objectives for both mitigation and adaptation and was KOICA’s largest disbursement in 2023 at US$3.1m. The project was initiated at the request of the host country and has been implemented in collaboration with various ministries of the host country and GGGI to support Ethiopia’s Climate Resilient Green Economy plan. It started by establishing an organizational structure for forest and land restoration and supported building forest and land monitoring systems, strengthening the capacity of government officials in the forest and land sector and educating local people in the same sector. Other projects included 6th–8th largest projects with US$2.4m disbursement, EDCF’s “Integrated Disaster Risk Reduction and Climate Change Adaptation Project in Province of Pampanga,” KOICA’s “Development of Flood Forecasting and Warning System in Citarum River Basin, Indonesia” and “Aral Sea Crisis Response through Community-led Green Reconstruction in Karakalpak, Uzbekistan with GGGI.” MOTIE’s two projects, “Construction of Solar Power and energy storage systems (ESS) in the Province of Sughd and Gorno-Badakhshan, Tajikistan” and “Construction of Self-Generation System for Rural Housing in Sucre, Colombia,” were the 9th and 10th largest projects with the disbursement of US$2.3m.

This study identified the outlines of 139 climate-related ODA projects and categorized them according to five project characteristics to determine whether they could be linked to international mitigation:

1. mention of international mitigation objectives;

2. support for international mitigation readiness;

3. expansion of Korean mitigation businesses;

4. collaboration with international organizations; and

5. other projects that cannot be identified because the Ministry does not disclose the project description, but the project name suggests the possibility of international mitigation linkages.

Of the 139 climate-related ODA projects, there were 50 mitigation projects with a RioMarker principal objective, 77 adaptation projects and 12 overlapping projects with RioMarker principal objectives for both mitigation and adaptation. Of the 50 mitigation projects in 2023, 29 (58%) are classified as internationally mitigation-compatible based on their project characteristics (Table 1). The ministry with the highest number of international mitigation-compatible projects was the KOICA, with 12 projects classified as international mitigation-compatible. According to the Ministry, the share of mitigation ODA with international mitigation linkages is the highest for the Ministry of Economy and Finance (MOEF) at 70% (7 out of 10 with linkages), followed by KOICA at 66% (12 out of 18 with linkages) and MOTIE at 60% (6 out of 10 with linkages). For the 2023 adaptation projects, 16 (21%) of the 77 total adaptation projects were classified as internationally mitigation-linkable, with fewer international mitigation-linkable projects than mitigation projects (Table 2). For adaptation projects, 11 of all eligible 2023 adaptation ODA projects in MOTIE were considered to have international mitigation linkages. Only one of the 12 duplicate projects in 2023 (8%) was categorized as potentially mitigating because it mentioned international mitigation in its project objectives. When categorized by project characteristics, 46 (33%) of the 139 total 2023 climate-related ODA projects were considered potentially mitigating.

Of the 139 climate-related ODA projects by 2023, only one project, as specified in its title, was intended to secure international mitigation outcomes. MOEF’s “Strengthening Capacity to Utilize ITMOs through E-mobility in Rwanda” project, which aims to secure ITMOs through the procurement of electric buses, specified international mitigation in the project name and project objective.

Some projects did not specify securing ITMOs in the project name but included the identification of international mitigation projects in the project objectives, outcomes or linkages. Among the adaptation ODA projects, five of MOTIE’s cooperation projects with international organizations to improve energy efficiency specified the identification of international mitigation projects in the project objectives and outcomes, but all five of the following projects lacked performance indicators to evaluate them and thus did not correspond to the project objectives. The “Association of South-East Asian Nations (ASEAN) Centre for Energy (ACE) Joint ASEAN Countries to Support the Improvement of Industrial and Building Energy Efficiency in ASEAN Countries” project is a project to install an Energy Management System (EMS) to analyze industrial and building energy efficiency and conduct capacity building in Myanmar, Lao people’s democratic republic (PDR) and Cambodia, and the project purpose and outcomes explain that the project will promote a demonstration project for solar energy deployment based on this project. However, the project description did not explain the potential reduction through energy-efficiency improvements or the link to subsequent solar projects. The “Asian Development Bank (ADB) Joint Support to Energy Efficiency in Southeast Asia” is a project to establish microgrids and energy diagnostic programs in Vietnam and Indonesia, which states that the project will implement various projects to expand the deployment of renewable energy in the future but lacks performance indicators to measure international mitigation linkages, such as infrastructure utilization. The project description of the “International Bank for Reconstruction and Development (IBRD) Joint Support for Energy Efficiency Improvement in the Building Cooling and Heating Sector in East Asia” states that the project aims to lay the foundation for mitigation projects in East Asia, including the Philippines, Cambodia and Mongolia, by improving energy efficiency, but there are no detailed project details on the foundation, which limits the ability to identify international mitigation linkages. The “Inter-American Development Bank (IDB) Joint Latin America Power Supply and Energy Efficiency Support Project” is an energy capacity-building project in Latin America and the Caribbean, including Bolivia, Dominica and Suriname; it builds energy infrastructure, but the project content does not reflect the type of infrastructure it builds. The “United Nations Industrial Development Organization (UNIDO) Joint Project to Support the Promotion of Renewable Energy in Southeast Asia,” which supports the development of renewable energy master plans in Malaysia and Thailand to expand the deployment of renewable energy, states in its project objectives that it will be linked to demonstration projects related to renewable energy but lacks performance indicators to measure the use of master plans or linkages to international mitigation.

In 2023, one in 12 of Korea’s projects, labeled as RioMarker’s principal objective projects in both mitigation and adaptation, were classified as international mitigation linkages. KOICA’s “Reducing Emissions from Deforestation and Forest Degradation Plus (REDD+) Initiative in the DRC,” a joint project with United Nations Development Program (UNDP), specifies in its project description that it is a linkage project to secure international credits for Korea’s NDC. However, the method of securing credits was missing; therefore, it was necessary to specify it in the post-management methods section.

Of the five categories of potentially mitigation-linked projects, building international mitigation readiness was the largest, accounting for 25 of 139 climate-related ODA.

Climate-related ODA projects that do not specify international mitigation in the project description but are identified as building international mitigation infrastructure in their project contents, such as inventory, Measuring, Reporting and Verifying (MRV), are considered likely to be linked to international mitigation projects in the future (Greiner et al., 2020). The Ministry of Science and ICT’s “Automotive Emission Reduction Technology Development in Ulaanbaatar City, Mongolia” is a joint research project with local research institutes that supports the development of science and technology and has established a demonstration center that analyzes emissions to provide data for future international mitigation projects. MOEF’s “Energy Statistics System to Promote Renewable Energy in Albania” is a project to establish a database system for renewable energy statistics in Albania, which provides a foundation for obtaining energy statistics for Albania and international mitigation projects. KOICA’s “Green Mobility through Electrification of Oil-powered Two-wheelers in Indonesia and Upgrading of Electric Two-wheelers in Vietnam” is a pilot project for converting oil-powered two-wheelers into electric two-wheelers. In addition, KOICA’s “Forest and Land Restoration Project for Climate Change Adaptation in Ethiopia” does not specify securing ITMOs, but the project description and performance indicators specify capacity building for MRV technology, which is essential for REDD+ projects. The expected outcome of the project, as identified in the implementation plan, is to contribute to the establishment of an operational system for future transfer of GHG mitigation projects overseas.

Other climate-related ODA projects have identified legal and institutional buildings as necessary foundations for international mitigation. MOEF’s “Establishing a Master Plan for the Lao PDR Emissions Trading System” project aims to adapt Korea’s emissions trading system to Laos and develop an implementation plan to link the two countries’ emissions trading systems. As a UN-designated least-developed country, Laos has set its own greenhouse gas reduction targets with the support of international organizations but lacks detailed implementation plans and systems and has requested support from the Korean government to adapt Korea’s emissions trading system to local conditions. The Lao PDR’s emissions trading system, established through this project, can be used to transfer ITMOs between Korea and Laos in the future. KOICA’s “Smart Public Transportation System Establishment Project in Makati City, Philippines” aims to reduce greenhouse gas emissions from the transportation sector by establishing an eco-friendly public transportation master plan and establishing a public transportation management system in the Philippines. The project has the potential to evolve into ITMOs, as in the case of the Bangkok E-Bus program of the Swiss Klik Foundation in Thailand, the world’s first Article 6.2 project. However, the project description does not specify performance indicators for securing ITMOs. MOTIE’s five energy policy consulting projects include: “Establishment of a Testing and Certification System for the Introduction of an Energy Efficiency Rating System in Lao PDR,” “Establishment of a Training Center for Energy Managers in Uzbekistan,” “Development of a Master Plan for Solar-powered Electric Two-Wheelers in Indonesia” and “Development of a Plan and Capacity Building for the Promotion of Solar-powered Electric Two-Wheelers in Cambodia,” “Establishment of ICT-based Energy Efficiency and Demand Management Policy for the Building Sector in Peru” are projects to establish a master plan for carbon reduction in the energy sector for Laos, Uzbekistan, Indonesia, Cambodia and Peru, and the follow-up plan states that international cooperation in the energy sector is under discussion, which is expected to build an institutional foundation for future international mitigation projects.

Among the climate-related ODA projects that have the potential to be linked to international mitigation projects, there are a total of eight projects that are considered to have a high potential for Korean mitigation companies to enter the markets of the partner countries. Partnerships with Korean companies can potentially lead to international mitigation projects if they are specified in the project description during the project proposal stage or implementation process (Jung et al., 2022). MOTIE’s “AMI Supply in West Java, Indonesia” is a project to build an advanced metering system (AMI) as part of a smart grid project, and in the project identification phase, it was emphasized that the project would lead to the participation of Hyundai Motor Company and LG Chem and was therefore a project with Korean mitigation companies in consideration. MOEF’s “Establishing a Roadmap to Strengthen the Competitiveness of Colombia’s Electric Hydrogen Vehicle Industry” project included an investment seminar for Korean companies, which was expected to attract Korean automotive companies. In addition, although MOEF “Efficient Solid Waste Management Strategy for Cambodia” project description only mentions a plan to link with ODA to build a solid waste treatment facility in the future, the 22/23 Knowledge Sharing Program (KSP) report (MOEF, 2023), which is the outcome of this project, states that the entry of Korean companies experienced in waste management is expected. Therefore, this project could be linked to future international waste-related reduction projects through the Korean reduction business.

In addition to donor countries, various international organizations support developing countries in implementing Article 6 of the Paris Agreement. Through its Readiness and Preparatory Support Programme, the Green Climate Fund (GCF) helps climate change-vulnerable countries, including least developed countries, small island developing states and African countries, develop NDCs based on long-term low greenhouse gas emission development strategies (LEDS) and supports their implementation capacity. The ADB, through its Article 6 Support Facility program, helps developing Asian countries cultivate a practical understanding of Article 6’s project design and outcome projections. As of August 2022, the ADB has supported the preparation of concept notes for Article 6 pilot projects in Indonesia, Mongolia and Pakistan. The World Bank supports institutional and technical capacity-building in developing countries, including the establishment of global mitigation registries and digital MRV systems.

Furthermore, the UNDP runs the NDC Support Program to help parties prepare for participation in international mitigation businesses. The program includes:

• assessing the readiness of developing countries to participate in ITMOs;

• raising public and private awareness for participation in ITMOs projects, including government approval and certification of projects, publication of emission reductions and reporting of offsetting adjustments in the biennial transparency report under the Paris Agreement;

• technical support for integrated MRV systems and registries to track reductions by unit;

• developing guidelines for the recovery of administrative costs associated with project oversight; (5) assessing host country legal frameworks, including legal ownership of reductions;

• conducting Sustainable Development Goals impact assessments and Private Sector Risk Assessment Tool consistent with UNDP social and environmental safeguards; and

• supporting technical assistance in seven thematic areas, including the development of payment mechanisms for reductions by UNDP as an intermediary.

The GGGI also launched the Mobilizing Article 6 Trading Structure (MATS) with the Swedish Energy Agency in April 2019 to identify mitigation activities eligible for performance trading under Article 6 and to support host countries in designing institutional arrangements to avoid double-counting of mitigation outcomes. Within the MATS program, the Mitigation Outcome Purchase Agreements (MOPA), a framework for trading ITMOs, provides transaction features and responses for each participant to support developing countries in implementing Article 6.2.

Although the project descriptions do not specify that ODA is intended to secure international mitigation results or support the implementation of Article 6 in partner countries, climate-related ODA projects that have collaborated with international organizations that support the implementation of Article 6 in developing countries and are expected to increase financial resources for international mitigation, project expansion and project sustainability are considered international mitigation-linked projects (Ahonen et al., 2022a). KOICA’s mitigation ODA projects, “Fiji Melanesia Renewable Energy Capacity Building Project” and “Capacity Building for Forest Landscape Restoration in Response to Climate Change through Trilateral Cooperation between Korea, Mexico, and the USA,” are examples of such projects. The “Fiji Melanesia Renewable Energy Capacity Building Project” is a small-scale renewable energy supply project for the energy underserved in the four Melanesian countries of Fiji, the Solomon Islands, Papua New Guinea and Vanuatu. The project is a pilot project of the GGGI’s National Green Energy Fund, and the GGGI considers further mitigation projects, such as solar power plant operations, in cooperation with the GGGI. The “Capacity Building for Climate Change Resilient Forest Landscape Restoration through Trilateral Cooperation in Korea, Mexico, and Central America” is a capacity-building project in Guatemala, Mexico, El Salvador and Honduras with GGGI and is likely to be linked to a large-scale REDD+ project in the future to secure ITMOs. MOEF’s “Establishment of a Plastics Circulation System Based on Biodegradation Technology in the Philippines” was categorized in this study as an entry into the Korean mitigation business because of its task content and expected outcomes, but it was initiated by GGGI in response to a request for advice on bioplastic introduction and processing technology in Korea and has the potential to expand into the waste sector mitigation business in the future.

The World Bank established the ITR as a readiness indicator for international mitigation projects. It serves as a tool to evaluate the international mitigation linkages of individual climate-related ODA projects (WB, 2021b). Essentially, the more ITR indicators a project satisfies, the more likely it is to be considered for these linkages. The UNDP, which contributed to the development of the ITR module, highlighted the need for developing countries to establish robust Monitoring, Reporting and Verification (MRV) systems and strong institutional and infrastructural capacities to effectively implement Article 6.2 and engage in carbon markets. The World Bank’s ITR module comprises four main indicators: transparency, prevention of double-counting, alignment of mitigation activities with NDCs and environmental integrity, totaling 20 specific indicators. The detailed assessment methodology for each indicator is outlined in the module guidelines (WB, 2021b).

Although there is no indicator in the 2023 Korean climate-related ODA project description that considers international mitigation, this study categorizes projects that can be used as international mitigation indicators based on the content of the indicators and that present performance indicators similar to those of the ITR as possible international mitigation linkages. Of the 46 climate-related ODA projects in Korea in 2023 that were categorized as internationally mitigation-compatible based on project characteristics, 21 projects presented ITR-related performance indicators in their project descriptions (Table 3).

In 2023, 21 of Korea’s climate-related ODA projects presented transparency indicators as performance indicators, similar to ITR indicators. Projects that used a party’s mitigation master plan as a performance indicator, such as MOEF’s “Establishment of a master plan for the Lao PDR carbon trading system,” were categorized under the “GHG mitigation strategy” indicator. On the contrary, projects with detailed sectoral mitigation policies, as opposed to NDCs or master plans, were categorized as “Policy instruments and activities generating mitigation,” such as MOEF’s “Nepal Brick Industry Green Transformation Plan,” which included an ITR-like indicator by presenting a policy plan for the green transformation of the brick manufacturing industry in Nepal as a performance indicator. MOTIE’s “Support for Green Energy Electrification in the Pondores Region of Colombia” can be considered a project with an ITR indicator, as the project’s baseline emissions were studied beforehand and post-project reduction was set as the performance indicator. KOICA’s “Forest and Land Restoration Project for Climate Change Response in Ethiopia” established an MRV system for the national forest sector and presented GHG emission reductions and carbon absorption from forest restoration as performance indicators. In this case, the project is categorized as a project that presents the transparency indicator “Information needed to track progress toward NDCs related to mitigation” because it provides GHG information through the MRV system and sets tracking information related to mitigation as a performance indicator.

However, even among projects with high potential for international mitigation linkages, many still do not reflect this in their performance indicators. This confirms that Korea’s climate-related ODA that considers international mitigation linkages needs to reflect indicators from the ITR that are key to international mitigation linkages, such as the prevention of double counting, alignment of mitigation activities with NDCs scope, and environmental integrity, in project descriptions.

In addition to the World Bank’s ITR, there are several frameworks for assessing a host country’s Article 6 readiness proposed by the international community. In 2023, GGGI published the Readiness and Needs Assessment for Article 6 report for Colombia, Pakistan and Zambia under the SPAR6C program in partnership with the government of Germany. The report assessed the readiness and needs of each country to implement mitigation activities under the Article 6 of the Paris Agreement and highlighted key recommendations. SPAR6C assesses each country’s readiness in four criteria: NDC Assessment, Institutional and Legal Arrangements, Key recommended sectors for developing mitigation activities and Private Sector (private project developers) readiness. The report did not specify detailed assessment criteria for Institutional and Legal Arrangements, so this study was unable to use the assessment criteria.

GGGI also published guidance on governance for Article 6 participation by host countries in the MATS program in 2021 in collaboration with Swedish Energy Agency. The guidance provides seven participation requirements for Article 6, which are much more focused on the measurement of ITMOs than ITRs, including the corresponding adjustments and accounting methods for ITMOs (Table 4). Based on the participation requirements for Article 6, this study assessed whether Korea’s climate-related ODA projects are linked to international mitigation, but none of the projects in this study have performance indicators similar to the requirements of the MATS, which focus on calculating ITMOs. The ITR indicators covered a broader range of host country Article 6 readiness criteria than the MATS. The processes cover a broader range of host country readiness criteria than the detailed criteria provided by the GGGI.

Greiner et al. (2020) suggest the following processes that parties need to prepare to use Article 6 of the Paris Agreement, as shown in Table 5. Research and development, regulatory processes and carbon market infrastructure provide detailed criteria, whereas information exchange, capacity building and stakeholder partnerships do not provide clear criteria, making it impossible to assess the international mitigation linkages of the climate-related ODA projects in this study.

This study assessed the potential of Korea’s climate-related ODA to link international mitigation to identify the interconnectedness between the two fields, how ODA can be used to secure international mitigation results, and how international mitigation projects can be used as a medium to increase the scale of development cooperation projects and financial resources. We categorized 139 Korean climate-related ODA projects in 2023 with a principal objective and project aid type under the Rio Marker as potentially linkable to international mitigation projects and found that 46 out of 139 projects (33%) were considered potentially linkable to international mitigation projects based on project characteristics identified in the project description. This study explored the various criteria for assessing a host country’s Article 6 readiness and assessed the potential for international mitigation linkages of Korea’s climate-related ODA using the World Bank’s ITMO readiness indicators (ITRs), which provide comprehensive but specific criteria. Of the 46 projects classified as international mitigation-capable, 21 projects (15% of the 139 projects) used indicators similar to those of ITR indicators as performance indicators. Based on the analysis results, this study proposes policy implications for synergies between international mitigation projects and ODA.

This study categorized Korea’s climate-related ODA projects with international mitigation linkages and found that many projects do not consider international mitigation in their project descriptions but build the technical and institutional foundations necessary for international mitigation. However, it was found that it is necessary to raise awareness of international mitigation linkages among project managers to reflect them in project objectives, performance indicators and follow-up management. In some cases, even if international mitigation linkages are specified in the project objectives or project names, they are not reflected in the outputs and performance indicators. Therefore, it is necessary to develop indicators to assess the potential of ITMOs. The evaluation of project effectiveness is essential, and the performance indicators used to evaluate projects are also very important for post-project management (Quang et al., 2024). Furthermore, if performance targets specify the entry of Korean mitigation businesses, it is necessary to specify post-management measures. Public–Private Partnerships are not only emphasized in securing ODA financing (Park, 2022) but are also increasingly needed for climate action projects such as mitigation and adaptation (Casady et al., 2024). The private sector, as a potential (co-)financier, project developer or buyer of generated ITMOs, will be interested in climate-related ODA projects for Article 6 readiness (Michaelowa et al., 2019). For Korean mitigation businesses to invest in private financing and actively participate in development cooperation, it is necessary to systematize the follow-up of projects linked to international mitigation.

Korea can incorporate international mitigation cooperation commitments such as MOUs as performance indicators when designing climate-related ODA projects. One way to secure international mitigation achievements is to enter bilateral agreements to implement international mitigation projects. According to United Nations Environment Program (UNEP)’s Status of Bilateral Agreements to Utilize Article 6 of the Paris Agreement, as of May 2024 (UNEP, 2024), only Japan, Switzerland and Korea, which have bilateral agreements, have 140 ITMOs pilot projects in total, confirming that bilateral agreements are prioritized for bilateral projects, whereas Korea has six bilateral agreements and one ongoing pilot project. Japan has been providing ODA for a long time, especially to Asian developing countries among the recipient countries, and the bilateral cooperation established by Japan is leading to reduction projects that can be linked to ITMOs (Kim et al., 2020). Korea also needs to consider the possibility that such a cooperative relationship may lead to reduction projects in the future. When designing climate-related ODA projects with the potential to be linked to international projects, it is possible to establish international mitigation cooperation commitments with partner countries as performance indicators.

The World Bank’s ITR, used in this study to assess the potential for international mitigation linkages, can be used as a performance indicator for climate-related ODA. The ITR provides the most extensive and specific criteria among the various frameworks for assessing a host country’s Article 6 readiness. While this study found that some climate-related ODA uses a “transparency” analog of the ITR as a performance indicator, a more robust assessment of international mitigation linkages could be made by using indicators such as “prevention of double counting,” “alignment of mitigation activities with NDCs scope” or “environmental integrity,” which are key indicators of a partner country’s Article 6 readiness. Many host countries and some investing countries have expressed interest in the market mechanism of Article 6 of the Paris Agreement. Host countries, most of which are developing countries, have difficulty in building readiness such as implementation of a registry for tracking of internationally transferable units, documented procedures for double counting prevention, and corresponding adjustment provisions, which are key indicators of “prevention of double counting” in the ITR. The readiness for robust accounting procedures in the partner countries that may become future hosts of international mitigation is essential to ensure the quality of credits that will be traded as international mitigation projects and must be established (Cook et al., 2024). Investment countries including Korea will be able to help host countries build their readiness for Article 6 accounting procedures through climate-related ODA and verify that they are properly built by using international standards such as the ITR as performance indicators. While the climate-related ODA projects in this study did not have similar performance indicators, it may be possible to use Article 6 of the MATS’s participation requirements for Readiness of host country as a performance indicator for future projects. The MATS requirements cover readiness in great detail, including ITMOs double counting and corresponding adjustment methodologies, registry establishment and quantification of NDCs. For climate-related ODA projects that can be linked to international mitigation projects, it may be possible to provide performance indicators on which of the requirements of the MATS are supported.

As various international organizations are supporting developing countries to implement Article 6 of the Paris Agreement, it is necessary for Korea to seek multilateral development cooperation with international organizations, such as the European Investment Bank, to link international mitigation (Iacobuţă et al., 2022). Through multilateral cooperation, such as using international organizational platforms in parallel with bilateral efforts, Korea can expand its financial resources, scale and sustainability in both international mitigation and development cooperation. The GCF and UNDP can be leveraged to support NDCs in developing countries and jointly work with host countries to build foundations for the implementation of Article 6 projects. As developing countries in Asia host 78% of the world’s international mitigation pilot projects (UNEP, 2024), Korea could consider using ADB’s Article 6 Support Facility to collaborate in building institutional capacity and infrastructure for Article 6 implementation in developing countries in Asia. In addition, exploring multilateral cooperation among international organizations, the private sector and the government through the GGGI’s own carbon reduction projects in developing countries is essential. GGGI operates SPAR6C with the German government to help developing countries enhance their Article 6 capacity and also has a MATS program in cooperation with Swedish Energy Agency to provide institutional and technical support for host countries’ participation in Article 6. Korea can also use climate-related ODA projects as projects to build Article 6 readiness in host countries through multilateral cooperation with these international organizations and the international climate funds (Park, 2022).

The analysis of this study identified the synergy between the utilization of climate-related ODA in international mitigation and the potential of international mitigation in development cooperation as an innovative source of funding. This study will help to enhance the understanding of the interaction between development cooperation and international mitigation among policymakers and stakeholders in both the host and investing countries who want to achieve cost-effective mitigation under Article 6 of the Paris Agreement and contribute to the advancement of development cooperation and effective international mitigation.

This work is financially supported by Korea Ministry of Environment (MOE) as Graduate School specialized in Climate Change.