Oman publishes 'developer friendly' Article 6 framework
Quantum Commodity Intelligence – The Middle Eastern state of Oman has published a draft carbon markets policy framework for public consultation, according to officials within the country's Environment Authority.
The 52-page document, seen by Quantum, is one of the most complete seen globally on Article 6, the system for country-to-country transfers under the Paris climate change agreement that is in the process of being ironed out, and attempts to be as clear as possible for project developers.
Oman is currently vying with the United Arab Emirates (UAE) and Saudi Arabia to become the Middle East's pre-eminent carbon trading hub.
And, while the UAE and Saudi Arabia have the advantage of being larger economies, Oman has now set out a much clearer policy than its neighbours.
Under the proposed framework, Oman undertakes to create a national carbon registry and strengthen institutional and technical capacity to deal with carbon markets, both under Article 6.2 - the mechanism for country-to-country transfers - and Article 6.4 for project-based crediting.
"As the Sultanate of Oman charts its course towards a net zero future, the Article 6 policy serves as a testament to the nation's steadfast dedication to environmental stewardship and prudent development," states the draft document.
"Through the utilisation of carbon finance mechanisms outlined in Article 6, Oman is fostering innovation and encouraging collaboration through carbon trading for the welfare of both its populace and the planet."
However, instead of classifying projects based on whether they match Article 6.2 or 6.4, the Oman framework was built from the viewpoint of developers and the "end markets" they are likely to target when creating a project, officials told Quantum.
The Sultanate differentiates between International Mitigation Purposes (IMP), which involves transferring carbon credits from Oman to other countries for use within their Nationally Determined Contribution (NDC) and requires approval by authorities, Other International Mitigation Purposes (OIMP), and domestic schemes.
Oman said OIMP claims include the Carbon Offsetting and Reduction Scheme for International Aviation (Corsia) and agreements signed with non-state actors.
Projects registering under OIMP will benefit from a fast-track approval mechanism, a mechanism that contrasts with the uncertainties surrounding CORSIA currently.
Positive and negative lists
The National Committee on Climate Change (NCCC) will be responsible for the overall policy direction with regards to Article 6 and for negotiating bilateral agreements.
The Environment Authority, meanwhile, will vet individual projects, approve methodologies and populate 'positive' and 'negative' lists of project activities.
So far, the positive list of projects that will receive automatic approval - provided they meet key criteria - includes activities with high abatement costs, such as:
- Advanced technologies for reducing fugitive emissions in oil and gas;
- Carbon capture and storage;
- Abatement of fluorinated greenhouse gas emissions;
- Engineered landfills;
- Mangrove conservation and tree plantations;
- Sustainable agriculture; and
- Green hydrogen production.
The negative list of projects that will not be able to export any carbon credits, meanwhile, is due to be announced at the end of 2024 following a broader consultation with industry, but is likely to include low abatement cost solutions such as energy efficiency and renewable energy, according to officials.
In addition, a Technical Advisory Committee including industry federations, NGOs and academics will provide high-level guidance to authorities.
The country also said it will consider adding emission reduction targets under its NDC to the baseline of Internationally Transferable Mitigation Outcomes (ITMO) transfers - the trading currency under the Paris agreement - and will also apply a 'reserve buffer' as a form of insurance against emissions reversals.
"Oman will establish pricing strategies for ITMOs that generate a pool of funds, which will be used for additional domestic mitigation investments, enhancing the country's overall mitigation efforts," states the policy document.
To register, projects will have to follow a set path, first by uploading a project idea note, then by requesting validation by an external auditor and finally by undergoing a public consultation.
Projects that do not meet either the positive or negative lists will undergo a "priority evaluation process" by authorities to assess their eligibility for corresponding adjustments.
The country reserves the right to revoke a project's export permit if it fails to comply with its environmental and social commitments.
"While the Executive Body retains the right to revoke project authorisations for non-compliance, several safeguards exist to protect investors," states the document.
"No new or amended tax laws, or regulations will be applied retroactively to emission reduction projects that have received valid permissions or authorisations and are operating in compliance with existing laws."
The proposed framework is currently undergoing a public consultation and a workshop will be held next week in the Sultanate where it will be discussed.
Oman plans to officially launch the policy at COP29 in Baku, Azerbaijan, this November.
