How to End a 30 Year Mexican Standoff in Glasgow ? (1)

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By Mathew Carr

Nov. 2-10, 2021 — LONDON AND GLASGOW: How can climate envoys gathered in Glasgow use Article 6 of the Paris climate deal to encourage tighter emission targets in emerging countries voluntarily, when apparently suspicious poorer nations are holding off doing so?

Should incentives be deployed using voluntary or compliance carbon markets?

The less wealthy are focussed on trying to secure as much finance as possible — incentives, carbon finance, compensation, even, for loss and damage. Once they win that money, the incentives, only then will they feel able to limit their emissions growth, then cut toward net zero.

Poorer nations have been burned before …promised lucrative carbon credits under the Kyoto Protocol, only to be denied as some large developed countries refused to abide by the deal even before it was finally set.

Now, the emerging-market climate envoys are gently pointing their (figurative) six shooters in the direction of the heads of the developed nation countries that are mostly to blame for the climate crisis. “Stop getting rich killing our climate, or we’ll shoot.”

Up until now, the developed countries were able to point their (figurative) pistols back at the poorer nations: “If you shoot us we won’t (be able to) give you money for climate aid and anyway you have had a chance to get rich using fossil fuels, just like we have.” People don’t usually say it this bluntly, or course.

Now, though, there’s talk of a little more collaboration.

What’s changed this year is loosened purse strings of governments and, more importantly, the private sector.

It’s been helped (not quite the right word) by a global pandemic that’s expanded government borrowing dramatically, and stoked the virtual “printing of money”.

Something like $4 trillion a year is needed to save the climate (keep global average temperatures from rising more than 1.5C). That’s over and above what the world would have invested anyway. Global GDP is about $80 trillion.

Global Gross Domestic Product: on the Up
Current prices

The Article 6 negotiations can help stoke this economic expansion, as can the voluntary carbon markets — stay with me. How do they potentially help overcome this Mexican standoff, which is now (pretty much) extending into its fourth decade?

One idea is to set aside some of the most “charismatic” carbon credits for the biggest companies on earth — allow projects that remove greenhouse gas from the atmosphere in a definitive way be relatively free of complicated Paris-climate-deal accounting rules for a while — while the technology evolves.

Emission-reduction credits or emission-avoidance credits would stay under Paris accounting.

The distinction between these credit types is not well understood and it’s not even agreed, or, to be honest, not that clear.

The thinking goes something like this.

If I replace an old boiler with a new, more efficient, one, I’ve avoided emissions and might be granted avoidance credits.

If I shut down my coal-fired power station and replace it with a vast array of solar plants and windfarms, that’s reducing emissions and I might be granted emissions reduction credits.

The markets for reduction/avoidance credits is more mature and these types of action should be accounted for under Paris by everyone in the Mexican standoff — that’s all countries willing to participate in carbon markets for the avoidance of doubt.

Snip from Google search for “Mexican standoff”

But the world needs to develop blue-sky technology that will remove heat-trapping gas from the atmosphere in big volume during the next three decades.

The volume needs to surge to about 10 billion tons from 20 million tons now. That’s on top of the 10-20 billion tons already naturally absorbed by the forests and oceans. Ultimately, the world will need to have negative emissions by the end of the century to extract the heat-trapping gas in a big enough way and stay within the 1.5C limit.

These removal projects range from making graphene out of carbon, which is a thin film that can be used to make concrete stronger and more energy efficient. Biochar kilns can turn wood into pellets that can be spread across farmland to boost moisture retention. Giant carbon capture plants can remove the CO2 from coal and natural gas generators. Direct-air-capture systems can extract the carbon out of thin air, literally.

They would get carbon removal credits. See this slide below which outlines the variety of opportunities.

C Capsule: A planned system of carbon credits where physical, environmental, financial risks are almost entirely eliminated. See

By setting this carbon removal market free for a while, the world could open up opportunity to aggressively scale up old and new technology to save the market, said Jeremie Paul, product development manager at Green Certificate Company, which is helping create a platform for voluntary removal markets – C Capsule.

Hang on, I hear you ask. Won’t that just give the people who caused the climate crisis even more money?

Well, no it won’t, if done well. Businesses big and small will have to work very hard for it. See the 10 capture types in the above chart. And this time, emerging countries will insist on their fair share.

“The global South will have massive opportunity from carbon-removal credits,” Paul said. Once the private sector is allowed to develop the technologies and begin to deploy them, then countries can begin inserting them into their climate pledges and the Paris climate accounting system for countries in 8 to 10 years.

Green Certificate Co. ultimately wants to create a compliance tool for governments by scaling voluntary carbon markets, improving their integrity and providing a space for governments to monitor and regulate the market. C-Capsule is a voluntary instrument designed to facilitate compliance and integration of removals into legislation (and then integration under Paris).

The rationale for doing this is also linked to the huge demand from large corporation who right now want to voluntarily cut their emissions to zero. The airline and shipping industries for instance are already outside the country accounting systems, and they will be willing to invest in some of this cool tech.

Retaining some independence for the voluntary carbon market will give carbon removal businesses an immediate way to make money by saving the climate. At the moment, business’s key options include burning, digging, drilling, extracting, manufacturing, packaging and shipping — all processes that generally hurt the climate.

Let me try to explain a little about how we got here and what’s happening inside rooms at Glasgow right now to create a better way.

The current stand off is about climate justice, or more specifically, the lack of it.

The article 6 texts below are seeking to tackle this problem (among others).

See paragraph 16, for instance, in the second document below.

See UNFCCC 6.2 guidance draft right at the bottom

I might be wrong, but when the UN envoys say “mitigation outcome”, they can mean “carbon credit.” — especially when it’s traded internationally.

“Other international purposes” might mean “helping a giant oil company such as Shell, Occidental Petroleum, Exxon Mobil or Chevron show that it’s changing its ways — it’s reforming its behavior to save the climate rather than destroy it.” Same could be said about British Airways or Singapore Airlines — they want to offset the damage.

When the envoys write “if it has been authorized by a participating party” they mean authorized by a country willing to participate in carbon markets under the Paris climate deal. To be clear, this is any country willing to participate in article 6 markets. It won’t be mandatory, but participation might include non-climate benefits, such as freeer, greener trade between nations.

And remember it’s only removal credits that would be hived off for a while.

Now, the square brackets mean this paragraph 16 above has two options, and envoys have not yet decided between them.

I contend (OK, it’s more guessing than contending at this early stage of the talks) that the second option, the second sentence, is proposed by a large developing country beginning with a letter that’s very early in the English alphabet.

That sentence is saying that a country “shall apply a corresponding adjustment” if it transfers the carbon credit internationally. In other words a country applies the adjustment when it sells the carbon credit (“mitigation outcomes for other international purposes”).

That means, for instance, if a giant emitter such as a developed country beginning with a letter that’s near the end of the English alphabet, wants to sell a carbon credit internationally, then they need to tighten their 2030 emissions reductions target (for instance) by the same volume of the trade (“the use of mitigation outcomes for other international purposes”).

Again the company ultimately buying the credit could be any with a “net zero” target seeking to show it’s reforming its ways. All the better if its products are seen not only helping to save the climate, but seen helping correct the yawning global inequality between rich and poor countries.

This option, the second sentence in paragraph 16 to be clear, could give the developing countries an advantage in the Paris carbon markets, assuming they are created in Glasgow.

That’s because the developing countries are proposing to limit their emission gains. Note China, for instance, is saying it will peak its emissions in the five years starting 2026, but it’s not yet saying what that peak will be. It’s waiting for developed countries to tighten their 2030 targets, first.

See this snip from the Article 6.4 negotiations, which will probably establish a new global carbon market — one that could initially include removal credits, or exclude them for 10 years while they mature:

Section c of 6.4 text UNFCCC draft directly below this story

An “A6.4ER” is the catchy name that envoys are giving emission credits created by Article 6.4 of the Paris climate deal. What 43 of the draft rules is saying above is that “the host party” — ie the country where the project is located — may be able to create emission credits, as long as it addresses the corresponding adjustment question to the new global regulator of the planned A6.4 market. It’s important that the system — whether Paris or voluntary — prevents the same ton of emission cuts from being counted by two countries.

In theory at least, no country need claim the reduction. The important thing is that the physical emissions removal from the atmosphere happens soon.

At an event Monday hosted in Glasgow (and virtually) by the International Emissions Trading Association, the first “keeping-removals-in-the-voluntary-market-for-a-while” option was discussed.

That option is basically a private-sector solution to the climate crisis (with one-country oversight probably). The second option, I think, (A6.4ERs) is the climate envoys’ bid to try for a UN-endorsed climate solution with a little more UN oversight. (I might be wrong — I would not recommend trading commodities, bonds or shares based on my writing here, right now.)

There’s some surprising support for the private-sector solution. That is, letting companies with net-zero targets be the main demand source for carbon-removal credits for a set period of time.

Benedict Libanda, chief executive of Namibia’s Environmental Investment Fund, sees advantages in letting the private sector mature this market outside the complex system of national climate “pledges” under Paris labelled nationally determined contributions (NDCs).

“The advantages outweigh the disadvantages. As a developing country, we are also in favor of that process to be outside the NDC,” Libanda said in Glasgow. Benefits include lower unemployment in Namibia and skills development. These are key benefits in developing countries where career development and lack of innovation are difficult challenges faced by government, he said.

“It’s not about rejecting carbon removals from NDCs forever,” said Jeremie Paul. “It’s about giving the market time to mature and get some experience.”

(Tweaks headline [again — to add question mark Nov. 10 because I’m still not sure it makes sense to carve out removals] and adds details and comments throughout. More to come)

Rules for Article 6.4, draft, Nov. 2

Guidance for 6.2, Nov. 1, Version 1:

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