–China and the US say 6pm on Nov. 10 a global carbon market looks set to be created: China at talks

By Mathew Carr

Nov. 9-10, 2021: There’s a “high-risk, high reward” negotiation on in Glasgow that might just result in the start of a global carbon market at the end of the week, according to four people familiar with the situation.

“It’s a very political conversation,” Jennifer Katharina Tollmann, an observer and senior policy analyst at environmental group E3G, said.

Ministers have not been able to agree on the Paris rule book the last two times they tried, nor “article 6” markets. “I’m not going to say that it’s going to be an easy win,” she said in the media centre of the campus where the negotiations are taking place.

Ministers are seeking to keep several key elements of the negotiations standing up like a game of dominoes, including the Article 6 markets, Katharina Tollmann said.

“If one wobbles, the rest could come crashing down. This is why this is a very high-risk, high reward situation. We know all the elements, but if one or two of them go really badly, it’s really tough to see how the rest of them can be pulled through in a high-ambition, high integrity variation.”

Other dominos could include climate finance for emerging countries, adaptation finance and / or loss and damage, global stocktake rules, transparency rules.

Should envoys succeed on creating new markets, the incentives created could unlock the trillions of dollars of investments needed to boost renewable-energy generation, build new green-fuel plants, encourage energy efficiency, as well as streamline electricity grids.

COP26 president Alok Sharma from the U.K. said later at a press conference that after publishing a draft “cover decision” tonight, delegations would need to get in touch with their most senior political leaders in country capital cities. That would happen tomorrow and Thursday, to see if a deal can be struck by Friday, he signalled.

Other than Katharina Tollmann, three other people familiar with talks told CarrZee a deal on ambitious carbon markets was alive. One negotiator said he was confident it was going to happen.

In the markets strand, negotiators are effectively seeking to merge article 6.2, 6.4 and voluntary carbon markets, said one of the well-placed negotiators. “Voluntary and compliance markets are converging.”

A deal on non-market approaches under article 6.8 was pretty much already agreed, the person said.

There was still disagreement on several elements of the shape of the new markets, the person said.

One element was the “share of proceeds” from carbon trades, where emerging countries are pushing for as much as 30% share of transaction values. Another is the “overall mitigation in global emissions” (hilariously OMG) and whether companies / countries would need to mandatorily guarantee that or voluntarily guarantee it as they undertake international carbon transactions.

Another element still being debated was whether or how to allow the use of credits created under the Kyoto Protocol. China, for instance, is seeking to use them to comply with its Paris targets.

The quality of credits has been called into question.

“A lot of them were crap and you don’t want to carry a bundle of old credits into the future,” Yvo De Boer, former executive secretary of the UN Framework Convention on Climate Change, told CarrZee. “Another issue: if you go from legally binding to nationally determined to a host of collective undertakings, what’s next? How do you measure impact and who is accountable.”

Still, the European Union has already carried forward a bunch of its credits from before 2020 into the period beyond that year covered by the Paris climate deal.

The last thing that negotiators may do on Friday (or later) is merge the transparency and Article 6 provisions so the proposed markets have a more solid foundation, said one person.

(Adds other dominos and possible merger of Article 6 and transparency at the end; Adds De Boer’s comments; corrects typo in the share of proceeds section; adds details, more to come)

Link on China US Glasgow statement:

Other drafts out Nov. 10 here: http://carrzee.org/2021/11/10/cop26-glasgow-presidency-publishes-overarching-decision/