Reporting and opinion by MATHEW CARR

Oct. 31-Nov. 1, 2024 — Groups representing thousands of businesses worldwide have urged United Nations negotiators to push to change market incentives to help protect the environment and give emitters — such as oil companies — more certainty about the climate transition.

Landing the Article 6 airplane that’s been circling for almost a decade

International Chamber of Commerce, representing business, speaks at an International Emissions Trading Association (IETA) webinar on Oct. 31 on Article 6 of the UNFCCC Paris climate deal — the article that deals with new carbon markets:

Andrew Wilson, ICC – deputy secretary general, policy, above, said this:

“This time next week, we’ll be publishing a new study looking at the true economic costs of climate change and the slow pace of action in decarbonizing the global economy over the past 10 years.

And the figures from that independent study, which we commissioned a few months ago….really do exemplify the urgency with which we think climate action needs to take place.

On that note …we’ve heard, I just want to be very clear on this, particularly for our government interlocutors …we’ve heard in the media this upcoming COP [COP29 in Baku, Azerbaijan next month] described as a transitional Summit, some media articles suggesting it’s not necessarily that important compared to COP28.

At ICC, we take a very different view, and I believe that that’s shared broadly across our membership, we actually think that this is in some ways, the most important COP since the agreement of Paris in 2015

…and we believe that because of the vital importance of financing to enabling accelerated emissions reductions and also enabling the real economy to build resilience to a changing climate.

On that basis, we are very, very strongly urging governments to agree an ambitious and workable new climate finance goal, and we think that that goal needs to encompass a strong outer layer, setting a global investment target, but also looking at ways to enable the private sector to deploy more capital in support of climate action, especially in developing economies.

But we also see the discussions on Article Six as being absolutely pivotal and central to that discussion on mobilizing finance.

So we’re very, very keen to see the plane that has been circling the COP negotiations now for almost a decade finally landed on both Article 6.2 and 6.4” (two articles creating carbon markets under the Paris deal)

CarrZee: Emerging nations blame richer countries for lack of progress on Article 6 …because the countries most responsible for climate change have so far failed to provide enough finance via other sources.

Carbon markets have mostly had false starts for the past three decades. The webinar didn’t really hear so much from the global south, except for the incoming presidency …

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We are progressing on all tracks of Article 6, said:

Samir Bejanov, Azerbaijan: “We remain committed to bring [a] successful outcome for the full operationalization of Article Six at COP 29 as one of the priority areas for the presidency.

We believe that Article Six is one of the core and necessary elements of the Paris Agreement architecture and its full functioning will pave the way for the implementation of the NDCs in a cost-effective manner, bolster ambition in mitigation and adaptation, greatly enhance capital markets, create viable economic models for climate positive action, both in public and private sectors.

It will also enable channeling of financial resources and technology around the globe, including to the developing countries, and help immensely those who need carbon markets to implement their climate plans.

We believe that there are all necessary conditions in place to solve the remaining issues and build along the way the consensus on Article Six.”

Shame of it

The following shows how big an opportunity the world missed the past five years. Net emissions could be around 20 billion tons next year (green line) instead of close to 50 billion tons (blue line) [in theory] — had the world cooperated properly (IETA/Capstone chart). The pandemic, Donald Trump, fear, mistrust and war stopped that happening …or were used by big countries and big business as the excuse for slow action.

Click to access IETAA6_CapstoneReport_2023.pdf

Figure 4

There is some collaboration under way but it’s not by the biggest nations most responsible for the climate crisis. That’s shameful, too.

ICC priorities by policy person Sophie Talarico:

Hession:

Some nations want to keep control of their ITMOs (carbon credits under Article 6) in their own registry …others expect a UN registry to hold and handle the trade of the ITMOs. The EU was assuming a centralized system would be built.

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CarrZee comment: this is a key jurisdictional fight, but one that can be overcome …will the UN have control or countries?

My view is if a country wants control then that is a decision of that nation’s people or their representatives. That country can maintain control and have holdings and transactions mirrored in the UN registry.

If there is any discrepancy between a country’s registry and the UN mirrored version, then some type of alert or automatic report could be triggered. If a country deems it, the national registry should retain pre-eminence. If a country or its administration becomes unreasonable, then it should be able to be barred from the UN registry, but its own registry should not be able to be destroyed by the UN.

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Hession on Article 6.4

Buffer pool v carbon credit insurance is one interesting debate

Hession on questions from the Zoom chat:

Concern about “avoidance” of emissions and winning credits for avoiding emissions is: if we are interested in ambition, we can’t issue credits for stocks of carbon (eg for forests) –[CarrZee makes this perhaps too clear vs how Mr Hession said it]

Koakutsu:

It’s wrong to think success in delivering better Article 6 rules is optional at the Baku climate talks.

Issues:

–Authorisation of projects/credits…idea adopted in Glasgow…but not concluded/finalized still last year in Dubai …getting certainty is a “key outcome from cop29” … about 40 out of 190 countries are authorising already …having better, clearer rules will spur authorization of carbon projects/credits at a faster pace

–Registries structure is “a very important outcome”

–GHG removal standard/6.4 methodologies are needed to enable more ambition for next year

Koakutsu on avoidance credits: Reduction and removal credsits have been deemed to be the types of credits that will form ITMOs, a decision made at Glasgow (avoidance credits are not deemed part of the ITMO plan, so far) [CarrZee boiled this down a bit]

Di Credico:

What is needed in Baku is “action over perfection”. Use of technology will be important.

CarrZee comment:

This IETA report below from September is a great catch up…there HAVE been some meetings between negotiators since in Baku, since that report was published …and otherwise …and one on one meetings.

I would like to think it’s possible Article 6 can be wrapped up early in the Baku talks … but I would not hold my breath on that one.

This is one of the most fraught negotiations in world history.

Donald Trump is a not only a symptom of the delay but he’s also being put in place to instill fear into climate negotiations and prevent mainstream-media scrutiny of the USA’s behavior more generally:

Trump sues CBS News for $10 billion alleging ‘deceptive doctoring’ of Harris’ ’60 Minutes’ interview

cheers

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Earlier, Linked In… see this:

Andrea Bonzanni International Policy Director at IETA :

Many of you know that a big part of my job at IETA is to watch the Article 6 negotiations, so you do not have to.

Having been to Baku earlier this month and observed the UNFCCC workshop and the Article 6.4 Supervisory Body meeting, I am moderately optimistic about a positive outcome at COP29 next month.

Negotiations achieved a significant milestone on 9 October when the Article 6.4 Supervisory Body (SBM) reached consensus on key documents setting principles for methodologies and carbon removal activities under the Paris Agreement Crediting Mechanism (PACM), which had been on the agenda since 2022.

By turning these documents from recommendations into standards, Parties at COP29 will need to find consensus to reject them, rather than to adopt them. This should allow the work on the operationalisation of the PACM to continue without further hiccups. More deliberations are required on various technical tools (e.g. baseline setting, additionality tests, dealing with reversals), but we can now expect the first methodologies to be approved under the mechanism in 2025. A Methodological Expert Panel is at work on the revision of CDM methodologies on landfill gas and grid-connected renewables, so I assume these will be at the front of the queue.

Other outstanding issues are rules on authorisation (including revocation), the 6.2 international registry, reporting templates, and details of the UN expert review process. When Parties met in Baku earlier this month, the mood was positive. Technical negotiators seem to be under renewed pressure to deliver a positive outcome after the setback at COP28 and matters are being escalated – heads of delegation have already met several times this year and ministers are expected to get involved in week 2 at COP29, with Ms Grace Fu from Singapore and Hon. Simon Watts from New Zealand appointed to lead the ministerial talks.

Some deep-seated disagreements remain, especially on the nature and functionality of the 6.2 international registry. There have been some heated exchanges among negotiators in Baku on this topic, but I believe a compromise is ripening.

At IETA, we tried to explain the nature of these technical issues and our views on each subject in a series of policy briefs, which you can find here: https://lnkd.in/dyaNfYYe

If you want to know more, tune in for our COP29 preview webinar organised in partnership with the International Chamber of Commerce (ICC) tomorrow Thursday 31 October at 3.00-4.30pm CET. You will hear directly from senior negotiators such as Martin Hession (EU), Mbaye Diagne (African Group), KAZUHISA KOAKUTSU (Japan), Maria AlJishi (Saudi Arabia), and Samir Bejanov (COP29 Azerbaijan Presidency), as well as my CEO Dirk Forrister, Federico Di Credico (ACT Group & Climate Action Data Trust), Andrew Wilson and Sophie Talarico (ICC).

You can register here: https://lnkd.in/dCxGWSwW (the webinar ended around 3:30pm London time.)