By Mathew Carr
Nov. 11, 2024 — A new UN global carbon market may fire up earlier than some people think.
Azerbaijan, the president of this year’s climate talks starting today through the end of next week, is seen boosting momentum by getting UN envoys to immediately endorse rules of the program drawn up over the past few months, based on article 6.4 of the Paris climate deal. See here for the market’s latest newsletter.
It will allow hundreds of billions of euros worth of investment to flow from wealthy companies and rich countries over the next few decades, to speed the climate transition in poorer nations that are least to blame for the climate crisis.
This can ensure emerging nations grow their economies in a cleaner way than the current so-called “developed” nations did the past century or two.
Here is a snip from Carbon Pulse, which says there is some resistance to the early push:
There is a UNFCCC webcast here later today (which I won’t be covering live because I have other commitments). A recording will be available apparently.
Surprisingly, the EU was accused recently of being behind resistance to finalising the Article 6.4 market, which could become the Global Baku Carbon Market, I suppose.
The EU carbon market, the world’s biggest, may see an outflow of funds should a UN market be established. This could mean lower EU carbon prices.
I pressed the EU on this and have not yet got a response on this issue. They dodged it, so far, at the official level.
EU stance:
Here is my understanding of the EU position (from people familiar with it …who spoke on condition they would not be named publicly):
Developing nation countries hosting carbon-reduction projects for the 6.4 market will have greater demand for carbon credits to meet their own emission limiting targets.
They won’t want to be only selling credits, probably.
The EU should have strong demand for carbon credits because it wants to cut emissions by 90% by 2040 vs 1990 levels.
A focus on the EU buying credits when the likes of the USA is now barely on board with carbon pricing … might be misplaced.
The EU alone doing 90% is not going to get the world to keep temperatures below the 2C target (especially when they are over the 1.5C target already).
The EU is trying to show leadership …but what is the point if very few are following?
The EU CBAM — carbon border adjustment mechanism — is meant to spur other nations including the US to embrace carbon pricing.
I addressed this here in this curtain raising story for Baku:
There is probably more tension between the US and EU on climate now that Mr Donald Trump is president elect.
The EU is also promoting domestic pricing in all nations, because if the markets are to be effective and fair, developing nations cutting their own emissions need to implement and access their own cheap emissions credits from easy-win projects.
There is a risk all the emission-reduction credits from easy projects get bought by rich countries and that leaves poor countries with expensive emission-reduction options. That’s not fair and not addressing climate injustice.
Global carbon markets won’t work in a situation that the cheapest abatement is owned by the rich and then wealthy countries demand the poor do more in the longer term.
So there are both effectiveness and a fairness elements and these issues are not debated enough.”
End of EU stance
An EU negotiator (Martin Hession – who is also on the board of the article 6.4 supervisory body as vice chair) is speaking later today at the event linked above. Perhaps Mr Hession is conflicted between his 6.4 role and his EU one as negotiator.
This today from the International Emissions Trading Association IETA:
“The UNFCCC will host an official side-event, titled “Advancing Integrity in Carbon Markets with the Paris Agreement Crediting Mechanism“, at 1830 AZT (1530 CET). For those of you in Baku, this event takes place in Side Event Room 8, Area B.
The UN will webcast the event here.
Speakers at the event will include Maria AlJishi (SB Chair); Martin Hession (SB Vice-Chair); Kristin Qui (SBM Alternate Member and Chair of SD Tool small group); Mbaye Diagne (Chair of Methodological Expert Panel); and Molly Peters-Stanley (Vice Chair of Methodological Expert Panel). IETA’s Bjorn Fonden will also participate in the discussion.
You may already have heard that the COP presidency has expressed a wish to endorse the Article 6.4 standards as early as today, so this session will be very closely-watched.
See here how the world’s businesses want the flexibility of carbon credits and a credible 6.4 market:
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