*This includes comments from two different webinars, London time and US time
By Mathew Carr
Nov. 26-Dec. 5, 2024 — Buyers (more than 80%) willing to pay more than prices in voluntary markets for ITMOs (UN-stamped carbon): IETA
Changes to terms and conditions of 6.2 project approval to be publicly available: IETA (IETA would have preferred no changes to approvals/authorisations, but at least there is transparency so risks can be managed)
Paris Agreement Implementation & Compliance Committee (PAICC) to be powerful new regulator.
No further guidance expected on rules until 2028. (Giving markets some stability to implement on these rules)
Paris Agreement Crediting Mechanism (PACM) created. New name.
Dirk Forrister, president, IETA: Article Six talks looked like they might fall apart somewhat in the end of COP29 …yet “came together” in the end. Negotiations were tense.
Final text didn’t mention the 1.5C target (which might now be lost to history).
CarrZee: the complexity of the decisions may slow development of a global commodity market; eg each project may have different conditions listed in their letters of approval from each country
Panel
Tashi: there were concerns at the beginning of cop29 that agreement would fail again like it did a year ago
Decisions are “very very important”
Decisions were very hard fought, even if they look simple on paper right now.
“This is a workable text” until 2028
Mock: Big debate on whether the 6.2 registry should include transaction functionality or leave that to sovereign states; some saw the functionality would broaden use of 6.2 (boiling down )
The level of up-front information also a big issue.
Share of proceeds (5%) and its implementation was another issue.
We strived for “equal discomfort” in the negotiation room (!) to make it neutral and fair (boiling it down)
Finney: We really wanted to see mandatory minimum authorization requirements
Registry text not optimal but something we can live/work with
Text much better than that tabled in Dubai
Umbrella group disappointed agreed electronic format could not be approved
Disappointed CDM funds not transferred to Article 6
Some certainty to business
On UK NDC; says aligned to 1.5C; “We will not be using Article 6, but we reserve the right to” do so
Helen Finney 10:05
…. in the CDM room there is a discussion on timelines for the wind down of the CDM, and movement of surplus CDM funds. Unfortunately no progress was made in that room. We would have liked to see a Glasgow style package (as some were moved then) with some funds transferred to different destinations incl. A6, adaptation fund – but there is deadlock here on i) whether funds can move and ii) destinations.
Arumugam: New standards and tools “elephant in the room”; 79 items to be processed in four meetings of 2025
Interim 6.4/PACM registry should be ready by end of November; early December …or at least end of the year (second webinar)
International registry (wider registry) should be done by the end of next year (second webinar)
Some transition activities (from CDM) might be registered by the end of this year or by March 2025
Additionality not assessed again for CDM projects transitioning; for use until 2025
25 cooperative approaches expected by March (I think)
“Now we are open for business.” So this four years might be stepping stone for next 15 years.
Website shows about 900 activities approved, with about 600 rejected (I think he said on second webinar): Arumugam
Gantly: “The rules are complete”
“We’ve been in a no-man’s land”
“I’m concerned with the degree of complexity here – eg package of authorisations”
Missed opportunities: definition of cooperative approaches difficult – more clarity would have been helpful
When will private entities using or cancelling credits be named?
“Inconsistencies found” reports might put the market on notice of troubled projects (boiling it down)
Goldstein: revocation risks dealt with somewhat — making projects more “financible” — remaining risks can be insured
Some certainty through 2028 may spur more buying/demand
Needs to be an outlook on who is going to buy the itmos in order to get financing
Second webinar
Venzon: Brazil approved domestic carbon market during COP29
Saudi Arabia launched carbon exchange; UK introduced tighter climate contribution
Vargas: Chile aligning its domestic policy with article 6 rules; signalled lack of definition of cooperative approaches might be problematic; might have to be addressed in 2028;
Chile is open/flexible on authorization; so it depends on the host country
Bruno Carvalho Arruda, Brazil: Decision driven by politics that meant 10 years was enough time to prepare; it’s never going to be perfect in multilateral negotiations
Transparency and usability of carbon credits/projects was balanced ….might take some time to see if the balance is right
Unclear whether 6.2 or 6.4 will become the most popular/efficient (boiling it down)
Flores: Difficult role for Azerbaijan as president; a petro state in a tricky geographical position; trying to get rid of acronyms;
DeMarco: There were 76 minutes between parties said article 6 decisions were dead and when they were gaveled through
Lack of definition of cooperative approach was seen as positive
Clarity on revocation somewhat good
Cooperative approach needs to be authorised by each country/parties to the deal in a 6.2 agreement
No clarity on whether the end user needs to be authorized? “That can be problematic from a market perspective” (CarrZee: deep sigh)
6.4: “Recommendations are dressed up to look like standards; it could become a pandoras box; we re going to have a lot of kinks in the first year; quite lot of power concentrated in the supervisory body.”
US made significant compromise to accept the hybrid registry system …re sanctions …trade
Malek Al-Chalabi, Shell: IETA analysis of benefits of carbon trading in cutting the costs of the climate transition was picked up in the media
(Adds note)
From Alessandro Vitelli, carbon reporter
[…] UN carbon market rule complexity from COP29 may slow its emergence as global commodity; standards se… […]