Stockholm (NordSIP) – On November 12th at the COP29, UN Climate Change Executive Secretary Simon Stiell (Pictured) announced that the parties to the conference had “agreed [to] strong standards for a centralised carbon market under the UN” as per Article 6.4 of the 2015 Paris Agreement. Reactions were split. While some were encouraged by the promptness of the decision and the clarity it brings, others criticised the lack of debate that facilitated such a quick decision.
Setting Up the Paris Agreement’s Crediting Mechanism
The announcement has been in the works for some time. “Last month we hosted a meeting of the supervisory body for Article 6.4 in Baku. At that meeting, standards were proposed for how international carbon crediting projects will work. We built support for these standards at Pre-COP and worked intensively to lay the foundations for early endorsement. Yesterday, Parties reached consensus on the standards for Article 6.4 and a dynamic mechanism to update them. This is a critical step towards concluding Article 6 negotiations. This will be a game-changing tool to direct resources to the developing world and help us save up to 250 billion dollars a year when implementing our climate plans. We are grateful to all Parties who have come to COP29 ready to show flexibility, collaborate, and reach agreement,” Yalchin Rafiyev, COP29 Lead Negotiator said.
The deal was struck under the purview of Article 6 of the 2015 Paris Agreement, which “sets out how countries can pursue voluntary cooperation to reach their climate targets. It enables international cooperation to tackle climate change and unlock financial support for developing countries. This means that, under Article 6, countries are able to transfer carbon credits earned from the reduction of greenhouse gas emissions to help one or more countries meet their climate targets.”
The announcement refers specifically to Article 6.4 of the Paris Agreement, which establishes a new international carbon crediting mechanism (the Paris Agreement Crediting Mechanism), equipped with a “Supervisory Body tasked with developing and supervising the requirements and processes needed to operationalize the mechanism. This includes developing and/or approving methodologies, registering activities, accrediting third-party verification bodies, and managing the Article 6.4 Registry.”
“When operational, these carbon markets will help countries implement their climate plans faster and cheaper, driving down emissions. We are a long way from halving emissions this decade but wins on carbon markets here at COP29 will help us get back in that race,” Stiell added.
The Article 6 Mechanism
Although the mechanism of Article 6 was agreed in 2015, its implementation has been hindered by slow negotiations underscoring the different preferences of the parties to the Paris Agreement as well as the technicalities involved. While some countries have wanted a strict and centralised approach that mitigates the risk of double counting, others would have preferred a more flexible approach.
Technically, the Nationally Determined Contributions (NDCs) to carbon emission reductions at the heart of this matter are also complicated by the fact that different countries’ plans are scheduled around different time-lines. So far, negotiations have struggled to provide solutions for cases such as how to account for CO2 reduction trading from a country with a 5-year plan and another with a 10-year plan, for example. Stiell’s comments at the start of COP29, suggest that the parties may have overcome some of these hurdles this week.
“There’s more work to do, but this is a good start – the product of over 10 years of work within the process. (…)Our process is strong, it’s robust, and it will endure. After all, global cooperation is the only way humanity survives global warming. It’s only through that engagement, only through that cooperation that we’re going to get through this crisis. Our process is delivering concrete results, even though they are not quick enough and [do] need to accelerate,” Stiell argued.
Process Matters
Despite appearing to be a positive development, the announcement was not welcomed with open arms due to the manner in which the decision was taken, particularly how fast. “Today, States allowed this rogue move from the Supervisory Body to prevail in the quest to start COP29 with a ‘win.’ But this is hardly a win for people or the planet. Approving these carbon market rules without discussion or debate, sets a dangerous precedent for the entire negotiation process,” says Erika Lennon, Senior Attorney at the Center for International Environmental Law (CIEL).
“This is very concerning from a procedural standpoint: it bypasses States’ ability to even discuss, much less revise the standards before they go into effect. States’ oversight is all the more critical as the Supervisory Body’s efforts to get this done has resulted in risky rules that will lead to human rights violations and environmental harm,” Lennon continues.
“We endorse what they have done, not the way they have done it,” Kevin Conrad, executive director for the Coalition for Rainforest Nations and former climate envoy for Papua New Guinea, was quoted by Reuters.
Nevertheless, some did embrace the COP29 announcement, not least the International Emissions Trading Association (IETA), an industry NGO. “IETA applauds the CMA’s adoption today of the report of the Article 6.4 Supervisory Body, including its decisions to operationalise standards for methodologies and for carbon removals. This COP has a declared focus on finance, and the unlocking of billions in climate finance directed towards those countries that need it the most can only be welcomed. IETA issued the following statement after the opening plenary of the CMA meeting in Baku adopted the report of the Article 6.4 Supervisory Body on November 11,” IETA argued in a press release.
“The new standards will give market participants the certainty they need to proceed to develop projects around the world that will generate millions of tonnes of mitigation outcomes that put the world on a path towards meeting its goal to keep global temperature increases to below 1.5 degrees Celsius.
The Way Forward
This is not the last word on the new Supervisory body. “The COP president made it clear this evening that this decision does not mean that the work on Article 6.4 has finished, and that Parties should continue to develop further guidance to help the mechanism develop further. We look forward to the discussions to come in the next two weeks,” IETA notes.
“While States won’t be able to undo this move, they can still partially correct the wrong by giving strong guidance to the Supervisory Body that ensures further rules are adopted in line with science, human rights, and international law,” CIEL’s Lennon argues.
