Wednesday, 09 October 2024.
COP 29 is staring next November 11.
From Carbon Credit Markets’ perspective, here is one key topic on the radar: Article 6.
The current status is well summarized at the introduction of one press release from IETA, The International Emissions Trading Association. It indicates:
“Following the failure to adopt decisions on Article 6 of the Paris Agreement at COP28 in Dubai, the 60th session of the UNFCCC Subsidiary Bodies in Bonn (3-13 June) saw a new, reinvigorated spirit of compromise between countries.”
In fact, there were some positive developments at COP 28, such as agreements on issues relating to emission avoidance, treatment of confidential information and common nomenclatures.
And even yesterday we saw UNFCCC strengthening the Paris Agreement Crediting Mechanism through new environmental and human rights safeguards and with the mandatory use of a new tool.
But there are still key outstanding issues, highlighted in the same press release from IETA:
Authorisations. While some countries are advocating for it to be their national prerogative and allowing for revocation even after the transfer or use of ITMOs (Internationally Transfered Mitigation Outcomes), other countries are concerned with the significant risks for the whole market this prerogative represents, not only commercially but in relation to environmental integrity matters.
Registries. The interconnection between the national (host country) registries and the international registry set up by the UNFCCC for the ITMOs remains a critical issue. While not all countries have enough resources or appetite to develop their own registries, other simply don’t accept an international one.
Sequencing of Reporting and Reviews, and Addressing Inconsistencies. A timing issue still without consensus. Can a country transact ITMOs before the conclusion of the technical expert review (TER) for a cooperative approach? Eventually, how would any significant inconsistencies be addressed? Lack of clarity may affect project development and dampen investors’ willingness to finance Article 6 projects.
As we said yesterday, it is clear that the involved teams are working hard to have Article 6 deadlocks superseded, towards reaching consensus in Baku, in about one month. Hopefully.
IETA’S press release ends with the following alert:
“Whilst Article 6.2 is already operational and a growing number of countries are engaging in cooperative approaches, we cannot have another failure to finalise guidance in Baku and risk nullifying ongoing implementation efforts. We fear such a prospect may result in market participants starting to lose trust in Article 6, therefore failing to generate the extent of climate funding needed to meet the Paris Agreement goals.”
Click at the image below for the press release itself.
