Paris Agreement: Article 6, a COP26 sucess story or another loophole for polluters?
“Boris Johnson launch of COP26” by UK Prime Minister is licensed under CC BY-NC-ND 2.0
Writen by Bozhidar Tsvetkov, MScCCAFS student – affiliated with the Ryan Institute at NUI Galway.
For the past 6 years since the creation of the Paris climate agreement one issue that has prevented the finalisation of the guidelines for the full implementation of the agreement was article 6 relating to Carbon Markets. Their is no current consensus on the efficacy or potency of Carbon trading in meeting global CO2 reductions currently. Some argue they only provide a means for polluters to continue pumping CO2 into the atmosphere and that carbon credits over value the actual net benefit provided to curbing emissions of certain projects. Others think Carbon markets are a crucial part of the puzzle to mobilizing countries to make an effort to reduce their GHG emissions and meet their NDC’s (Nationally Determined Contributions). Whatever way you view carbon trading the finalization of Article 6 at COP26 has put the stamp of approval on the Paris Climate Agreement guidebook and should add clarity and certainty to future negotiations and processes.
At Cop26 the major deadlock was around 4 major issues. These were avoiding double counting, ensuring actual overall mitigation of emissions, support of the adaptation fund for developing countries and the transfer of credits acquired from the Kyoto Protocol.
Double counting is the process where one country can acheive its mititgation targets for emissions and then sell those credits named (internationally traded mitigation outcome) ITMO to another country. However instead of only 1 country claiming the reductions as should be the case, both the receiving and providing countries apply the ITMO to their own NDC’s. The framework has now been agreed to prevent this from happening and ensuring transparecny and accountability for trading carbon credits. The other outcome was that previous credits named “Certified Emissions Reductions” under the Kyoto Protocol will be recognised by the Paris Agreemenet NDC’s. This is not a particularly ambitious outcome of high reductions but it allows developing countries to continue receiving finance from these past credits (Acharya, 2021).
Going forward it remains to be seen how the development of carbon markets will play out under these now finalized guidelines. Other reporters such as (Favasuli, 2021)(Temple, 2021) see the potential for a two tier system to become the norm. Countries might want to have their cake and eat it, the UN has no official ruling on voluntary markets and how private companies deal in the carbon trading business. This has the potential for countries and the private sector companies in that country working together where the companies can trade their credits for financial returns while the countries own generated credits can be held towards contributions for its NDC’s. This has the potential to undermine the double counting prevention mechanisms and undermining the credibility of the whole thing. The hope is the body tasked with oversight of the implementation of Article 6 will monitor and make revisions to the guidlines as necessary to prevent repetition of previous mistakes and loopholes.
References
Acharya, M., 2021. COP26: Where do Carbon Markets Stand After Glasgow?. [online] The Wire. Available at: <https://thewire.in/economy/cop-26-where-do-carbon-markets-stand-after-glasgow> [Accessed 25 November 2021].
Favasuli, S., 2021. Paris accord Article 6 approval set to jump-start evolution of voluntary carbon market. [online] Spglobal.com. Available at: <https://www.spglobal.com/platts/en/market-insights/latest-news/energy-transition/111721-paris-accord-article-6-approval-set-to-jump-start-evolution-of-voluntary-carbon-market> [Accessed 25 November 2021].
Kizzier, K., Levin, K. and Rambharos, M., 2021. What You Need to Know About Article 6 of the Paris Agreement. [online] World Resources Institute. Available at: <https://www.wri.org/insights/what-you-need-know-about-article-6-paris-agreement> [Accessed 25 November 2021].
Saier, A., 2021. [online] Unfccc.int. Available at: <https://unfccc.int/news/cop26-reaches-consensus-on-key-actions-to-address-climate-change> [Accessed 25 November 2021].
Temple, J., 2021. How a new global carbon market could exaggerate climate progress. [online] MIT Technology Review. Available at: <https://www.technologyreview.com/2021/11/24/1040568/how-a-new-global-carbon-market-could-exaggerate-climate-progress/> [Accessed 25 November 2021].
Unfccc.int. 2021. [online] Available at: <https://unfccc.int/news/4-key-achievements-of-cop26> [Accessed 25 November 2021].