The world’s climate negotiators recently concluded two weeks of discussions about the next steps for the landmark 2015 Paris Agreement, with carbon market rules high on the agenda.
The annual mid-year climate negotiations are generally held ahead of the annual Conference of the Parties (COP), the top decision-making body for climate negotiations.
The recent COP24, in Katowice, Poland, was heralded by many as a success in multilateralism and diplomacy. It adopted an almost complete set of rules and guidelines supporting implementation of the Paris Agreement. However, the parties did not ultimately reach a consensus on one specific area: the rules for using carbon markets.
These rules are known in the climate jargon as the “Article 6 rules”, after the Paris Agreement article that mandates them. After the inconclusive talks at COP24, negotiators were tasked to come up with a new proposal for the Article 6 rules that could be adopted at the next COP25, in Santiago, Chile, later this year.
At the recent meeting in Bonn, which concluded last week, countries made good progress on technical discussions and came up with a new negotiating text. But disagreements remain about the status of the text and how to take it forwards. This means that there is everything to play for as we move towards COP25.
Here are some key points for understanding why carbon markets matter so much under the Paris Agreement and what the bottlenecks are in the negotiations.
What is Article 6 of the Paris Agreement?
Carbon markets are aimed at lowering the cost of reducing greenhouse gases emissions. Expanding and linking those markets internationally can help further drive down the cost of achieving emission reduction targets, helping to stimulate the needed investments for clean energy transitions.
By agreeing to Article 6 of the Paris Agreement, countries opened the way for a new form of international interaction on carbon markets. Article 6 builds on a long history of market approaches under the Kyoto Protocol, the Paris Agreement’s predecessor.
Article 6 is intended to support countries in enhancing the ambitions of their stated climate actions, known as Nationally Determined Contributions (NDCs), which collectively contribute to the overarching goal of the Paris Agreement: keeping the rise in global average temperatures to well below 2 degrees Celsius and to pursue efforts to limit the temperature increase to 1.5 degrees Celsius. However, the nature of carbon markets means that robust rules are important to ensure that environmental and sustainable development gains are realised. Article 6 introduces two voluntary market-based paths for international co-operation.
Article 6.2 sets out the principles for voluntary co-operative approaches. One country can transfer so-called “internationally transferred mitigation outcomes” (ITMOs) to another country, which can then use them towards its NDC target. These transfers must apply robust and transparent accounting rules to avoid double counting of ITMOs and to ensure environmental integrity. The transfers can take place using various approaches and mechanisms, such as bilateral cooperation programmes between countries, or national or regional emission trading schemes (ETS).
Article 6.4 establishes a mechanism to contribute to the mitigation of greenhouse gas emissions and support sustainable development, under the oversight of a central UN governance body. Public and private entities can participate in this mechanism if authorised by a country. While the main intention is that emissions reductions from the mechanism will count towards achievement of countries’ NDCs, the mechanism could also be used in other ways. For example, airlines could use credits from the mechanism to comply with the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) of the International Civil Aviation Organization (ICAO). Other companies could use them to count towards carbon neutrality. However, double counting of these emission reductions must be avoided.
Despite the lack of a formal outcome on Article 6 at the recent negotiations in Bonn, countries made substantial progress and had constructive discussions. Differences remain on several issues ahead of COP25, though. For instance, countries have not yet agreed on an accounting system to avoid double counting and other elements needed to prevent potential environmental integrity risks.
How is the IEA contributing?
The IEA is contributing to the discussions on Article 6 – as well as to the negotiations more broadly – through technical analysis by the joint OECD-IEA Climate Change Expert Group (CCXG). For more than 25 years, the CCXG has been developing and publishing technical papers in consultation with a wide range of countries to inform ongoing climate negotiations.
Through the CCXG, the IEA recently co-published a technical paper that analyses two specific unresolved issues in the negotiations of rules for Article 6 of the Paris Agreement: the accounting system of Article 6.2, and the implications of a potential transition of Kyoto Protocol mechanisms to the Article 6.4 mechanism. The outcomes of the paper were presented at a side event during the Bonn conference and directly informed the negotiations.
The CCXG also convenes two major events per year to promote dialogue among government delegates and experts from developed and developing economies, outside of the formal negotiations. Discussions stretch well beyond carbon markets, also covering the transparency framework of the Paris Agreement and climate finance issues, among others. The next edition of these invitation-only Global Forums on the Environment and Climate Change will be held at the IEA headquarters in Paris on 1-2 October. In addition, the IEA is ramping up its efforts to support countries in implementing and enhancing their NDCs.
Thirty years on, what is the Montreal Protocol doing to protect the ozone?
The Montreal Protocol to protect the Earth’s ozone layer is to date the only United Nations environmental agreement to be ratified by every country in the world. It is also one of the most successful. With the parties to the Protocol having phased out 98 per cent of their ozone-depleting substances, they saved an estimated two million people from skin cancer every year.
Following the thirty-first meeting of the parties in Rome during 4–8 November, Stephanie Haysmith, the communications officer for the Ozone Secretariat, explained why the Montreal Protocol has been so successful and what lies ahead for the treaty.
The 2019 ozone hole is the smallest on record since its discovery. How does the ozone repair and how long will it take?
The Montreal Protocol has been successful in reducing ozone-depleting substances and reactive chlorine and bromine in the stratosphere. As a result, the ozone layer is showing the first signs of recovery. It is expected that the ozone layer will return to pre-1980s levels by the middle of the century and the Antarctic ozone hole by around 2060s. This is because once released, ozone-depleting substances stay in the atmosphere for many years and continue to cause damage. The 2019 hole is indeed the smallest since recording of its size began in 1982 but the ozone is also influenced by temperature shifts and dynamics in the atmosphere through climate change. In 2019, the stratosphere was particularly warm during the Antarctic winter and spring.
The Kigali Amendment, which came into force January 2019, requires countries to limit hydrofluorocarbons in refrigerators and air-conditioners by more than 80 percent. Yet, there is a growing demand for cooling. How can the two needs be met?
While there is a growing global demand for cooling systems for personal well-being and in the commercial sector, improving energy efficiency with low or zero global-warming-potential will be needed to meet needs while minimizing adverse impacts on climate and environment. Research and development have kept pace: equipment design has changed and improved with the ozone-depleting substances phase-out.
At the Rome meeting, parties were made aware of an unexpected increase in global emissions of trichlorofluoromethane, or CFC-11. Why is that, and what is being planned to address it?
The issue of unexpected emissions of CFC-11 was brought to the attention of the parties in 2018. Global emissions of CFC-11 had increased in the period after 2012. This unexpected trend suggests that there is illegal production and consumption of CFC-11. The exact sources of these emissions have yet to be found. The parties take this very seriously and a decision was made at the MOP30 [30th Meeting of the Parties to the Montreal Protocol] to cooperate in further scientific research. In addition, the parties will assess the mechanisms of monitoring for the Montreal Protocol and the Multilateral Fund.
What is meant by “a sustainable cold chain” and how does it reduce food loss?
A cold chain is a connected set of temperature-controlled facilities (pack houses, cold stores, refrigerated transportation, etc.) that ensures perishable foods maintain their freshness and quality while in transit. Access to cold chain allows local producers to link with high-value markets locally, nationally and internationally. By enabling perishable food commodities to be stored and transported in a temperature-controlled environment not only ensures quality and safety, but reduces overall food loss, while improving economic gains and increasing sustainability.
From an environmental perspective, it is important that increasing demand for cold chain is sustainable with increased use of green fuels, energy efficiency and low or zero global warming potential technologies.
What do you hope the Montreal Protocol will inspire?
The Montreal Protocol is one of the world’s most successful environmental treaties and since its adoption, it has encouraged countries to commit to phasing out the production and consumption of ozone-depleting substances. The parties to the Protocol, on realizing that the alternatives, known as hydrofluorocarbons, are potent greenhouse gases contributing to global warming, agreed to address this. After protracted discussions, in 2016 the parties adopted the Kigali Amendment. The global partnership, stakeholder involvement and overall commitment of the countries lent to the success of the ozone protection regime. A successful hydrofluorocarbon phasedown is expected to avoid up to 0.4°C of global temperature rise by 2100, while continuing to protect the ozone layer.
Consequences of U.S. formal exit from Paris climate pact: More isolation globally
The U.S. has formally begun to exit the Paris climate agreement. Regardless of whether or not the Paris Agreement is legally binding, the U.S. has committed to cut 26-28% of its greenhouse gas emissions by 2025 from 2005 levels, and donate three billion dollars to poor countries by 2020.
The U.S. is now the world’s second-largest emitter of greenhouse gases after China. In other words, U.S. greenhouse gas emissions in 2015 were about 7000 million metric tones, which is more than total emissions of the entire EU countries. However, the U.S. president claimed that he has decided to pull his country out of the Paris climate pact because his job is to “protect America and its citizens”.
Commenting on the reason for withdrawing from the agreement, the U.S. president said that the pact is favorable for other countries not the United States, because it puts the country at a very big economic disadvantage. Trump also presented statistics showing that implementation of the agreement for the U.S. will result in losing 2.7 million job opportunities by 2025 as well as 440,000 industrial opportunities inside the country. The president added that this is not what the U.S. needed. This issue is not acceptable to Trump that China can continue to emit greenhouse gas for another 13 years, and India is able to continue its greenhouse gas emissions till 2020, while receiving billions of dollars.
The U.S. president also complains that his country has already donated about one billion dollar to Green Climate Fund, which is founded to help developing countries, while no other country has spent such a large sum in this field.
Trump, despite his decision to exit the Paris Agreement, has announced that he is ready to “begin negotiations to reenter either the Paris Accord or a really entirely new transaction on terms that are fair to the United States, its businesses, its workers, its people, its taxpayers”. He also said that if they reach an accord, that will be great and if they do not, that will be fine.
Consequences of U.S. withdrawal
It should be noted that the withdrawal from the Paris climate accord by the U.S. is not its first unconventional action toward valid international documents. After coming to the White House, in one of his first moves, Trump ordered to pull the country out of the Trans-Pacific Partnership (TPP) that was signed in 2016. The TPP is the greatest trade agreement in the world, which was signed between 12 countries around the Pacific Ocean with the exception of China, and aimed to remove trade barriers to the countries that signed the agreement.
However, the Paris Agreement is of particular importance for the current generation and the world’s future in terms of environmental and international rights. Obviously, legal and political consequences of the Paris accord is more serious than those of the TPP. The following is the summary of the effects of the U.S. withdrawal from the Paris climate pact:
1. U.S. political and legal isolation: the U.S. will be seriously isolated if it withdraws from the Paris accord, because besides Europeans, countries like Canada, Russia, and Asian countries such as China and Japan have signed the agreement. German Chancellor Angela Merkel and the Chinese president reaffirmed that they will be committed to the pact even after the U.S. withdrawal.
Jean-Claude Juncker, the president of the European Commission, at a meeting in Berlin, described the U.S. withdrawal as a completely wrong move. Juncker said that the U.S. cannot exit the agreement just like that. He added that Trump says he will exit the Paris climate pact because he is not well aware of this pact. This is while, he said, in 2015, about 200 countries signed an accord in 2015 in Paris, based on which they were committed to keep the increase in global average temperature to well below 2 °C to prevent global warming.
2. Lack of states’ trust on the U.S. to reach an agreement on other issues: this move by Trump shows the U.S. non-compliance with international agreements that could disturb its prestige and position in the world. The move also will cause other Western partners, especially Europeans, lose their trust of the United States. Following the U.S. withdrawal from the agreement, other countries will hesitate to cooperate and sign contract with the White House on other issues.
3. Distrust of environmental rights: one of the important issues in legal subjects is environmental right, which is being taken into account at national and international level. The U.S. withdrawal from the pact means disregard to international documents related to environmental rights. This approach can be a serious threat to plans to control global warming. Furthermore, the approach indicates that the world’s second largest polluter does not pay much attention to environmental protection, which has been one of most important challenges for environmental rights in recent decades.
From our partner Tehran Times
Climate Risks: Wildfires, Glacier Melt, Coastal Flooding … A Beautiful Antelope
California wildfires are again in the news as the Kincade Fire now raging risks 50,000 people, who have been evacuated. It might come as a surprise but there have been 41,074 wildfires compared to 47,853 in 2018 for the first nine months of the year. Blame the downslope Santa Ana winds for fanning them. Fires can occur naturally through lightning strikes but these days some 90 percent are due to human carelessness: discarded cigarettes, unquenched campfires and the like, all exacerbated by a warming climate. Killing 85 people, the deadliest wildfire in the state’s history seemed to have been caused by Pacific Gas and Electric power lines (although it is still under investigation), and they are suspected in the present Kincade Fire. Wildfires do clear brush — 4.4 million acres burned off this year — ensuring a worse fire will not occur in the future.
As can be expected, such fires also place property at risk. California, Texas and Colorado have the highest numbers of properties at risk, while Montana and Idaho are tops in percentage terms; in Montana 29 percent and in Idaho 26 percent of properties are in the danger zone.
If the west is prone to wildfires, the east has an opposite problem: flooding. Sea levels are rising. The Greenland ice sheet holding enough water to raise the water line by 7 meters is melting. Scientists estimate two-thirds of the ice loss is due to glacier calving as chunks of ice detach from the 300 odd outlet glaciers that end in the fjords. As reported in Science magazine recently, (October 11, 2019), Helheim, a major glacier responsible for 4 percent of Greenland’s annual ice loss is being observed by a team headed by Fiamma Straneo of the Scripps Institution.
In severe retreat since 2014, the glacier has reduced “by more than 100 meters, leaving a tell-tale ring on the rock around the fjord.” This summer its water temperature is 0.2C above the previous high in a relentless rise. Also the data collected will improve mathematical modeling to predict future consequences.
Coastal flooding on the East Coast has been noted by the New York Times (October 8, 2019) in a feature article, As Sea Levels Rise, So Do Ghost Forests. Trees in coastal areas are dying off due to frequent total incursions of saltwater.
An excellent estimate of coastal flooding on the East and Gulf coasts, Encroaching Tides, was prepared by the Union of Concerned Scientists a few years ago. Sober reading, it forecasts coastal innundation over the next three decades. It talks about adaptation to the new norms, the responsibility of Municipalities, States and the Federal Government, sea walls, economic consequences, and a retreat from heavily impacted areas. Is anybody listening, and when they called for reducing emissions was the US listening?
When more than 190 countries signed up to almost all of the rulebook buttressing the 2015 Paris Agreement, it made the 24th International Climate Conference in Katowice, Poland (Dec 2018) a major success. This December the 25th International Climate Conference will convene in Santiago, Chile. A primary issue before it is how to avoid double counting i.e. counting the same emission reduction more than once. Countries have so far failed to reach common ground on how to avoid it despite the threat to carbon markets underpinning the Paris Agreement. Is bashing heads together in Santiago one answer?
Meanwhile on the top of the world, inhabiting the Tibet plateau, the beautiful and majestic chiru or Tibetan antelope, once in trouble from excessive poaching and then recovering, is at risk again. This time it is due to climate change. It has caused excessive melt and a burst natural dam that used to surround Lake Zonag right beside their calving site.
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