The main goal of COP26 is to operationalise Article 6 of the Paris Agreement. It is a complicated knot that shall still be untangled since the COP in Marrakech in 2016. Intended for market mechanisms, it is the only Article that still needs to be completed. The problematic aspects that need to be solved concern three crucial sub-sections: 6.2, 6.4, and 6.8.
To try and grasp where the technical difficulties occur, which preclude a quick and shared solution, I have sought help from an expert negotiator who has been specifically working on this Article for years. What I got back is a context that is unclear even for who negotiates, where identifying a common path seems very far away. However – the ways of the COP are unpredictable, and solutions are often reached when no one expects them. Considering all the declared difficulties, I hope for the sympathy of who reads for the inevitable accuracies that will follow. This attempt for clarity will inevitably require me to simplify the complexity of the positions at stake.
Let’s start with Article 6.2. For the sake of simplicity, I will identify it as the one dedicated to ET, or Emission Trading. Beware that we are not referring here to the EU ETS, the main tool developed by the European Commission that established the European market of CO2 allowances. Indeed, we are talking about the ET system envisaged by the Kyoto Protocol, but that has had a limited application in the past. The underlying logic is that country A (generally among the rich countries) can promote certain reduction initiatives in country B (developing country), receiving – in exchange for the economic support – the equivalent in reduction quotas, to be taken off from the national inventory of country A.
Article 6.4 can instead be assimilated to the logic of the CDM (Clean Development Mechanism) of the Kyoto Protocol. In other words, the realisation of specific reduction projects for GHG emissions. It isn’t clear whether this possibility is limited only to countries (A and B) or might be extended to privates. In any case, it will lead to the generation of emission credits used by the investing subject.
One may note a similarity between the two mechanisms; however, while the ET aims to arrange coordinated actions between countries A and B, CDM favours the free initiative of the proponent within a system of agreed rules.
When I ask the negotiator enlightenment on Article 6.8, I get back a shrug. “That on non-market approaches”, clarifies, “is an article wanted by Bolivia, but to be honest, many of us don’t even know what its particular purposes are”. I try to dig in the memory, and I remember that Bolivia, back in Paris, opposed market mechanisms for political reasons since it didn’t want the market to enter on an issue that concerns the whole planet. This memory brings me back to 2009 when, in a plenary in Copenhagen, then-President Morales accused capitalism of being the cause of climate change. On that same occasion, Venezuelan President Chavez declared that “if the climate were a bank, the United States would have already saved it”. The consequences of the 2008 global economic and financial crisis were still echoing back then. It was inevitable to note the truth contained in those speeches, not without bitterness. The same reason probably pushed the combative Bolivian Head of Delegation to strongly support the inclusion of the “non-market mechanism”. Nowadays, the problem is that the gap between understandable political reasons and practical implementation translates into the difficulty of operationalising this Article. So, for the moment, we’ll need to put any further consideration on pt. 6.8 on hold.
Having analysed the background of the stakes, let’s now see some of the positions that make this agreement even harder. We shall also consider that yesterday the first bilateral ministerial meeting among groups of countries began, so every single word could be old by the time it’s written.
A first point, objectionable to the most, is the logic of the double-counting promoted by Brazil. Let’s assume that A wants to promote a forest protection action for country B(razil). (It is, however, not clear yet if activities on forests, like REDD+, will enter in Article 6’s market mechanisms).
Brazil would want the CO2 reduction – in this case, the greater absorption of this gas from the atmosphere – to be accounted for in both national inventories of A and B. One does not need a particular inclination to mathematics to understand how the numbers don’t add up. For this reason, it is seen by most negotiators as too big of a bite.
Another critical point is the desire of transferring the credits acquired with the Kyoto Protocol mechanisms (e.g., CDM) into the new system. It is blatant how the old credits, added to the new ones, would inevitably lead to a surplus, thus already generating a market distortion.
There is also the issue of the economic value of the carbon market, focused by definition on mitigation, now turning towards adaptation interventions.
Lastly, there’s the issue of how many credits to “burn” (technically, annul or withdraw) in each transaction. The credit market balance would naturally be zero: every reduction action would potentially offset any higher emission. However, the mechanism would always reach a benefit in terms of emissions when, against the generation of 100 tonnes of emission credits, some of these certificates could be withdrawn, using a smaller number of these to offset certain GHG emissions. The annulled certificates would represent, in this case, the net benefit in terms of global emission reduction. For this reason, the representatives of the AOSIS group (Alliance of Small Island States), heavily impacted by climate change and the rising oceans, aim to raise this share up to 20%.
These are only some of the points discussed with a negotiator during a coffee break. Still, it's easy to imagine how much the situation would gain in complexity if we were to listen to hundreds of points of view from the experts called to find a solution for Article 6 – even if what we just saw is already enough to create sleep problems for many of us.
