The good news from COP28: The failure to agree on Article 6 carbon markets
Everything else is bad news
The UAE Consensus that came out of COP28 should have been called the Dubai Disaster. There is neither a “phaseout” nor a “phase-down” of fossil fuels in the text. Instead, the text “calls on Parties to contribute” to “Transitioning away from fossil fuels in energy systems”.
The words “calls on” are important. It’s the weakest form of invitation or request in UN jargon, coming below encourages, strongly encourages, recommends, invites, urges, strongly urges, and requests (in reverse order of strength).
In any case, the text is full of loopholes and dangerous distractions. It refers to “unabated coal” which will encourage co-firing biomass with coal, and carbon offsets. Carbon capture and storage is in the text despite the cost, the failure to scale, the risks of leakage, and the energy required.
The text even encourages the use of “transitional fuels” - which include fossil gas. So the Dubai Disaster has managed to include fossil fuels in its proposed transitioning away from fossil fuels.
Climate scientist Kevin Anderson sums up perfectly what’s wrong with the failure of COP28:
The climate challenge we face today is 40 billion tonnes of carbon dioxide harder than it was last year, and around one third of a trillion tonnes more difficult than at the time of the Paris Agreement. COP28 might well have been appropriate if it had taken place in 2000, but in 2023 it falls far short of our Paris temperature and equity commitments. The time for polish, rhetoric and applause is long gone. We face a climate emergency that the COP process appears simply unwilling or unable to address.
No agreement on carbon markets
Article 6 is the carbon trading loophole in the Paris Agreement. There are two paragraphs in Article 6 that relate to carbon trading:
Article 6.2 allows governments to trade carbon credits bilaterally. The carbon credits are called Internationally Transferred Mitigation Outcomes (ITMOs) under the UN system.
Article 6.4 will set up a global carbon market to replace the complete disaster that was the Clean Development Mechanism. The new carbon market will be run by the Article 6.4 Supervisory Body. Projects will have to be approved by the government of the country where the project takes place as well as by the Supervisory Body.
As Carbon Market Watch notes, “the fact that they reached no deal was better than agreeing to a bad one that would torpedo the Paris Agreement”.
Of course an acknowledgement that carbon trading is a dangerous distraction from the need to leave fossil fuels in the ground would have been even better.
Article 6.2
At COP28, three main items were on the agenda relating to Article 6.2:
how the carbon credits would be certified;
an international registry, including possible links between Article 6.2 and 6.4 registries; and
how carbon trading transactions are reported, including what information is made public.
The problem in Dubai was that many governments, including the US, were pushing for the regulation of carbon trading to be determined by the governments involved in the bilateral carbon deals. The EU, the Independent Association of Latin America and the Caribbean, and the Alliance of Small Island States argued for guidelines and safeguards.
Negotiators failed to agree on what governments would be required to report about the carbon deals they make under Article 6.2. The final draft of the text would allow governments to make the entire carbon trading arrangement completely confidential.
Had the final draft been agreed, there would be no way of ever finding out the details of the carbon deals that governments have signed. The details of the deals that several countries have signed with the United Arab Emirates’ company Blue Carbon LLC, for example, could remain hidden forever.
The same would apply for any deal to trade ITMOs under Article 6.2.
Several governments, including Switzerland, Japan, and Singapore have already signed a series of Article 6.2 deals with other governments to trade ITMOs. These countries are taking the risk that the carbon deals they sign may not comply with the yet to be finalised Article 6 rules.
And a deal between Switzerland and Thailand that replaces diesel buses with electric buses in Bangkok is already coming in for criticism.
A study by Alliance Sud and Fastenaktion found that the investment in electric buses would have taken place by 2030 even without the offsetting project. The Bangkok project is yet another dodgy carbon offsetting project that is being implemented by carbon consulting firm South Pole.
Article 6.4
The Article 6.4 Supervisory Body hoped to get approval on guidance on methodologies and on carbon removals in Dubai. But, as with Article 6.2, some governments wanted to water down the methodological guidance while others were worried that the safeguards were inadequate, and that the text on removals was weak.
The disagreements started early in the Dubai meeting. On 6 December 2023, S&P Global reported that progress on adoption of Article 6 was “shaky” with governments disagreeing on the definition of removal credits and on the methodologies to be adopted.
The discussion on carbon removals is very relevant to REDD. So-called nature-based “solutions” do not lead to permanent removal of greenhouse gases from the atmosphere. As the climate crisis gets worse forests and other ecosystems are increasingly at risk of going up in smoke.
No space for offsets
A response to the Dubai Disaster from CLARA (the Climate Land Ambition and Rights Alliance) includes the following comment from Kelly Stone of ActionAid USA:
“There is no space for offsets if we want to meet the Paris Agreement goals. These market negotiations keep breaking down because market mechanisms don’t work. We’ve had decades of experience now with how market mechanisms not only fail in their climate commitments but do real harm to communities. The text that was negotiated was absolutely unacceptable, and would have allowed these market mechanisms to go forward with minimal transparency and without key safeguards for communities. It’s better to delay than accept bad rules. It would be best if parties rethought their approach to markets entirely.”
Not sure I agree that no decision on 6.2 is good news. Those who wanted "light touch" regulation under 6.2 were in favor of adding no additional language, which is exactly the outcome they achieved. 6.2 is viewed as being operational and countries are enacting bi-lateral arrangements "under the guise of 6.2". Maybe you could argue that an agreement to add no additional text would have been worse than no new text, but not clear that we will get a different outcome. Given the inability of the CMA to make any decisions on 6.2 or 6.4, the VCM ecosystem believes it has the green light for business-as-usual. They are celebrating the collaboration amongst the major standard setters, and between the various 'regulatory' initiatives (VCMI, ICVCM, SBTi, CDP .....). Additionally they are pointing to comments made by John Kerry and others fully supporting the VCM. Like it or not, we have not seen the last of carbon credits and carbon offsetting.
The COP trade shows are meaningless,
"Since the climate negotiations began in 1992 more carbon dioxide from burning fossil fuels has been released worldwide than in all preceding human history."
https://www.monbiot.com/2023/12/13/baked-in/