Carbon Market Watch

For fair and effective climate protection.

Market negotiations make little progress in Bonn

18 Jul 2017

Despite the political uncertainties around US’ participation in the Paris Agreement, technical negotiations on how to implement the climate deal, including through carbon markets, continued at the UN Climate Conference last May. While delegations stressed continued commitment to the Paris Agreement, little progress was made on the Article 6.

Disagreements over the role of forests and multilateral oversight

Longstanding divides persist between negotiating blocks. The Umbrella Group of countries including New Zealand, Japan, Canada, and the US continue to resist multilateral rules and oversight, especially for cooperative approaches under Article 6.2. Others cite risks to environmental integrity and call for more oversight and a more centralized system.

Other disagreements loom over the role of REDD (reducing emissions from deforestation and forest degradation), and the relation of cooperative approaches, the Sustainable Development Mechanism, and non-markets to each other and to other parts of the Paris Agreement.

To the dismay of NGOs, the negotiations on the Paris Agreement’s market mechanisms -as part of Article 6- were held behind closed doors without any public concrete outcome.

Well into the second week, negotiators compiled a list of issue headings which could serve as the basis for submissions, but which some were adamant to make sure have no official standing. Article 6 discussions will start again with a new round of submissions, and another roundtable at COP23 in November.

Aviation offsetting scheme adds urgency on robust accounting rules

It is unclear to how accounting for transfers can be done accurately given the diversity of national climate pledges and the ongoing discussions on features of these pledges.

Some negotiators have started to question if rules for markets will, can, or must progress at the same time as other issues to be finalized and adopted at the climate conference COP 24 in 2018. Clarity, transparency, and understanding of NDCs – or in other words – what countries’ have actually promised are likely a prerequisite.

At the same time, rules for the aviation sector’s future offsetting scheme CORSIA and its implementation are on a similar timeline. If CORSIA is to have any clear climate benefit, global accounting rules must be harmonised on time before the scheme enters into force in 2021.

Clean Development Mechanism review important to set precedent for the new UN climate tool

Parties also continued with another round of talks on the review of the modalities and procedures of the Clean Development Mechanism (CDM). While they agree that they should wrap up the process, they can’t agree on how.

Many want to only include the issues they made progress on – namely the role of Designated National Authorities (DNAs) and Programmes of Activities (PoAs). But Saint Lucia on behalf of the Alliance of Small Island States (AOSIS) and the EU are adamant that unresolved issues such as double counting, net mitigation, environmental integrity and the need for a grievance mechanism are reflected in any final document.

The review is important because the experience with the CDM is likely to influence  how the future sustainable development mechanism (SDM) under Article 6.4 of the Paris Agreement functions and is run.

However, because of the absence of agreement and with very little willingness to compromise, the review will continue at the next Conference of the Parties in November 2017 in Bonn.

By Aki Kachi – International policy director Carbon Market Watch Logo - JPG - Copy30


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