Keeping the books on emission units
Accounting of emissions will be a cornerstone of a future climate treaty and is hugely important for the integrity of carbon markets as well as keeping us on track to limit global warming below 2°C. Lima will need to lay grounds for a rigorous accounting framework and robust unit quality requirements. It will also need to establish consistency to the ICAO process that is developing a global market based mechanism for aviation emissions.
Robust and comprehensive accounting rules are a prerequisite to track and account for units that are used to meet climate targets, avoid double counting and enable net atmospheric benefits.
A recent UNFCCC document on elements for a future climate treaty suggests that “cooperative arrangements” shall be established on the basis of the work conducted in the framework of the global carbon market discussions and that these arrangements shall create synergies between mechanisms, such as the existing and future carbon market mechanisms, a REDD-plus mechanism, the Financial Mechanism and the Technology Mechanism.
While there is a risk of allowing the carbon market accounting framework to also account for units generated through non-market approaches i.e. forest protection activities (REDD-plus), it is important to ensure consistency of standards used throughout the mechanisms of the Conventions. This consistency is also important for parallel processes that envisage the use of carbon markets from 2020, such as a global market based mechanism to reduce emissions from international aviation currently under development at the International Civil Aviation Council (ICAO). Double counting needs to be avoided not only for units counted towards the UN’s climate treaty but also towards reduction targets for international aviation and international maritime emissions.
Moreover, not just accounting but also quality criteria matter for internationally traded units. Lima will also discuss how established unit quality requirements to ensure that emission units are real, permanent, additional and verified will be implemented in a future global carbon market. There is a wealth of experience gained through the CDM and JI that must be taken into account when defining these rules, i.e. the need to establish a negative list to exclude certain technology types such as coal power projects for offset programmes.
The current decision texts talk about “mitigation outcomes” potentially opening doors to the inclusion of REDD-plus activities in a global carbon market. Given the inherent high risks such as leakage and impermanence, land use activities, forests and agriculture are not suitable for carbon markets, especially project-based offsetting. Alternative financing options exist and should be used.
11 Mar 2020
Carbon Market Watch input to public consultation on draft ETS state aid guidelines
17 Feb 2020
EU carbon market state aid rules moving in the right direction – but not far enough
28 Jan 2020