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COP25: No deal on UN carbon markets as a number of countries reject loopholes

MADRID 15 DECEMBER 2019 Governments at the UN climate talks (COP 25) postponed decisions on future carbon market rules after no agreement was reached on the most contentious issues such as the fate of old credits and measures to avoid double-counting. Carbon Market Watch commends countries who defended strong carbon market rules and calls on governments to ensure carbon markets increase climate action, not undermine it.

The marathon talks that lasted well into Sunday, saw progressive, vulnerable countries excluded from key negotiating rooms in the final hours of the talks as big polluters and emerging economies discussed the carry-over of old Kyoto credits into the Paris Agreement. Several countries such as Brazil and Australia were promoting measures which would have allowed them to use old carbon credits to meet their new climate targets. Furthermore, Brazil continued to promote accounting loopholes which would allow countries to double-count their emission reductions. 

This was unacceptable for a majority of countries which held their ground and refused to establish carbon markets which would have undermined efforts to stop the climate crisis.

Sam Van den plas, policy director at Carbon Market Watch said

People all over the world are asking for urgent action and several countries only offered accounting tricks and cover for climate inaction. These loopholes are nothing but a way of cheating the climate and betraying the people. What was on the table here could have been a real disaster for the Paris Agreement. We need carbon markets to increase climate action, not undermine it, to protect the environment and to uphold human rights and benefit local communities.

Future carbon market negotiations will need to deliver robust rules:

Only new emission reductions after 2020

Allowing countries or companies to use old, junk Kyoto Protocol units to meet their climate targets would further weaken the already insufficient national climate pledges. This must be avoided by banning old units from entering the Paris Agreement. 

Gilles Dufrasne, policy officer at Carbon Market Watch said:

“Currently, carbon markets risk creating massive loopholes to reach climate targets on paper without actually reducing emissions, it’s cheating. Certain countries want to exploit the past to cheat the future when what we need is real action to match the scale of the climate emergency.” 

Sustainable development at the core of climate action

Human rights references have been removed from the Article 6 text and they must be reinserted. The Clean Development Mechanism (CDM) lacks basic social and environmental safeguards and has led to human rights violations as well as environmental destruction. It is crucial that we learn from these past mistakes and adopt proper safeguards.

All climate projects must drive sustainable development, benefit local communities, including indigenous communities, and reduce emissions. Affected communities must be involved in the decision-making process and be given access to an independent grievance mechanism. 

Gilles Dufrasne:

No climate policy can be allowed to infringe on human rights and it is paramount that human rights-based safeguards are put back into the carbon market rules. We will not accept that human rights and the rights of indigenous peoples are violated under the pretext of climate action.”  

Strong rules to avoid double-counting of emission reductions

There is a significant risk that under the new carbon markets, a single tonne of CO2 reduced will be counted towards multiple climate commitments. This would water down efforts to stop the climate crisis.

It is imperative to ensure that emission reductions are correctly tracked and reported. Countries must correct their final emission levels if they have sold emission reductions to another country or company. This correction is called “applying corresponding adjustments”.

Gilles Dufrasne:

“Double-counting your emission reductions would be cheating. But you cannot cheat the atmosphere. While countries would reach their climate targets on paper, emissions will keep rising and the impacts of the climate crisis will only get worse.” 

Markets must go beyond offsetting

Increasing the pace of emission reductions over time is at the core of the Paris Agreement and must be reflected in the implementation of Article 6. Carbon offsetting is (at best) a zero-sum game and does not lead to global emission reductions since greenhouse gas reductions in one place are cancelled out by continued carbon pollution elsewhere.   

The first step towards phasing out zero-sum offsetting is to automatically cancel half of every credit when it is issued.

Gilles Dufrasne:

Offsetting emissions will do nothing to help stop the climate crisis as it will only shift pollution from one place to another. That governments would still want to rely on this faulty logic shows that our leaders have not grasped the urgency to act.”

Avoid hot air

If countries have weak climate targets which they can easily overachieve, and if Article 6 allows these countries to sell this so-called “extra-abatement”, then this would generate “hot air” credits. If these credits were then used to justify emissions somewhere else, this would increase overall emissions because the credits do not actually correspond to real emission reductions. 

There is about 20 gigatonnes of such hot air in the national Paris Agreement pledges. 

In order to avoid the trading of hot air, governments need to agree on a total cap on the number of credits a country can issue and use over a given period of time, as well as a limit on the lifetime of units.

Gilles Dufrasne:

We cannot afford to set up new systems which will repeat mistakes from the past and create billions of tonnes of hot air credits which have no value for the climate and are used by rich countries to escape their climate responsibilities. Without clear limits on the use of carbon markets, governments would risk creating an easy way-out for climate laggards”.

In the absence of clear rules, countries now face an enormous responsibility to ensure that they only finance projects that reduce emissions and which do not infringe on human rights or negatively affect people or the environment. The loopholes which persist given the absence of rules will have to be closed by national governments if they want to prevent markets under Article 6 from watering down climate efforts.


Gilles Dufrasne, Policy Officer
+32 491 91 60 70
[email protected]

Sam Van den plas, Policy Director
+32 485 95 22 01
[email protected]

Kaisa Amaral, Communications Director
+32 485 07 68 90
[email protected]



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