The new body tasked with designing and supervising the global carbon market under the Paris Agreement must put in place environmental safeguards and protect the interests of local and indigenous communities.

At the end of July, the UN body in charge of overseeing the new global carbon market agreed at last year’s COP26 Glasgow, under Article 6.4 of the Paris Agreement, met for the first time.

The Article 6.4 Supervisory Body has significant responsibilities, since it is tasked with the design and governance elements central to the implementation and operation of this market. These include developing and approving carbon crediting methodologies, approving or rejecting the registration of individual projects, establishing environmental and social safeguards – such as a grievance process in case local or indigenous communities are harmed by projects – and more.

This first meeting mainly served for the 12 members to agree on the body’s rules of operation and to set a direction of travel for the coming months. For those interested, there is a rather technical meeting summary to consult.

The second meeting, planned for 19-22 September, will focus on more substantive points for discussion, including the development of guidelines on core subjects in Article 6.4, such as greenhouse gas removal activities and methodological requirements for setting accurate baselines and determining if a project’s climate impact is additional to business-as-usual. The body has a mandate to develop draft guidelines on these subjects, by COP27 at latest, where countries will either approve or renegotiate them.

This gathering will, thus, be key for civil society and other stakeholders to follow, which anyone around the world can do since all Supervisory Body meetings are publicly webcast and recorded. This was an important win for the civil society organisations that had demanded transparency prior to the COP26 agreement.

Public oversight

Importantly, all stakeholders are welcome to submit their views on Article 6.4 Supervisory Body meeting documents up until seven days before the start of any given meeting. This time around, however, some meeting documents were still not uploaded at the time of writing this article (only four days before the 12 September deadline for comment), leaving little time for stakeholders to respond. In order to receive meaningful feedback from stakeholders, in the future, the supervisory body should upload the relevant documents at least two weeks ahead of their meetings. Stakeholders should also be given the opportunity to comment, after the end of a given meeting, on any agenda items or documents discussed during it.

Carbon Market Watch has submitted its inputs for consideration by the supervisory body members ahead of their second meeting, which mainly stress three points.

First, the second version of the supervisory body’s draft 2022-2023 workplan still lacks any reference to the independent grievance process that the body is mandated to develop. Just because it may not be until 2024 that any Article 6.4 projects are actually registered, this does not mean that the grievance process can wait until then. A process needs to be established before any projects are registered, or else key stakeholders like local and indigenous communities would unacceptably be deprived of their right to redress. Furthermore, the grievance process is also relevant in the context of theSupervisory Body developing guidelines and methodologies, since the Article 6 rules entitle external stakeholders to appeal the decisions of the Supervisory Body.

Second, the Supervisory Body’s expected recommendations on methodological requirements should be based on principles that would only allow for activities compatible with the Paris Agreement’s goal of limiting global heating to 1.5°C. There should, for instance, be no crediting methodologies for fossil fuel-related activities, such as reducing leaks from fossil fuel transport, nor for activities whose impact is difficult to measure. Rather than simply trying to adapt outdated and oft-discredited methodologies developed under the Kyoto Protocol’s Clean Development Mechanism (CDM), the Supervisory Body should develop new and effective methodologies. Some elements from previous methodologies can be considered but must still be reassessed against the requirements of the Paris Agreement.

Third, the Supervisory Body’s expected recommendations on greenhouse gas removal activities should accurately define removals  – for example, by excluding carbon capture and storage (CCS) at fossil-fuelled point sources (power plants and factories) and carbon capture and utilisation (CCU) with temporary storage (synthetic fuels), and by embedding proper accounting principles. We also strongly caution the Supervisory Body against setting rules that would create the false impression that biological carbon and geological carbon are equivalent. This means that credits issued on the basis of temporary carbon storage, such as sequestration in natural sinks, should either not be eligible for offsetting claims or should be time-bound (i.e. with an expiration date like under the CDM).

In other business

Beyond the Supervisory Body, negotiators will have a busy two months ahead of them in the run up to Sharm el-Sheikh on other aspects of Article 6. Several workshops are planned to advance negotiation texts for COP27 on a range of subjects, including: how to prevent the risk of double counting; what market interface is required for trades to happen; what information must be reported about trades and whether it will be public; and whether or not avoided emissions should be eligible for crediting.

Carbon Market Watch has prepared recommendations on these and other Article 6.2 and Article 6.4 topics being considered by negotiators. 

As we approach COP27 in Sharm el-Sheikh, it is clear that the time of deadlocked talks on Article 6 is giving way to a period where the international community must walk the talk to deliver on environmental and social safeguards in carbon markets. This warrants equal review and input from stakeholders. As ever, what’s most vital is that environmental integrity, human rights, and transparency are upheld. Rapid implementation should not be an end in and of itself. Better to get the rules right from the outset, rather than rush and make errors that would do more harm than good.

For that reason, the involvement and supervision of civil society organisations and other stakeholders is just as important as ever in order to help ensure proper guardrails are in place and better outcomes are secured.