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UN must get the fine print right on global carbon market

To ensure that the new carbon market under Article 6 of the Paris Agreement benefits the climate and society, the supervisory authority set up to govern it must get the rules absolutely right. That is why Carbon Market Watch submitted a set of recommendations.

It is not yet dawn, but Mike Winkler, a Quinault Indian, has already been digging in the wet sand along the edge of the ocean for hours. Image: Michael Synder, Climate Visuals Countdown

In preparation for the 58th session of the Subsidiary Body for Scientific and Technological Advice (SBSTA 58) in Bonn in June, Carbon Market Watch has submitted its input on several matters pertaining to Article 6.4 of the Paris Agreement. 

Article 6.4 establishes a framework for a global carbon market overseen by a United Nations body known as the Article 6.4 Supervisory Body. As it stands now, Article 6.4 is still wide open: it could encourage finance to flow towards necessary actions, but could also facilitate action that could cause environmental harm or lead, paradoxically, to even higher overall emissions. Moreover, too little effort has been made to ensure a just and equitable mechanism that takes the interests of all stakeholders into account.

The following recommendations need to be incorporated to create an airtight mechanism that works to reduce global emissions effectively and fairly.

Murky concepts

Emissions avoidance, a blanket term for any emissions ‘that could have been worse’, has no place in Article 6.4. Any meaningful form of emission reduction is covered already under other activities described in 6.4. The term is not well defined, and can be used to cover a net increase in emissions: polluters could claim emission avoidance, as long as their hypothetical baseline against which they measure their emissions has even higher levels of emissions. This would lead to creating carbon credits for activities whose emissions are actually increasing overall. Moreover, this ‘emission avoidance’ could then be used to justify even more emissions elsewhere through offsetting.

Another risk of crediting emission avoidance is that this could disrupt the 6.4 market mechanism entirely by flooding the market with meaningless credits, because the term could cover much more than actual emission reductions. In short, there is no need for this blanket term, especially when potentially leading to detrimental environmental outcomes. It should therefore be left out of Article 6.4 entirely.

Safeguarding rights

Carbon market projects must respect the human rights of indigenous and local communities. This means that an appropriate grievance mechanism needs to be set up as soon as possible, as it must be operational before any activities under Article 6.4 are registered or start operating. Six core criteria should be met when establishing this mechanism: accessibility, transparency, predictability, independence, adequacy, and safeguards (see more details in our briefing here). 

This means that all stakeholders worldwide should be aware of and have easy access to the grievance mechanism, and to achieve this, it should be promoted with due regard to its cultural and gendered contexts (accessibility). The grievance mechanism should provide openness about the operation of the mechanism, and keep a public repository of all non-confidential grievances (transparency). The mechanism should have oversight from a team that is entirely separate from the A6.4SB or other related bodies (independence). The rules and procedures of the mechanism should be clearly communicated, with a clear timeline and step-by-step process (predictability). Use of the mechanism should have tangible influence on the decision-making process of the A6.4SB (adequacy). Lastly, the mechanism should ensure the safety of its users and aim to prevent, rather than deal with, grievances under Article 6.4 (safeguards).

In addition to the grievance mechanism, which focuses on grievances at the project level, an appeals procedure should be instituted. Functioning as a mechanism-level redress mechanism, this will allow stakeholders to appeal decisions from the supervisory body.

Of course a grievance mechanism is a necessary, but not sufficient, safeguard to protect indigenous peoples and local communities. Among other measures, local stakeholder consultations are also crucial, and rules on these should be elaborated by the Supervisory Body.

Removals

Carbon removal activities cannot and must not be equated to emission reductions. Virtually all “removal” credits that are found on carbon markets today are based on temporary carbon storage, often in the land use sector. Using these temporary solutions to compensate for real emissions that have a permanent impact on the climate could lead to increases in overall carbon emissions. Moreover, climate change will exacerbate reversal risks, such as forest fires, further shortening the lifespan of most carbon removals. These risks should be taken into account. 

While measures to compensate for the temporary nature of removals exist, such as buffer pools and temporary crediting, these are not sufficient to address the problem, if they are framed in the context of an offsetting mechanism. Therefore, the A6.4B must simply not allow crediting of temporary carbon storage if used for offsetting purposes.

Three concepts in particular should be left out of any part of Article 6.4 that concerns removals. First of all, “processes” cannot qualify as removals; only outcomes can. Processes that partially capture emissions are not removals if there is still a net increase in emissions, e.g. because there is no valid storage for the captured carbon. 

Secondly, storage in the form of products, which nearly always have a short lifespan, should not be considered as credible. 

Finally, the concept of tonne-year accounting reared its head again in UNFCCC discussions on removals. Tonne-year accounting means that short-term carbon storage is also assigned value. This is dangerous, as it would fuel the false equivalence between temporary and permanent carbon reduction or removal, and it should therefore be left out of Article 6.4 entirely. 

Conclusion

In order for the Article 6.4 market mechanism to deliver on its mandate to help slash greenhouse gas emissions while fostering sustainable development, it is essential that all loopholes currently still up for discussion are firmly closed once and for all by incorporating these recommendations.

The full submissions can be found at the following links:

CMW inputs on the grievance process in Article 6.4

CMW inputs on removal activities in Article 6.4

CMW inputs on emission avoidance under Article 6.4

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