EDITORIAL: Article 6.4 SBM decisions give Baku a chance to move forward on global carbon trading
Quantum Commodity Intelligence –
It may still be October, just, but this will be the last Carbon Insights before COP29 in Baku next month. If conversations with market players are anything to go by, this year's UN climate talks are not going to attract anything like the numbers seen in Dubai at COP28.
Observer groups and parties – the UN term for countries that are a 'party' to the Convention on climate change – will be sending smaller delegations. Part of the reason seems to be that pass allocations have been restricted due to the venue being smaller, but another will also be the logistics of getting to Baku compared with Dubai.
In addition, the Azerbaijani government has been keen to tilt COP29 representation far more towards organisations that are drawn from 'global south' developing countries, according to various sources.
'Finance COP'
Particularly, given that this year's meeting is being labelled as the so-called 'finance COP', supposedly to put richer countries under pressure to massively step up direct funding to developing countries so they can transition to cleaner energy and greener agriculture, and adapt to a rapidly changing global climate.
The upcoming discussions on Article 6 carbon mechanisms have become more interesting given the decisions by the Article 6.4 Supervisory Body (SBM) to approve standards for carbon dioxide removals and methodology requirements. Recommendations on these two areas by the SBM to the Dubai COP did not get approved and were one of the main stumbling blocks that led to the failure to approve anything on Article 6 last year.
The move by the SBM came as something of a surprise, but a welcome one to most market participants given the reactions that have been seen. However, questions have been raised as to whether or not negotiators in the Azerbaijani capital will push back on the SBM's move.
One veteran of the UN climate change negotiation process – Axel Michaelowa, a consultant on carbon markets with Switzerland-based consultancy Perspectives – expressed cautious optimism at a webinar last week. "The bulk of interventions from governments congratulated the Supervisory Body to the great work they had undertaken, which essentially meant that these countries were willing to endorse the standards," he said.
While others noted, that even if the standards survive COP29, there is much work still to be done on Article 6. "There are many elements that will need to be further clarified, or additional processes still to be developed. There is time to get that done now that the basic framework is in place, pending CMA's reaction," said Eve Tamme, a Netherlands-based consultant.
"All in all, we are suddenly in a much better place with operationalising Article 6.4. Of course, it will still take quite some time to get the first credits issued, so nothing changes in the short term," she said.
Baku now has an opportunity to move the Article 6 markets closer to full operationalisation than had probably been expected prior to the last SBM meeting. And frankly, if Article 6 is going to make meaningful contributions to 2030 climate goals under the Paris Agreement, then that is what is required from COP29. If the outcome is a pushback, then it is back to square one and another year wasted.
Cookstoves
The controversy over C-Quest Capital's cleaner cookstoves projects took another turn over the last two weeks with around 5 million carbon credits being cancelled in US-based Verra's Verified Carbon Registry.
This move came days after the FBI and the US Attorney for the Southern District of New York indicted its former boss Ken Newcombe on charges of data manipulation.
The cancellations are part of a reconciliation effort by the company following a wide-ranging review of its projects. In total, 19 projects are concerned by the cancellations, all located in Africa and Southeast Asia.
A further six projects have been suspended and have not been issued any cancellations yet, meaning that the overall volume of cancellations is likely to rise.