FEATURE: Art. 6.4 SBM takes 'Standards' route to try and circumvent COP bureaucracy

Quantum Commodity Intelligence – The UN-appointed expert panel that draws up rules for the Paris Agreement's Article 6.4 mechanism approved standards for carbon dioxide removals and methodology requirements at its last meeting in Baku, earlier this month.

The move is intended to circumvent the political and bureaucratic logjam that has deterred developers from planning projects through the Paris Agreement.

"These standards will help project developers create and submit methodologies for their projects, to allow them to be registered under the new Paris Agreement crediting mechanism," a Supervisory Body (SBM) statement said.

The option to adopt standards, rather than making full recommendations to the upcoming COP 29 climate talks in Baku, had been telegraphed ahead of the SBM meeting. But it was nonetheless an unexpected and welcome development for many in project-based carbon markets.

"I have been somewhat disparaging of the chances for success and I would caution that the CMA [strand of the UN climate talks] can easily override any decisions of the SBM," said Pedro Martins Barata, a carbon markets expert at Environmental Defense Fund, in a social media post.

"That said, this is indeed a great decision and I must say totally unexpected and thoroughly welcome," he said.

Good idea?

Olga Gassan-zade, who is a member of the SBM and was the panel's chair last year, said "future will tell if it was a good idea or not" to convert recommendations that were made to the CMA last year into internal SBM standards.

"Personally I have huge reservations against creating a UN mechanism that can effectively evade the UN governance, but it didn't feel like the SBM as a whole was willing to risk not adopting the CMA recommendations for a third year in a row," she said in comments made in a personal capacity on LinkedIn.

Andrea Bonzanni, international policy director at the trade body IETA, said more time is needed to digest the substance of what was agreed. "But it is positive that the SBM could reach consensus. We could not afford further delays to the operationalisation of the 6.4 mechanism," he added.

The 12-page removals standard, which is applicable from October 9, sets out several elements required of project developers. These include: monitoring; reporting; post-credit monitoring and reporting; accounting for removals; and methodologies applicable for a renewed crediting period.

The standard also has a section, broken into three sub-sections, on reversals – 'reversal risk assessment', 'reversal-related notifications and actions', remediation of reversals. It also outlines requirements on avoidance of leakage, "and avoidance of other  negative and social impacts."

The 15-page methodologies standard sets out requirements for developing and assessing projects under Article 6.4.

Martin Hession, vice-chair of the Article 6.4 Supervisory Body said: "Some of the highlights of these standards include the alignment of baselines with Paris goals through downward adjustment, an additionality test that excludes projects that would lead to lock-in of unsustainable levels of emissions, and a shift to cover the risk of reversal for all risks with a buffer pool."

Ambiguity

One lawyer who follows UN climate talks on Article 6 said that the decision by the SBM to approve and operationalise standards without having to wait for CMA approval stems from ambiguity in the decision text from COP26 in Glasgow.

"But the CMA in Baku might decide that the SBM didn't have the mandate to do this. Whether they do decide to do this is likely to be highly political. The language on the mandate of the SBM isn't entirely clear from COP26," he said.

Other observers of Article 6 echoed the view that upcoming climate talks in Baku might override the SBM's decision to adopt standards.

"Though these standards have been adopted by the Supervisory Body, there is theoretically still room for negotiators at COP29 (CMA) to not endorse them and provide additional guidance to the SBM for revisions," Bjorn Fonden, an international policy analyst at IETA, said in a LinkedIn post.