Switzerland forms two more Article 6 agreements

  • Market: Emissions
  • 10/13/21

Switzerland's federal government today gave the green light to two agreements on the basis of Article 6 of the Paris climate agreement with Georgia and Dominica.

Under the agreements, projects in these countries financed by Switzerland will count towards Switzerland's greenhouse gas (GHG) reduction target, the Swiss ministry of environment, transport and energy said.

Article 6 agreements are signed by parties with a view to generating so-called internationally transferred mitigation outcomes that can be counted towards their nationally determined contribution (NDC) to the aims of the Paris deal.

Switzerland's NDC stipulates a 50pc cut in GHG emissions by 2030 against 1990 levels. The NDC provides for domestic policies to account for just a 37.5pc reduction.

In Georgia, Switzerland will develop a national support programme for energy efficiency in the buildings sector. Switzerland will bring in its "long-term" experience from its own buildings programme, the government said.

In Dominica, Switzerland will focus on the electrification of the island's transport sector and on geothermal energy. The aim is for Dominica to be able to phase out fossil fuels.

Switzerland has already signed four Article 6 agreements, with Peru, Ghana, Senegal and Vanuatu. Switzerland also in May this year signed an initial agreement for an Article 6 partnership with Thailand.

In August, Switzerland signed a "joint declaration of intent" with Iceland on collaborating in the fields of carbon removal and carbon capture and storage technologies. Under this collaboration, Switzerland would invest in direct air capture in Iceland, and in exporting its carbon to Iceland, to be permanently stored in basaltic formations.

Iceland and Switzerland in the declaration say that they will "consider legal international frameworks to promote cooperation in this field, taking into account the provisions under the Paris Agreement, including its Art. 6.2". Iceland itself has pledged in its NDC to carry out all its carbon reduction measures domestically.

Switzerland's government says that with the agreements it has signed, the country is creating a "standard" for international climate projects that meet strict environmental criteria, and international standards on human rights.

In the agreements, both signatories commit to a method preventing the double counting of emissions reductions, the government said. And constant monitoring ensures the projects meet the specified criteria, it added.

A final agreement is yet to be reached on the rules governing Article 6. This is expected to happen at this year's UN Cop 26 climate conference in Glasgow next month. As a result, the bilateral agreements are sufficiently flexible to allow them to evolve over time, Switzerland's office for the environment said.

The agreement between Switzerland and Peru, signed in October 2020, was the first agreement world-wide signed under Article 6.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
02/26/24

More firms join Japan-Malaysia CCS value chain study

More firms join Japan-Malaysia CCS value chain study

Osaka, 26 February (Argus) — Japanese firms Chugoku Electric Power and Nippon Gas Line (NGL) plan to join a study to establish a carbon capture and storage (CCS) value chain from Japan to Malaysia. Chugoku and NGL on 26 February signed an initial agreement with upstream developer Japex, engineering firm JGC, shipping firm K-Line and steel mill JFE Steel to jointly study the facilities and costs required for the potential CCS project. The partners are looking to separate and capture CO2 from JFE's steelworks and Chugoku's power generation plants, with NGL promoting the delivery of liquefied CO2 through coastal transportation in western Japan's Setouchi area to storage sites in Malaysia. The deal followed JFE's participation in the feasibility study of the Japan-Malaysia CCS value chain in June 2023. Japex, JGC and K-Line had looked for potential CO2-emitting firms, under a separate CCS value chain tie-up with Malaysia's state-owned Petronas through its subsidiary Petronas CCS Ventures. The collaboration with Petronas first began with Japex in January 2022, with JGC and K-Line joining later in July 2022. The four companies reached a key principle agreement in September 2023 to jointly develop the CCS project offshore Malaysia. The project aims to start injection and storage of CO2 emitted in Malaysia and outside Malaysia under the seabed at the end of 2028. Chugoku is looking to Malaysia as a destination for its CO2 exports and storage. The company on 19 February also signed an initial agreement with Japanese trading house Mitsui to jointly study building another CCS value chain to a planned project offshore Malaysia. Getting involved in overseas CCS projects could be inevitable for Japan, because of its limited domestic storage sites. Tokyo aims to add 6mn-12mn t/yr of CO2 storage capacity domestically and overseas from 2030, and achieve 120mn-240mn t/yr of capacity by 2050. The government previously estimated that Japan could store up to 70pc of its forecast 240mn t/yr of CO2 emissions in 2050. Japan hopes to carry out CCS projects in its territory. Japanese cabinet agreed on 13 February to support a bill outlining administrative rules for exploratory drilling and storage operations for CCS, which would require government permission to conduct, to prepare for the commercial start of CCS business by 2030. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Read More
News

UN Article 6.4 should become offset standard: Atmosfair


02/23/24
News
02/23/24

UN Article 6.4 should become offset standard: Atmosfair

Berlin, 23 February (Argus) — Article 6.4 of the Paris climate agreement should become the standard for carbon offset credits both regarding the double-counting of emissions reductions and the role granted to host countries, chief executive of non-profit carbon credit developer Atmosfair Dietrich Brockhagen told Argus . The voluntary carbon market (VCM) should incorporate much of the Article 6 provisions, otherwise lower quality projects will continue to dominate and diminish the market's integrity and credibility, Brockhagen said. Article 6.4 is designed to establish a high integrity centralised UN-supervised carbon market. The rules for the mechanism are currently being finalised by the UN's climate arm. But the key feature of Article 6.4 is less its much-touted corresponding adjustment — which precludes double counting of achieved emissions reductions by the host and buyer country — than the necessary co-operation between project developers and host country governments, Brockhagen said. Joint planning, development of project activities and negotiations with the host government when setting up a carbon offset project are "crucial", Brockhagen said, as this allows a host government to maintain "authority" over its nationally-determined contribution (NDC) — emissions reduction pledge — to the Paris deal. The government can decide whether it should implement certain projects itself or co-operate with an investor from abroad, incentivising developers only to propose projects in the best interests of the country. But an Article 6.4 credit is only worth as much as the transparency and quality of the underlying NDC — a corresponding adjustment based on a shoddy NDC can amount to "hot air", Brockhagen said. "Having a corresponding adjustment does not automatically guarantee a good project." "Ultimately, all good offset projects have to be additional at least to the government policies in its NDCs, so the government sets the ambition threshold," Brockhagen said. The transparency key to this would only be provided by Article 6 provisions. Negotiations with host country governments can be lengthy and complicated processes that some developers of carbon offsetting projects in the VCM are "understandably" unwilling to go through, Brockhagen said. He pointed to the two-year long process Atmosfair undertook with the Nigerian government when building a cook-stove factory project there in 2022. Atmosfair has since 2019 focused exclusively on developing projects aligned with Article 6 standards. "I do not know whether other offsetting companies will follow us here" until the mechanism's rules are either adapted by or enforced in the VCM, Brockhagen said. Atmosfair currently "parks" its Article 6.4-aligned credits with the VCM's Gold Standard ahead of the article registry's full operationalisation. "It is hard to come up with any price tag for the new certificates," Brockhagen said. "There is not yet a real market and the unsuccessful negotiations in Dubai have not helped," he said, referring to the failure of parties to come to an agreement on outstanding Article 6 elements at the UN Cop 28 climate conference last year. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

'Huge demand' ahead of carbon exchange: Australia’s CER


02/23/24
News
02/23/24

'Huge demand' ahead of carbon exchange: Australia’s CER

Sydney, 23 February (Argus) — Demand for Australian carbon credits and renewable energy certificates is expected to continue increasing rapidly over the coming years, including voluntary markets, officials at the country's Clean Energy Regulator (CER) said today as they unveiled details about the planned Australian Carbon Exchange. Cancellations of Australian Carbon Credit Units (ACCUs) are estimated to have reached around 1mn in 2023 in the voluntary market, a new high and up from approximately 855,000 in 2022, while those for large-scale generation certificates (LGCs) rose to an estimated 4.9mn last year from 3.4mn the previous year, CER's general manager Jane Wardlaw said during a webinar organised by the Australia-based industry group Carbon Market Institute. While most of the demand for both products comes from compliance obligations under Australia's Renewable Energy Target and Emission Reduction Fund, including the revamped Safeguard Mechanism , companies can also make cancellations against voluntary certification programmes such as the federal government-backed Climate Active or under organisational emissions or energy targets. The CER is expecting "huge demand" in the voluntary market stemming from Australia's planned stricter mandatory emissions reporting , especially for LGCs, executive general manager Mark Williamson said on 23 February. Demand for ACCUs in the compliance market has been already increasing on the back of new safeguard obligations starting from the July 2023-June 2024 financial year, Wardlaw said. The regulator has been working closely with the Australian Securities Exchange (ASX) and technology solutions provider Trovio Group on its planned Australian Carbon Exchange . Trovio as a first step is developing a new registry for the Australian National Registry of Emissions Units, which is expected to come on line in the second half of 2024, with the exchange itself set to be launched between the end of 2024 and early 2025. "We think it's time to move to an exchange-based market where participants can trade anonymously," CER chair David Parker said, noting the buying side of the market has become much more diversified in recent years. "That's not intended to lock out the over-the-counter [OTC] arrangements," Parker said, adding the regulator hopes OTC trades will be cleared on the exchange. Companies that operate existing trading platforms will be able to connect their systems to the new registry. But the CER will require them to "release some data transparency" such as volumes and prices, Wardlaw said. New options The registry and exchange will incorporate other existing certificates like LGCs and small-scale technology certificates, as well as new ones such as the proposed guarantees of origin for hydrogen and renewable electricity . It will also include the new Safeguard Mechanism credit units (SMCs), which will be issued by the government to facilities that reduce their emissions below their baselines. The CER plans to publish information about which facilities are issued SMCs. While the exchange works with the CER on the new spot exchange, ASX's senior manager of issuer services Karen Webb said it is developing its own separate carbon futures contracts, which it is planning to launch in July 2024. The physically settled contracts will consist of ACCUs, LGCs and New Zealand units, for delivery up to five years ahead. By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Ship speeds on Red Sea rerouting to 'erode' GHG cuts


02/22/24
News
02/22/24

Ship speeds on Red Sea rerouting to 'erode' GHG cuts

Edinburgh, 22 February (Argus) — Ships increasing speed as they are forced to sail longer routes to avoid Houthi attacks in the Red Sea could "erode" environmental gains in shipping, the United Nations Conference on Trade and Development (UNCTAD) said today. The shipping sector has for over a decade reduced sailing speeds to cut fuel costs and reduce greenhouse gas (GHG) emissions, UNCTAD said. Speed optimisation is one of the solutions shipowners can consider to improve their rating under the International Maritime Organisation's (IMO) carbon intensity indicator (CII) measures which came into force in January 2023. Container ships' speeds for voyages around the Cape of Good Hope at the southern tip of Africa have increased since the Red Sea disruption started late last year. Container trade flows measured in tonnes account for over half of traffic through the Suez Canal, according to the Suez Canal Authority. Higher speeds are likely being used as a way of adhering to delivery schedules but also to manage fleet capacity, as longer routes mean vessels are employed for a longer period of time. UNCTAD said that these trends could erode environmental gains previously achieved by ships reducing speeds, or slow steaming. The organisation calculated that a ship increasing speed to 16 knots from 14 knots would increase bunker fuel consumption per mile by 31pc. "In this context, longer distances travelled due to rerouting away from the Suez [Canal] and through the Cape of Good Hope imply that greenhouse gas emissions for a round trip from Singapore to northern Europe would rise by over 70pc," it said. Ship tonnage entering the Gulf of Aden declined by over 70pc between the first half of December 2023 and the first half of February 2024, while ships passing the Cape of Good Hope increased by 60pc, UNCTAD noted. The security issues in the Red Sea have also affected insurance costs for shipowners, UNCTAD said. "By early February 2024, some reports indicate [risk] premiums rising to around 0.7pc to 1pc of a vessel's value, from under 0.1pc previously," UNCTAD said, citing a report by ratings agency Moody's. Ships avoiding the Suez Canal, particularly container vessels, also pose a risk to "global supply chains, potentially leading to delayed deliveries, heightened costs and inflation", it said. "The war in Ukraine had already shown the impact of longer distances and freight rates on food prices." UNCTAD estimates that about half of the increase in food prices observed in 2022 resulted from increased transport costs caused by longer distances and higher freight rates. By Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Australia’s Santos joins OGCI zero methane initiative


02/21/24
News
02/21/24

Australia’s Santos joins OGCI zero methane initiative

London, 21 February (Argus) — Australian independent Santos has signed the Aiming for Zero Methane Emissions initiative, which seeks "near-zero" methane emissions by 2030 from signatories' operated oil and gas assets. The project, which now has 23 signatories, was launched in March 2022 by the Oil and Gas Climate Initiative (OGCI) — a group of 12 major oil and gas companies. Santos has operations in Australia, Papua New Guinea, Timor-Leste and the US. The company produced 92.2mn bl of oil equivalent in 2023 and has set a target of net zero emissions across scopes 1 and 2 by 2040 for its equity share. The company is also looking to develop three carbon capture and storage (CCS) hubs offshore Australia, which could have a total future storage capacity of up to 35mn t/yr of CO2 — though Santos did not provide a timeframe. Its Moomba CCS project is 80pc complete and the first CO2 injection is expected in the middle of this year. Santos today also formally endorsed a World Bank initiative to eliminate routing flaring from oil operations by 2030. Santos will "will develop and implement plans to achieve its commitment under this initiative", it said. It will also report "flaring and improvement progress" to the World Bank on an annual basis, from 2025. The recent UN Cop 28 climate summit, in November-December 2023, placed scrutiny on oil and gas producers' emissions reduction plans. Companies representing over 40pc of global oil production pledged to cut emissions — including methane to "near zero" by 2030. The summit saw renewed focus on methane emissions , although the frameworks are voluntary. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.