Cop 27: New UN emissions credits raise questions

  • Market: Emissions
  • 29/11/22

The new type of emissions credits agreed at this month's UN Cop 27 climate conference, aimed at supporting domestic climate targets with no offsetting, is causing concern over potential double counting.

The new emissions reduction (ER) credits, to be issued under Article 6.4 of the Paris climate agreement, will come without "corresponding adjustments", which are designed to avoid credits being counted towards more than one country's climate target.

Creating these novel Article 6.4 units was already decided in November 2021 at Cop 26 in Glasgow. But a final agreement on how to officially name these units, and on the permitted scope of their usage, was reached at Cop 27 in Sharm-el-Sheikh earlier this month.

Both the units' name and their definition in the final text have come under scrutiny.

The units' official name — "mitigation contribution A6.4ER" — omits any reference to non-adjustment. This omission has been attributed to delegates from like-minded developing countries — mainly Saudi Arabia but also India — who were heard to be pushing hard, and ultimately successfully, for the "unadjusted" to be dropped from the official name.

Delegates attending the negotiations say these countries appeared keen to enable large-scale international trading of these units, contrary to the units' designated scope.

The text stipulates that the units can be used either towards the host country's nationally determined contribution (NDC) under the Paris deal, or as a "contribution claim" for either results-based climate finance or domestic carbon pricing systems, "inter alia". The "inter alia" refers to the different possibilities of contribution claims, but could also be interpreted more widely.

The Swiss environment ministry, a pioneer in bilateral carbon trading activities, has voiced its disappointment at the dropping of "unadjusted". The Swiss delegation at Cop 27 would have preferred the names "support A6.4ERs", "unauthorised mitigation contribution A6.4ERs" or "unadjusted mitigation contribution A6.4ERs", delegation head Franz Perrez says.

Perrez said the units' official name might lead some to believe that they contribute to global emissions reductions, as authorised A6.4 units will do once the Article 6.4 mechanism is up and running.

Conversely, it might precisely be the existence of authorised units that will make companies steer clear of the unauthorised ones, Perrez said.

Jonathan Crook, global carbon markets expert of non-governmental organisation (NGO) Carbon Market Watch (CMW), says ultimately it is up to companies and governments, as the UN Framework Convention on Climate Change (UNFCCC) cannot police claims that buyers will make. "Companies must not make misleading offset claims on the back of such contribution units, and governments must tighten their advertisement consumer protection laws to prevent this from happening."

Crook says the new credit type also sends out a "clear signal" to the voluntary carbon market that "climate contributions" are a real, and better, alternative to offsetting.

Germany's Development and Climate Alliance — a platform for voluntary greenhouse gas offsetting projects founded in 2018 by development bank KfW, on behalf of the ministry for economic co-operation and development — has tasked researchers from the Wuppertal Institute to look into ways of operationalising the "contribution claims".

Environmental NGO WWF and Cologne-headquartered NewClimate Institute are also researching the issue.

Some clarity on the uptake of mitigation contributions may arise once the Article 6.4 registry goes live, possibly from the end of next year. The registry would list both authorised and non-authorised credits, although it is as yet unclear how transparent the registry will be — for instance, in terms of disclosing the buyer's identity.

No overall agreement on the Article 6.4 framework was reached at Cop 27, mainly because the issue of emissions removals proved too big. Insufficient preparatory time for the UNFCCC "supervisory body" on Article 6.4, together with strong opposition from NGOs against excessively loose rules for removals, ensured that negotiations reached a dead end in the first week of the conference.

Article 6.4 of the Paris agreement will ultimately regulate a global carbon market, essentially a successor to the Kyoto Protocol's clean development mechanism.


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