Disagreement over methodologies for the future UN carbon market under Article 6.4 of the Paris climate agreement continue, as the rift between developed and developing countries on stringency levels persist.
Countries at the Bonn conference disagreed on the key concepts of the baselines against which an activity's results are measured, and additionality, echoing the fault line that already existed between developing and developed countries under the new market's predecessor, the Kyoto Protocol's clean development mechanism (CDM).
The so-called baseline contraction factor (BCF), designed to encourage rising ambition over time, was particularly contested by developing countries.
Developing country members had warned at an Article 6.4 supervisory body meeting hosted by the UNFCCC ahead of the Bonn conference of overly stringent or "academic" criteria, which might make project activities too difficult and expensive to run, for instance cookstove projects in African regions, according to a member from the region.
Other members, particularly among developed countries, warned against letting standards slip, thereby repeating the mistakes of the CDM. "I'm afraid it is not possible for current crediting levels to continue in a Paris world," a developed country member said.
Members agreed that more research and input was needed on the BCF and additionality, but also on other related concepts including suppressed demand — where some emissions growth is permitted to allow for development — business-as-usual scenarios, and best available technology.
Baseline contraction could be generic, but could also be set at a country or activity-specific level. Host countries must understand how to link the BCF to their nationally determined contribution (NDC) to the Paris deal. Suppressed demand could be evaluated on a case-by-case basis as suggested by the UNFCCC secretariat, or be kept simple, as suggested by members from developing countries.
Members also warned at the supervisory body meeting against aligning Article 6.4 too closely with voluntary carbon market (VCM) standards.
While harmonising methodology requirements across standard-setting bodies "has a huge value to it", there is also a "huge risk to it and we don't want to start a race to the bottom", a developed country member said.
The Article 6.4 mechanism will start up at the end of this month, but only for eligible CDM activities transitioning to the new market, not for projects undergoing the full Article 6.4 activity cycle process.
Agreement on methodologies will be crucial for the mechanism to be fully operational by the end of the year. A first draft on methodological guidance is expected for the next supervisory body meeting in July. The body aims to finalise work on the issue in September, at its penultimate session before the UN Cop 28 climate conference in December.
The supervisory body did agree at Bonn on ditching the tonne-year accounting approach relating to carbon removals permanence, in favour of the tonne-for-tonne basis.
Disagreement persisted at Bonn on the timing and content of project authorisation. The EU and the Association of Latin America and the Caribbean (AILAC) argued for authorisation to precede credit issuance, while the like-minded developing countries (LMDC) and African Group of Negotiators (AGN) pushed for authorisation to be possible at any time. AILAC, the least developed countries (LDC) but also the UK, pushed for minimum requirements for authorisation.
