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Bonn UN climate talks fail to advance new finance goal

  • : Emissions
  • 24/06/13

Talks at the UN Framework Convention on Climate Change (UNFCCC) in Bonn, Germany, are coming to an end today and parties have little to show for their two weeks of negotiations on climate finance for developing countries.

Progress on agreeing a new climate finance target — to replace a pledge that was missed by developed countries to give $100bn/yr to developing countries by 2020 — was limited and there are still significant divisions among parties, think-tank E3G said today.

Details of the updated target must be finalised during the UN Cop 29 climate summit in Baku, Azerbaijan later this year. But so far negotiators have remained entrenched in their positions on key issues such as how much finance should be provided, who should contribute, who should benefit or qualify as "particularly vulnerable" and the quality of the finance — loans over grants — along with the role of private finance.

Developed countries have not come forward with a number during the negotiations, despite being pressed repeatedly by developing nations to do so. The latter, including Saudi Arabia, India and African nations, are calling for at least $1 trillion-1.3 trillion/yr.

The US said that it supports a goal that is "fit for purpose" and "from a floor of $100bn/yr". The EU and other developed nations argue that certain high-emitting developing countries, such as China or Saudi Arabia, should shoulder some of the finance, thereby broadening the donor base. But China made clear that it has no intention of doing that. "Developing countries voluntarily support each other beyond our capacity and we have no intention to make your numbers look good," the Chinese negotiator said.

Pakistan's delegate rejected developed countries' proposals, which he said were not in line with the Paris Agreement, such as the obligation on developing countries to implement certain domestic measures in exchange for funding.

Australia called parties out on a "game of word-count to measure balance" and said the new target amount should be "the star at the top of the Christmas tree" because "it is dependent on the structure, types of sources, the timeframe and breadth of contributor base".

Meanwhile, Barbados pleaded for parties "to move forward" on the text as otherwise "more Small Island Developing States and Least Developed Countries will simply disappear from this gathering because we disappear from this planet".

Although UNFCCC executive secretary Simon Stiell called for "serious progress" to be made on finance and for parties to move from "zero-draft to real options", these key issues will be left for top negotiators and ministers to tackle in Baku. The US election — which will take place a week before Cop 29 starts — is one of the biggest factors in moving the finance discussions forward, E3G policy adviser Tom Evans said.

Convergence

Consensus does seems to be forming on some issues, such as the need to make access to finance easier to least developed and vulnerable countries, discussing unsustainable debt and the cost of capital, and the need for more transparency — possibly in the context of the Enhanced Transparency Framework (ETF). The framework obliges parties to draw up biennial transparency reports, with the first due at the end of the year.

The "very fundamental divide" between the two blocs on their perceptions around climate finance is underpinned by a lack of trust in the system, senior attorney Erika Lennon from the Center for International Environmental Law said. This is understandable given the time it took developed countries to fulfil their $100bn/yr pledge and the underwhelming performance so far of the different funding programmes, she added.

With neither camp ready to compromise in Bonn, it remains to be seen who will "give", Evans of E3G said.


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24/12/03

Treasury eyes 45Z guidance before Biden exit

Treasury eyes 45Z guidance before Biden exit

New York, 3 December (Argus) — The US Department of Treasury said it still plans to issue guidance before president Joe Biden leaves office next year clarifying how refiners can qualify for a new tax credit for clean fuels. The agency "anticipates issuing guidance" around the Inflation Reduction Act's 45Z credit before 20 January to "enable producers to claim the 45Z credit for 2025", disputing a report today that the Biden administration planned on punting implementation to president-elect Donald Trump. The credit, set to kick off regardless on 1 January, will differ from some prior federal incentives by offering greater subsidies to fuels that produce fewer greenhouse gas emissions. Treasury did not commit to any definitive timeline for releasing guidance, and it did not immediately clarify how thorough any eventual rule would be. Companies in the biofuel supply chain say the current lack of clarity from Treasury — particularly on how it will calculate carbon intensities for various fuels and feedstocks — has slowed first quarter dealmaking. Government guidance could make or break the economics of certain plants, particularly for relatively higher-carbon fuels like soy biodiesel or jet fuel derived from corn ethanol. The US Department of Agriculture's timing for releasing a complementary rule to quantify the climate benefits of certain agricultural practices, envisioned as a way to reward refineries sourcing feedstocks from farms taking steps to reduce their emissions, is unclear. The agency said today that a "rulemaking process" in response to its request for information on climate-smart farm practices is "under consideration" but did not elaborate. Agriculture secretary Tom Vilsack had insisted earlier this year that his department would release some package before the end of Biden's term. Some industry groups remain pessimistic that the Biden administration will answer all of the thorny questions still lingering around the 45Z credit, especially given signals earlier this year that other Inflation Reduction Act programs would take priority. The Renewable Fuels Association, which represents ethanol producers, says final regulations around 45Z "seem highly unlikely" before the end of Biden's term but that it hopes Treasury releases at least some "basic information" or safe harbor provisions. Delays getting credit guidance could prod Congress to extend expiring biofuel incentives for another year, including a $1/USG credit for blenders of biomass-based diesel. Some formerly skeptical lobbying groups have recently come on board in support of an extension, fearing that biofuel production could slump next year given the lack of 45Z guidance and uncertainty about how Trump will implement clean energy tax credits. But four lobbyists speaking on background told Argus today that the proposal still faces long odds. Congress has various other priorities for its relatively brief lame duck session, including government funding and disaster aid, that take precedence over biofuels. A staffer with the Democratic-controlled US Senate Finance Committee said last month that Republicans have been reluctant to negotiate tax policy in a divided Congress this year when they are planning a far-reaching tax package under unified Republican control next year. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Africa attempts to surmount clean cooking obstacles


24/12/03
24/12/03

Africa attempts to surmount clean cooking obstacles

Financial backing and carbon credits could be vital for making LPG more affordable as a clean cooking fuel, writes Elaine Mills Cape Town, 3 December (Argus) — Sub-Saharan Africa still has many of the same intractable challenges to overcome if it is to come close to achieving universal clean cooking access, delegates heard at LPG Week in Cape Town, South Africa. But government support, public-private collaboration, grassroots movements and carbon credits could pry open markets. The IEA is spearheading momentum behind the drive to clean cooking adoption in sub-Saharan Africa, expecting 45pc of the transition to be to LPG. A global transition would result in a net reduction of 1.5bn t of CO2 equivalent by 2030, of which sub-Saharan Africa alone would account for 900mn t, it says. "We can't imagine a more important global initiative in terms of our objectives of development, poverty alleviation, health and prosperity," the IEA's head of sustainable transitions, Daniel Wetzel, said during the World Liquid Gas Association event. Sub-Saharan Africa consumes less than 4kg/capita of LPG per year, according to South Africa's Department of Mineral and Petroleum Resources. This compares with north Africa's 35kg/yr, including Morocco, which has the highest in the world at 73kg/yr, Argus Consulting data show. The IEA estimates Africa requires investment of $4bn/yr to facilitate clean cooking. The continuing challenge for LPG penetration in southern Africa is "affordability, availability and acceptability", the International Finance Corporation's (IFC's) regional industry manager for manufacturing, Bambo Kunle-Salami, said. An average household needs to spend about $300-400/yr on LPG, while GDP per capita is just over $1,000/yr, he said. Government backing is essential, as "no LPG has grown on its own organically or reached desired levels [without] government intervention", the UN-backed Global LPG Partnership's East Africa director, Elizabeth Muchiri, said. Subsidies can solve cost barriers but many African governments cannot afford them, Kunle-Salami said. It might also encourage cross-border smuggling, so if used they must be targeted to low-income homes with a clear end goal, he said. Some countries have struggled to scale back their LPG subsidies, Wetzel said. But the IEA expects LPG prices to drop sharply later this decade as global demand peaks, allowing markets to reduce subsidies and emerging markets to expand. Kenya has distributed subsidised cylinders to low-income homes, scrapped LPG taxes and introduced mandates on new homes to include LPG infrastructure, Muchiri said. Some banks and retailers have offered microfinancing and pay-as-you-go smart meters on cylinders, she said. Ghana has also provided free cylinders and stoves to those most in need, its National Petroleum Authority director Akua Kwakye said. A cylinder recirculation model was introduced so consumers do not own the cylinders, which improves safety and reduces costs, she said. Logistics and their cost impact are a significant problem in Africa, Kunle-Salami said. "In a healthy market [logistics costs] should be 10-20pc, but in many African countries it is as high as 40-50pc," he said. A lack of storage infrastructure to protect from supply shocks is another issue. This requires significant investment that needs private-public collaboration, Wetzel said. But centralised solutions can only go so far — only grassroots initiatives create trust and acceptance, he added. Credits where they're due The IEA thinks carbon credits have huge potential in making LPG more affordable as a clean cooking fuel owing to the emissions savings and certainty of the verification. Such schemes might yield higher-quality credits than many other carbon-offsetting projects, Wetzel said. Many of the firms IFC finances struggle to understand, let alone access, the carbon market, Kunle-Salami said. But agreements on Article 6 at the UN's Cop 29 climate summit on establishing a global carbon market, and inclusion of clean cooking at the G7 and G20 summits, provide more hope such credits can become important, delegates heard. Nigeria LPG residential demand. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Brazil eyes Cbios, CGOBs integration


24/12/02
24/12/02

Brazil eyes Cbios, CGOBs integration

Sao Paulo, 2 December (Argus) — Brazil is considering integrating its biomethane certificate of guarantee of origin (CGOB) to Cbio decarbonization credits, as biomethane plants will be eligible to generate both. The fuel of the future bill's approval established a mandatory biomethane blend into natural gas pipelines, which can be fulfilled either with the physical molecule or by buying the newly proposed CGOBs. As a result, natural gas producers and importers will have to reduce greenhouse gas (GHG) emissions by 1pc in 2026 through the mandate that starts at 1pc and may increase to up to 10pc in subsequent years. Oil and gas regulator ANP is now leading regulatory discussions on the law. As biomethane producers are eligible to issue Cbios once authorized under the biofuels carbon credit Renovabio program — also mandatory in Brazil but aimed at motor fuel distributors — there are discussions on how to prevent double counting. Brazilian biogas producers association Abiogas points out that Cbios and CGOBs represent different concepts: the first acts as a carbon credit, while the latter is a guarantee of origin, so there is no risk of double counting. Additionally, Cbios are not used in companies' GHG emissions reports. "This would not be any different from what happens in the US," Abiogas' president Renata Isfer said. "The low-carbon fuel standard, which is similar to Cbios, is not counted in the inventories, while the US Renewable Fuel Standard, like the CGOB, is." Abiogas said there could be transparency to consumers, so they can opt to buy CGOBs from plants that do not issue Cbios if that concerns them. Critics worry this can lead to double counting and less international acceptability. The market is also debating whether this certificate will need to be retired to satisfy mandatory buying, as is the case with Cbios, or if buyers will be able to resell CGOBs after purchasing them. Participants again worry this might lead to double counting, as producers and importers would be reselling a credit that has been accounted for in the voluntary market. "Motor fuels distributors will want to do the same with Cbios," a market participant said. ANP will also have to define biomethane volumes necessary for the target, determine which gas producers and importers are big enough to be a part of the compulsory market and specify how much biomethane a CGOB will represent. By Rebecca Gompertz Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Denmark pledges DKr150mn to Brazil's Amazon fund


24/11/29
24/11/29

Denmark pledges DKr150mn to Brazil's Amazon fund

Sao Paulo, 29 November (Argus) — Denmark will donate 150mn Danish kroner ($21.3mn) to Brazil's Amazon fund, adding the Nordic country to a growing list of nations supporting the South American country's efforts to preserve the Amazon forest. The Amazon fund issues grants to projects that prevent, monitor and combat deforestation while promoting conservation and sustainable development in the Amazon. The fund was created in 2008 and is managed by Brazil's Bndes development bank. It has R4.5bn ($750mn) under management and has supported 114 projects to date. Norway is the fund's largest donor, having pledged R3.5bn, followed by German development bank KfW with R388mn and the US with R291mn. Other donors include the UK, Switzerland and Japan. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop 29 Article 6 deal ushers in new carbon markets era


24/11/29
24/11/29

Cop 29 Article 6 deal ushers in new carbon markets era

New NDCs will show how many countries aim to use Article 6 mechanisms towards climate goals London, 29 November (Argus) — Countries concluded nine years of negotiations on UN-level carbon market mechanisms at the Cop 29 climate conference in Baku, Azerbaijan, this month, opening up new avenues for carbon trading that will present both opportunities and challenges for existing systems. Cop 29 ended last week with agreement on the crucial outstanding elements to allow the full operationalisation of Article 6 of the Paris Agreement, which includes two mechanisms designed to help countries co-operate on meeting their emissions cut targets, or nationally determined contributions (NDCs), through carbon trading. Article 6.2 provides for the bilateral trading of so-called internationally traded mitigation outcomes (Itmos) between countries, while Article 6.4 establishes the Paris Agreement Crediting Mechanism (PACM). The mechanisms distinguish themselves from existing carbon markets largely in the rules and methodologies underpinning the credits. Article 6.2 credits will be "correspondingly adjusted", meaning emissions savings cannot be double-counted by the buyer and seller. And Article 6.4 specifically requires the downward adjustment of emissions cut pathways over time, as well as providing environmental and human rights safeguards and a buffer pool to address any reversal of achieved mitigation. This offers potential guidance to other carbon markets, whether existing schemes in need of reform or newly established. The unregulated voluntary carbon market (VCM) has notably suffered a reputational crisis since last year, largely as a result of questions surrounding the integrity of its credits. Brazil's planned emissions trading system is "sure to benefit" from the benchmarks established by Article 6.4, Bruno Carvalho Arruda of the Brazilian foreign affairs ministry said this week. But Article 6 also potentially poses competition to existing systems, if the credits that it issues are perceived to be more robust. "The UN system will not be immune from the same criticisms as the VCM," Switzerland's lead negotiator on international carbon markets under Article 6, Simon Fellermeyer, told delegates at Cop 29. But its basis of legitimacy — an inclusive system, which has been developed over a long period of time — gives confidence to participants and could act as a "guiding star" that other markets could try to align with, he said. Healthy competition There is a role for independent carbon crediting registries, but they will be looking at the UN process for comparison, chair of the Article 6.4 supervisory body Olga Gassan-Zade said following the body's initial adoption of key rules for the mechanism last month. "It's healthy to have competition," she said. The submission of new NDCs under the Paris deal, due in February, should bring some more clarity as to how many countries intend to make use of Article 6 mechanisms towards their goals, as they set out how they intend to meet ever-stricter emissions cut targets, this time for 2035. Some parties, including the EU, have made it clear that they will not use Article 6 to meet their targets under the Paris agreement. But deputy director-general of the European Commission's climate directorate, Jan Dusik, still welcomed the agreement on Article 6.4 at Cop 29 as a "significant achievement", emphasising the "complementary role" it can play for individual member states that want to make additional emissions cuts beyond the bloc's NDC, as well as for EU companies. And the flow of money between regions through Article 6 mechanisms could become all the more vital in light of the $300bn/yr climate finance deal reached in Baku, which is widely regarded as inadequate by developing countries. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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