Negotiations in Bonn, Germany, on the future UN carbon markets closed yesterday evening with little progress, five months before the UN Cop 29 climate conference in Baku, Azerbaijan, in November.
Negotiation texts on carbon market rules under both Article 6.2 and 6.4 of the Paris climate agreement, passed at the end of the Bonn UN climate talks, still included a range of options and a significant amount of bracketed text, which marks as yet undecided wording.
Disagreement persists on issues touching on the registries for credits under both mechanisms, information disclosure requirements along the credit-generating process, and the timing and scope of credit authorisation, including the extent to which this authorisation might be revoked.
One proposed option would allow host countries to transfer Article 6.4 emissions reductions credits that have been authorised, and therefore become so-called internationally transferred mitigation outcomes (Itmos), to the international or national registries for activities in the more informal market segment under Article 6.2.
Some parties, including the US, were heard to oppose this option on grounds of "integrity", given that Article 6.2 is based on bilateral agreements between states and not strictly speaking a carbon crediting mechanism.
Another option in the Article 6.2 negotiation text, upheld by several potential host countries, allows either participating party "to change and/or revoke the authorisation of Itmos at any time".
One option also calls for bilateral agreements themselves to be subject to authorisation, not just the Itmos generated subsequently. Switzerland, a frontrunner on Article 6.2, has adopted the approach of authorising the actual co-operative agreements.
Environmental non-governmental organisation Carbon Market Watch (CMW) today commended the stronger focus on the crucial role of transparency during the Bonn talks, with negotiating parties tasking UN climate arm the UNFCCC with developing a code of conduct on "treating and reviewing" information they classify as confidential about their trade agreements, although it remains to be seen how ambitious the code of conduct will be, CMW said.
On the UNFCCC-regulated market mechanism under Article 6.4, which will broadly replace the clean development mechanism under the Kyoto Protocol, there is hope that the supervisory body will solve outstanding issues in the meetings it has lined up before Cop 29. These include the methodologies underpinning permitted credits and how to deal with credits generated by carbon removal activities.
The Bonn talks also saw a push for a verdict on the eligibility of carbon credits generated by emissions avoidance activities. But countries ended up sticking to the position agreed at Cop 28 to postpone a decision on the issue until 2028.
"Completing the remaining elements on Article 6 in Baku will unlock further funding for national climate plans and adaptation," the UNFCCC said today.
