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UNFCCC climate negotiators approved last Thursday in Bonn a set of draft texts on Article 6 rules for international carbon markets, paving the way for a political agreement on the delayed rules at this December’s Conference of Parties in Santiago, Chile.
The texts covered Article 6.2 (cooperative approaches); Article 6.4 (a new market mechanism), and Article 6.8 (non-market approaches).
Critical points of disagreement emerged in Katowice last year on how to accommodate projects from the Kyoto Protocol’s Clean Development Mechanism in the new Article 6.4 system; on how to account for transfers of emissions reductions arising from such projects, as well as transfers under Article 6.2; on whether to cancel a proportion of these reductions in an effort to generate additional emissions reductions; and on how to fund the administration of the mechanism.
Last week’s agreement doesn’t clear up any of these or other sticking points; the meeting was chiefly concerned with solving technical issues and setting out Parties’ positions for a political negotiation and agreement in December.
The headline issue of the transition of the CDM saw Brazil, the Arab Group and the Like-Minded Developing Countries in favour of a transition of all activities, credits and methodologies into the new mechanism. A large group of countries, including the Least Developed Countries and the African Group, opposed the transition of credits, but were not opposed to bringing CDM methodologies into the new system.
One of the chief problems coming into the Bonn meeting was that delegates had departed Katowice last year with two sets of “conclusions” in circulation: the first, a full set of Party positions complete with competing options; and the second, a draft prepared by the Presidency of the COP that attempted to narrow these options down.
After several iterations of the texts were produced last week for comment and discussion, negotiators in the SBSTA agreed Thursday on versions that will be forwarded to the COP for political discussion. These are all available on the UNFCCC website: Article 6.2, Article 6.4 and Article 6.8.
These texts are longer than the original documents forwarded from Katowice, since negotiators have re-inserted original positions that were removed or watered down at COP24, but we remain hopeful that these will give the Santiago talks a good basis to work from. A lot of work remains to be done, and IETA will continue to represent its members views in all appropriate fora over the coming weeks and months.
To find out more about our work or how to get involved, contact us today!Alessandro Vitelli
For more information on IETA and our work, see www.ieta.org
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How is ACT Commodities involved in the carbon market?
ACT is a trader and liquidity provider, active globally in the majority of environmental markets. We have offices on 3 continents and are quickly approaching 200 full-time employees. Within the ACT family, ACT Financial Solutions is the investment firm responsible for trading and providing investment services to clients in all products that are classified as financial instruments, including EUAs.
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IETA's 2019 GHG Market Sentiment Survey
Confidence is growing for trading in China's national ETS, while EU ETS price expectations continue to rise in this year's survey