IETA welcomes Glasgow Climate Pact
GLASGOW, 13 November – World leaders today adopted the Glasgow Climate Pact, a package of decisions at COP26 in Glasgow that includes completion of the carbon market elements of the Paris Rulebook. The guidance for Article 6 sets up a new structure for carbon markets to work in the service of the Paris Agreement goals.
The decisions provide clear accounting guidance for emissions trades between countries, and launch a new crediting mechanism that will give market access to all countries interested in attracting green investment through the global carbon market. Other forms of non-market approaches are also encouraged, with the creation of a new Glasgow Committee on Non-Market Approaches to begin work in 2022.
“This is a solid and ambitious outcome, because it establishes an integrity framework to support the expansion of carbon markets to help governments and businesses deliver higher climate ambitions,” says Dirk Forrister, IETA CEO.
“It will now be up to the private sector to channel green investment using these new market structures and accelerate the race to net zero.”
On the key political issues on Article 6, negotiators made a series of compromises:
- Corresponding adjustments will ensure no double-counting of units in both Article 6.2 and Article 6.4 mechanisms. IETA supports this decision because it assures integrity in the accounting system for the markets and mechanisms advanced in Article 6.
- Certified Emission Reductions produced between 2013–20 may be used against countries’ first Nationally Determined Contributions. While this may not be the most ambitious outcome, it allows the carryover of a limited supply of pre-2020 units. IETA believes this will maintain the flow of finance to developing nations until the new mechanism is up and running.
- To assure an overall mitigation in global emissions from the Article 6.4 mechanism, a 2% discount will be cancelled from issuances from that mechanism. However, this factor was not applied to Article 6.2 market linkages.
- On the Share of Proceeds (SoP) for adaptation, negotiators agreed on a rate of 5% to be taken from issuances in the new Article 6.4 emissions crediting programme, but no fixed rate will apply to Article 6.2 transactions. Instead, countries using Article 6.2 are encouraged to contribute voluntarily to the Adaptation Fund.
IETA congratulates the UK Presidency and the Article 6 negotiators for such a significant success in Glasgow. In the lead-up to COP26, carbon markets surged in many jurisdictions, as businesses contemplated the enhanced ambitions of many countries. This included growth in every carbon market in 2021, with a near doubling of voluntary market transactions and the launch of China’s national ETS. Markets in Europe, California, Quebec, New Zealand, Australia and RGGI have seen record prices in the past month.
“Now we’re committed to build on the success of Glasgow,” says Andrea Bonzanni, IETA’s International Policy Director. “We look forward to working with countries to develop national strategies and policy frameworks for how to use Article 6 to further their climate ambitions – and to make new carbon market systems grow even stronger in pursuit of the Paris goals.”