KATOWICE (December 15) - IETA is deeply disappointed that climate negotiators failed to fulfil their mandate to deliver rules for market cooperation as part of the Paris Agreement "rule book” at COP 24 in Katowice today.
In a year when the scientific community urged governments to scale up action to address climate change towards achieving a 1.5 degree Celsius goal, negotiators delayed decisions on rules that would have delivered a valuable signal to business.
These decisions would have offered guidance on how international markets could be harnessed to enhance ambition. Instead, negotiations stalled, and Parties deferred this item for further work in 2019, missing an opportunity to inspire businesses to accelerate action.
“If countries want to ramp up climate action, they must get more serious about international cooperation through market incentives,” said Dirk Forrister, IETA President and CEO. “But we should not let this slow us down - we don’t have time to waste. While we wait for the rules to firm up, committed countries and businesses should team up to start building cooperative markets - and the rule writers can catch up later.”
“Sound environmental accounting is the bedrock of market-based climate policies,” said Stefano De Clara, IETA’s Director for International Policy. “Nearly every country recognises this essential element. Yet a slim minority blocked agreement in Katowice and insisted that the new crediting mechanism should not require a project host to properly reflect exports in their Nationally Determined Contributions."
“This would invite double-counting and erode confidence in both the public and private sector. So it is a good thing that the majority rejected this weakening measure.”
At COP24, IETA and Environmental Defense Fund launched the Katowice Declaration on Sound Carbon Accounting to highlight the need for a robust system to avoid the double-counting of emission reductions.
The likely impacts of the delayed decisions on emissions markets are unclear. The UNFCCC’s new mechanism planned under Article 6.4 will remain closed until rules are agreed. This means project developers, who aim to apply to the UNFCCC for carbon credit approvals under the Paris Agreement, will remain on hold.
However, they may pursue the growing markets being run by individual governments, or voluntary markets served by independent standards organisations. In addition, markets set up under the Kyoto Protocol will remain open, although their future, meant to be defined by the rule book, is uncertain.
Importantly, Article 6.2 of the Paris Agreement allows countries to link markets “consistent with” UN guidance. In the absence of such guidance, they are free to set up market systems that link together to meet targets and accelerate action at lower cost.
A number of countries have already banded together to explore market harmonisation and future linkages under Article 6.2. Voluntary markets are also growing more vibrant as corporate leaders respond to investor and customer interest in climate responsibility. Domestic and international action through markets will continue to grow and deliver emission reductions, despite the anti-climatic end of COP24.