IETA supports the Council of the European Union’s conclusions on climate diplomacy, in which it “welcomed the European Commission’s strategic long-term vision for a prosperous, modern, competitive and climate-neutral economy.”
We are particularly heartened that Ministers reiterated their belief that “carbon pricing and fossil fuel subsidy reform are key steps in creating an enabling environment for making finance flows consistent with a pathway towards safe and sustainable low greenhouse gas emissions and climate-resilient development”.
“We’re pleased that ministers have taken pains to underline the EU’s ambition for a climate-neutral future,” said Simon Henry, IETA’s Director of Carbon Market Development. “Our main concern now is that Europe’s efforts should take place in the context of global ambition, underpinned by strong market mechanisms.”
IETA is concerned that there is no reference in the Council conclusions to the urgent need for all nations to complete the work on Article 6 of the Paris Agreement. An agreement on Article 6 would unlock significant financial support for climate protection measures worldwide.
About Article 6
Under Article 6, countries may undertake cooperative measures to reduce emissions which generate Internationally Transferable Mitigation Outcomes (ITMOs), tradable instruments that can be put towards the achievement of national climate targets.
Such market mechanisms need robust rules governing accounting, monitoring and verification in order to give private and public participants confidence in the outcome of funding activity.
At the last Conference of the Parties in Katowice in December 2018, nations were unable to agree a set of guidelines for these mechanisms under Article 6, while all remaining parts of the so-called Paris Rulebook were agreed.
A priority for 2019
Despite the lack of progress on this critical issue, some private and public sector actors are already moving ahead with experimental initiatives to test the market-based mechanisms established by the Paris Agreement.
For example, Switzerland’s Klik Foundation has issued a tender to buy ITMOs and is inviting international emissions reduction projects to qualify for its programme. The World Bank is also working to test how nations may transfer ITMOs between themselves.
The Katowice climate talks concluded that work on Article 6 needs to be complete by the next meeting, in late 2019 or early 2020, in time for countries to be ready to implement the rules when the Paris Agreement takes effect in 2021.
IETA urges all Parties to the UN Framework Convention on Climate Change to redouble their efforts to complete this vital building block of the Paris Agreement.