COP28 update: Day 4, 3 December
So it must have been a facepalm moment when the Guardian newspaper revealed that it had uncovered footage of him telling former UN climate envoy Mary Robinson last month that there is “no science” supporting the call to phase out fossil fuels.
The story, which broke in the afternoon, elbowed aside all the other useful news that had been made at COP today, which was a shame since Sunday was developing into a welcome relief from the breakneck pace of the first three days, and a chance to catch up on things we may have missed. Attire was slightly more relaxed and the conversations more interesting.
The strangest thing about this COP is that, because it began on Thursday, our (well, my) conception of where we are in the schedule has been completely thrown out. I mean, Day 4 isn’t supposed to be a Sunday, is it?
Our efforts to find the best coffee at the COP venue continue but, short of joining the long lines at the Australian pavilion, we’re starting to suspect that the coffee machines in our own lounge, which serve a brand endorsed by a well-known Hollywood personality, may be the best way to stay alert.
The day kicked off with the publication in the Financial Times of an opinion piece co-authored by IMF managing director Kristalina Georgieva, Ursula von der Leyen and WTO director general Ngozi Okonjo-Iweala.
The three officials wrote that “carbon pricing’s growing appeal boils down to three factors. First, it works… Second, it is the most cost-efficient solution… Third, with the right design, it’s fair.”
“We must look to COP28 to deliver a robust benchmark for co-operation on international carbon markets. Carbon pricing must be a transparent tool for reducing emissions, not just a cover for continuing business as usual. And that returns to the crux of the matter: business as usual is not delivering what we need to prevent catastrophic consequences.”
Later, the U.S. Department of State, the Bezos Earth Fund and The Rockefeller Foundation announced the first details of the Energy Transition Accelerator, which was first unveiled by US climate envoy John Kerry at last year’s COP.
The ETA is intended to be launched formally early next year, and will enable private sector and government buyers to acquire credits generated by host countries’ energy transition strategies. Credits will be issued when emission reductions are achieved and verified.
ETA documentation sets clear eligibility criteria for buyers, who are required to commit to SBTi-aligned targets, publicly report their emissions inventory and progress towards their targets, and clearly report their use of ETA carbon credits.
Similarly, sellers need to show the credits they sell avoid emissions leakage, demonstrate additionality, set baselines below business-as-usual and adjust them downward as necessary, and show alignment with Article 6, CORSIA, and the ICVCM’s Core Carbon Principles.
We also saw some helpful in-depth reports on the voluntary carbon market. Singapore’s GenZero yesterday published this excellent paper on the VCM, identifying “pain points” and offering solutions. In particular, the report highlighted that:
- The industry needs to shift away from discussing quality in general to specific quality considerations;
- Having quality controls is important, but it must be balanced with pragmatism, and
- Technology is a critical lever to scale the market.
And today, the International Organisation of Securities Commissions (IOSCO) published a consultation report on the VCM, seeking stakeholder views on what it calls “potential vulnerabilities” around market integrity. IOSCO’s report highlights:
- Concerns at the project level, regarding the environmental integrity of the carbon credits and the manner in which carbon credits are issued to a registry;
- Issues relating to the characteristics of the trading environment in which credits are transferred from one party to another, and the behaviour of market participants in doing so, and
- Issues regarding the use and disclosure of use of carbon credits by buyers.
The IOSCO report proposes a set of 21 good practices that should guide market practitioners. We will be submitting comments on the document, and interested members should liaise with Antoine Diemert.
On a slightly more concerning note, Carbon Market Watch yesterday issued a brief report that calls into question recent findings by MSCI (formerly Trove), Sylvera and EcoSystem Marketplace that companies that buy and retire carbon offsets are generally also achieving internal decarbonisation.
CMW asserts that these findings neither prove nor disprove their claim that buying offsets remains a “licence to pollute”.
“This is because the alleged positive correlation between the two is questionable, and secondly, even if such a correlation exists, it in no way demonstrates that the purchase of carbon credits leads to the reduction in a company’s emissions,” the CMW report states.
Out and about in the pavilions, IETA co-hosted its official UNFCCC side event today to discuss carbon markets, at which International Policy Director Andrea Bonzanni represented the private sector: you can watch a recording of the session here.
Lastly, we thought we’d share this useful and interesting thread by Tennant Reed on the impact that the EU’s Carbon Border Adjustment Mechanism is having on the COP28 talks, and on the development of new compliance markets. We’ll be discussing CBAM and its wider influence tomorrow morning at the IETA Lounge.
As we reported yesterday, a second iteration of the Article 6.2 text that included input from Parties was published yesterday and prompted angry reactions from some delegates.
Negotiators met in an informal consultation this morning, at which many Parties expressed diverging views on some key topics:
Firstly, whether the UN should operate a transactional 6.2 registry on behalf of parties lacking the resources or intention to set up their own national registries. The US has been particularly opposed to a UN registry that would hold and transfer ITMOs. Any central registry should simply be a database for general information, they say. Only Australia appears to support this view.
Secondly, there are still different views of changes and revocation of authorisation, details of which we shared yesterday.
And thirdly, the European Union, supported by the AILAC group, is pressing for Article 6.2 to define more clearly “cooperative approaches” with the intention of exerting some control on eligible activities. This is opposed by the Umbrella Group and Singapore in particular.
Meanwhile, the Article 6.4 co-facilitators published an updated text late last night, and negotiators met this afternoon to discuss the new draft.
Parties again got stuck regarding the inclusion and eligibility of emissions avoidance and conservation enhancement in the mechanism. Whilst a new textual proposal suggested dividing the option to treat conservation enhancement separately from emissions avoidance, and most Parties seem to be agreeing on a constructive way forward, the Philippines remained the sole strong voice for continued elaboration of avoidance under the mechanism.
Following this, the mandated joint session between Article 6.2 and 6.4 took place, with Parties mainly sharing views on the interoperability and functions of the international registry and 6.4 mechanism registry.
There were still many diverging views in the room regarding if the international registry should be transactional or not, how the mechanism registry should connect to the international registry, and if so, what units could flow depending on the status of authorisation.
The US continues to hold a clear line that the international registry should not be transferring units but simply tracking amounts, and ended with a parting shot to the Coalition for Rainforest Nations, saying that results reported to the Lima Hub under Article 5 are unequivocally not carbon credits and should not be treated as such under Article 6.
Co-facilitators ended the session with several speakers still on the list, and promised to come back to the joint 6.2-6.4 session in the coming days.
If you stayed away from your emails over the weekend, you may not have had the chance to watch a recording of our terrific Article 6 “state of play” event that took place yesterday; you can watch that here.
Of particular interest to IETA’s community was this afternoon’s Article 6.4 Supervisory Body official COP side event, which was really interesting and definitely worth a watch. Olga Gassan-zade and El Hadji Mbaye Diagne, the SB’s chair and vice-chair, presented an overview of their work this year, and the tasks facing them in 2024.
Andrea Bonzanni also participated in a great panel discussion that followed the presentation, taking in topics ranging from the 6.4 grievance mechanism to the sustainable development tool and to the recommendations on removals.
You can watch a recording of the SB side event here.
Coming up on Monday at IETA’s COP28 Business Hub
0830-0930: Voluntary Carbon Markets: What Narrative for 2024?, with Dale Hardcastle (Bain & Co), Kelley Hamrick (The Nature Conservancy), Steve Howard (Temasek) and Jonathan Grant (Rio Tinto). Event webcast.
0830-1000 : Vertis Environmental Finance Breakfast Roundtable – Regional Scope, Global Impact: How the EU ETS Sparks Worldwide Carbon Pricing (in the IETA Lounge), with Alessandro Vitelli (IETA) and Gauthier Bily (Vertis). This event will not be webcast.
0930-1100: Partnerships for Progress: How a Just Transition Drives Sustainable Energy and the SDGs, with Isabel Miranda (IPIECA) and invited guests. Event webcast.
1100-1200: Creating Pathways to Mobilise Private Sector Climate Finance in Emerging Markets, with Odile Renaud-Basso (EBRD), Anja Hajduk (Germany), Michael Strauss (EBRD), Soha El-Turky (EBRD), Joaquin Jugo (Citi), Barbara Buchner (Climate Policy Initiative), Jingdong Hua (International Sustainability Standards Board) and Vera Rodenhoff (Germany). Event webcast.
1200-1315: Carbon Markets: Digital Infrastructure for Integrity, with Lucy Hargreaves (Patch), Brian DiMarino (JP Morgan Chase & Co), Mark Kenber (VCMI), Fiona Mugambi (Octavia Carbon), Antti Vihavainen (Puro.Earth) and Robert Niven (CaarbonCure). Event webcast.
1230-1400: European Energy Exchange Lunch Event: Current Trends and Opportunities in Global Carbon Markets from EEX Group’s Perspective (in the IETA Lounge), with Christina Sell (Deutsche Boerse). This event will not be webcast.
1315-1430: A Carbon Bank to Manage the Transition Towards a Low Carbon Economy, with Andrei Marcu (ERCST), Daniele Agostini (ENEL Group), Philippe Chauveau (Solvay), Claude Lorea (Global Cement and Concrete Association) and Robert Jeszke (KOBiZE). Event webcast.
1430-1600: Supercharging Climate Finance, with Richard Manley (Canada Pension Plan Investment Board), Celine Herweijer (HSBC), Hana Al Rostamani (First Abu Dhabi Bank PJSC), Daniel Pinto (JP Morgan Chase & Co) and Makhtar Diop (IFC). Event webcast.
1600-1730: Getting Carbon Markets RIGHT for Communities – A Conversation on Fair GHG Accounting, with Anna Lehmann (People’s Forest Partnership), Francisca Arara (Brazil), Gustavo Sanchez (Mesoamerican Alliance of Peoples and Forests), Julia Sunderland (Equitable Earth), Christina Magerkurth (ART/TREES) and Sarah Walker (Wildlife Conservation Society). Event webcast.
1730-1900: Revolutionizing REDD+: How to Set the Standard and Move to REDD 2.0, with Rick Saines (Pollination), Naomi Swickard (Verra), Sarah Walker (Wildlife Conservation Society), Sassan Saatchi (CTrees) and Jeff Silverman (Conservation International). Event webcast.
1900-2000: Carbon Capture and Storage (CCS): Towards Long-Term Commercial Deployment, with Ruth Herbert (Carbon Capture & Storage Association), Piers Forster (UK Climate Change Committee), Catherine Raw (SSE Thermal) and Pierre Girard (Neptune Energy). Event webcast.
Don’t forget you can see the full programme overview (as well as all COP28-related IETA content) on our COP28 online hub!