Dodgy carbon market rules risk undermining Paris Agreement

MADRID 10th December 2019. The UN carbon market talks are at a crossroads in Madrid as ministers take over today. Carbon Market Watch calls on governments to only accept a deal that bans old Kyoto credits, includes rules to avoid double-counting, and to ensure that markets reduce emissions, and include strong environmental and social safeguards.

Last week’s negotiations on the Paris Agreement’s Article 6 - which will lay out the rules for future global carbon markets - made some progress on technical aspects, with the latest text published on Monday evening. But these 34 pages still contain all the contentious and potentially harmful options.

These include the possibility of carrying over old credits from the Kyoto mechanisms to be used towards countries’ climate targets under the Paris Agreement and the risk of counting emission reductions towards multiple climate targets. How to ensure that carbon markets reduce emissions globally and generate revenues for climate finance for developing countries is also still undecided.

Sam Van den plas, policy director at Carbon Market Watch said:

“We came to Madrid expecting governments to do their job and agree on carbon market rules that increase climate action. But after one week of talks, old credits and double-counting still pose a direct threat to the Paris Agreement. This makes a mockery of the slogan of these talks that it’s “time for action.”

The talks in Madrid have been described as slow and painful. There is a huge contrast between the gloomy atmosphere inside the negotiating rooms and the energy of young people on the streets and at the venue who demand urgent action against the climate crisis.

Sam Van den plas:

“We need our leaders to deliver a vision at COP25 that responds to the climate emergency. But if they are unable to agree on strong carbon market rules that benefit people and the planet, they should keep negotiating. No outcome from Madrid on carbon markets is better than locking in bad rules.”

Ministers take over the carbon market talks today. The COP25 is scheduled to run until Friday the 13th December.

An overview of crunch issues on the table

1. Avoiding double counting and old Kyoto credits

Countries like China, Brazil and India that together hold 60% of the existing credits under the UN’s Clean Development Mechanism (CDM) keep pushing for a carryover of credits. Australia has announced that it plans to use old credits to meet its already inadequate climate target.

Many countries remain adamant that they will not accept a deal that allows old credits or double-counting of emission reductions, as such a deal would undermine the environmental integrity of future markets. These include the EU, Mexico, Switzerland, Costa Rica, New Zealand that are part of the so-called environmental integrity group, the Alliance of Small Island States (AOSIS), and the group of Least Developed Countries (LDC).

Gilles Dufrasne, policy officer at Carbon Market Watch said:

“Double counting emission reductions or using old credits to reach climate targets instead of actually cutting pollution would be cheating. But the atmosphere cannot be cheated. While countries go to great lengths to defend and create policy loopholes, emissions are rising and the devastating impacts of the climate chaos are all around us.”

2. Delivering emission reductions instead of offsetting

AOSIS that represents countries that are the most vulnerable against the rising sea levels supports partial cancellation of credits as a way to reduce emissions instead of compensation through offsetting.

Gilles Dufrasne:

“The carbon offsetting practice from the past is a zero-sum game for the climate. What matters is what the atmosphere sees and carbon markets should deliver global greenhouse gas reductions rather than shifting pollution around."

3. Social safeguards and upholding human rights

As governments are under pressure to reach an agreement on Article 6, there is a risk that references to human rights could be left out of the final agreement. Countries like China, Saudi-Arabia, Brazil consider human rights a national issue and don’t want to include safeguards that would ensure that the carbon markets do not harm local communities.

Many projects under the Kyoto Protocol’s Clean Development Mechanism (CDM) caused harm to the environment and local communities that had no channel to seek redress. These past mistakes must be corrected under the Paris Agreement by including mandatory stakeholder consultations and an independent grievance redress mechanism under the Article 6 rules.

Gilles Dufrasne:

“Involving citizens in decision-making is not only a cornerstone of democracy, but it also leads to better projects. A deal that doesn’t include strong social and environmental safeguards is simply not acceptable.”

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