Latin America urged to unite on carbon market efforts
Latin American countries must unite efforts in carbon market development and leverage shared experiences, delegates heard at an industry event.
Carbon markets in Latin America have not reached full stages of development and trail behind those in Europe and California, but they are making progress, addressing unique challenges and opportunities in building their carbon market frameworks.
Latin American countries need a unified voice in global carbon market talks, Alejandra Camara, director of Argentinian climate change consulting firm Genesis, said during the Mexico Carbon Forum in Leon, Guanajuato. "We must make ourselves heard, our problems are not the same as those in developed nations," she added.
Renewable energy projects in some countries, such as Argentina, are still heavily dependent on external support or carbon credits to be viable, Camara said. She criticized the UN's Clean Development Mechanism (CDM) for no longer recognizing these projects as additional in certain countries. An additional project is one that would not have occurred without the incentive provided by carbon credit revenues.
Mexico launched a pilot emissions trading system (ETS) in 2020 to cap greenhouse gas emissions (GHG) from major industries, but the project has stalled for almost two years.
Chile implemented a carbon tax in 2017 targeting large emitters in the power and industrial sectors. The country is developing a more comprehensive ETS to meet its climate goals, particularly through Article 6 of the Paris Agreement, which allows for international cooperation in reducing GHG emissions.
Every region faces unique challenges and "even within our own countries, the situation varies," said Cristian Mosella, director of Chilean firm EnergyLab, emphasizing the need for tailored project strategies that reflect local realities.
Meanwhile, Ecuador is focusing on carbon offset projects to reduce deforestation. The country is a relatively new player in the carbon market, Jackson Torres, director of Ecuadorean agency Soft Landing said. Last year, Ecuador hosted its first Carbon Forum, marking a significant step toward engaging the private sector in carbon offset projects, he added.
Frequent changes in direction after elections and turnover among government officials also make consistent policy implementation on carbon markets difficult, Andres Pascuas from Colombian firm Ambiente & Comunicaciones said.
Colombia introduced a carbon tax on fossil-fuel emissions in 2017 and is developing a broader ETS as part of its Nationally Determined Contributions (NDCs) under the Paris Agreement.
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Mexico’s Queretaro state readies carbon offset program
Mexico’s Queretaro state readies carbon offset program
Mexico City, 15 August (Argus) — Mexico's central Queretaro state said it will launch a new compensation mechanism to provide a structured framework for carbon reduction projects. The joint initiative between the state government and MexiCO2, a subsidiary of Mexico's stock exchange, "aims to support all sectors in reducing emissions through frameworks tailored to Mexico's needs and at the lowest possible cost," said Eduardo Piquero, chief executive of MexiCO2 during the Mexico Carbon Forum in Leon, Guanajuato. The mechanism will also track emission reductions used for state-level carbon tax payments, voluntary offsets and other purposes, contributing to Mexico's commitments under the Paris Agreement. The compensation mechanism registers and certifies emission reduction projects within the country, integrating standards and eligibility criteria designed to ensure the initiative achieve real, verifiable, and transparent benefits, Ricardo Torres, Queretaro's deputy environment ministry told Argus on the sidelines of the event. Queretaro leads Mexico in carbon reduction efforts, as it is the only state currently allowing a combination of carbon taxes with utilization of carbon offsets to meet state-level carbon tax compliance obligations. The compensation mechanism is expected to launch in 2025, with plans by MexiCO2 to expand it to other states, including Guanajuato and Tamaulipas, Ricardo Torres, Piquero told Argus . By Antonio Gozain Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Q&A: 'Business-as-usual' on climate finance for the EU
Q&A: 'Business-as-usual' on climate finance for the EU
Brussels, 15 August (Argus) — The EU's position on climate targets is lacking ambition, while the block is following a business-as-usual approach to climate finance, non-governmental Climate Action Network (CAN) Europe head of climate Sven Harmeling says. But he still sees potential for progress at the UN Cop 29 climate summit in Baku from 11-22 November. How are the EU's negotiation positions shaping up for UN climate talks? EU conclusions on climate finance are still quite vague. While this gives EU negotiators some room for maneuver, it also fails to send a clear signal that the bloc is ready to step up on financial commitments and move subsidies away from fossil fuels. This remains a key area that needs to be addressed. The draft suggests that the EU is essentially following a business-as-usual approach, aiming for the $100 billion goal and looking to get a bit more from the private sector and other countries. However, this falls short of what is needed. The real requirement is more in the range of trillions. That will be a challenge at Cop 29. And how positive is the EU's related draft negotiating mandate for Cop 29? There are some promising elements in the draft, such as the emphasis on transitioning away from fossil fuels and the expectation for investors to align with the new nationally determined contributions (NDCs) that countries must submit next year. There is also mention of finance from the private sector. However, support for developing countries in their transition is one of the weaker points. Many elements are familiar — this is typical of the Cop process where progress builds on previous agreements — and the agreements at Cop 27 and Cop 28 around moving away from fossil fuels are broadly steps in the right direction. Now, it is crucial for Cop 29 to push further, with more countries ready to move away from fossil fuels. Aside from the lack of detail on 2040 emission cuts, what other points are lacking in the EU's draft COP position? One significant issue is the lack of ambition in the EU's targets, particularly the commitment to a 55pc reduction in greenhouse gas (GHG) emissions compared to 1990 levels by 2030. Many scientific analyses suggest that this is insufficient for the EU's fair share to keep the rise in average global temperatures to the 1.5°C limit, compared to pre-industrial levels. The target is not up for discussion. That is a point of criticism for us. We are also advocating for climate neutrality by 2040 and this target is not explicitly stated in the draft. Are you concerned about a backward shift in the EU on international climate action after the elections, especially with Hungary now holding the presidency? There has been no significant backward shift in the EU's climate policies. It's more about progressing to the next level. The Green Deal will largely remain intact, although there will be tweaks, which is necessary because every law needs to be assessed for its effectiveness and potential improvements. We will also see more detailed plans on how to advance clean and green industries with clear objectives. At this stage, I would say the EU's draft Cop negotiation mandate is not worse than previous mandates for past summits. And the EU presidency's role, in principle, is to moderate the process and gather views from member states. Cop decisions are not typically where tough domestic decisions are made. For instance, the draft negotiation mandate being prepared for EU climate ministers says very little about the 2040 emissions reduction target currently on the EU agenda. How optimistic are you about Cop 29 reaching strong conclusions? There is potential to make progress, particularly in furthering the transition away from fossil fuels and encouraging more ambitious NDCs from countries. However, there are also significant concerns, particularly regarding the insufficient provision of finance and the slow phase-out of fossil fuels in both developed and developing countries. The new finance goal currently under discussion and to be agreed at the summit is one of the most critical deliverables for Cop 29, and we have yet to see if the EU or the US is truly prepared to shift gears on this front. How beneficial is holding another Cop in a fossil fuel-producing country like Azerbaijan? It's not ideal for the UN Framework Convention on Climate Change (UNFCCC) process to have a fossil fuel-based economy hosting another Cop, especially one that has not previously played a significant role in the UNFCCC. Azerbaijan's human rights situation is also a concern. Civil society plays a crucial role in national climate debates as a positive force. This role might be compromised in a country where freedoms are restricted. However, I don't want to overstate the importance of the host country on the overall outcomes of a Cop. Ultimately, the results depend more on the will of the most powerful countries than on the presidency. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Major banks ‘far off track’ to hit climate targets: WRI
Major banks ‘far off track’ to hit climate targets: WRI
London, 14 August (Argus) — Major banks are "far off track" to meet their climate pledges, and many of their commitments are not ambitious enough, non-profit the World Resources Institute (WRI) has found. WRI assessed 25 banks in 10 countries, including the four biggest in the US — JP Morgan Chase, Wells Fargo, Citibank and Bank of America — and the world's biggest bank in terms of assets, the Industrial Commercial Bank of China. WRI analysed the institutions' net zero commitments across transparency and ambition, implementation, credibility and nature and equity. Of the 25 banks analysed, just four have a "long-term commitment to phase out or [phase] down oil and gas finance", WRI found. Most of the banks — 16 of the 25 — have committed to phase out coal financing by 2040 or earlier. Although most banks reported "green" financing — albeit using different definitions — this was often significantly lower than financing for fossil fuels, it added. If the world is to meet climate targets in line with the Paris Agreement, investment in "clean energy" must by 2030 outpace fossil fuel investments by 10:1, according to the IEA. But the banks assessed "fell far short of this mark", averaging a ratio of 1.3:1, WRI said. The WRI pointed to "significant blind spots" in banks' plans. The majority of the institutions it assessed do not have a commitment to reduce deforestation, while "high emitting sectors like shipping and real estate are barely covered", it found. Overall, banks' commitments are varied and standardisation is lacking, making comparison difficult, WRI noted. A UN-appointed group in November 2022 set out guidelines to "bring integrity to net zero commitments", while the UK in October last year issued a "gold standard" climate transition plan framework for companies and financial institutions to follow. The focus on private sector finance is intensifying, ahead of the UN Cop 29 summit, set for November in Baku, Azerbaijan. Finance will be the key topic at Cop 29, including discussions around funds to tackle climate change in developing countries. Several jurisdictions, including the EU, are clear that public climate finance will not be enough to address climate change, and that private sector finance must be mobilised. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
EU Cop 29 negotiating mandate light on finance goals
EU Cop 29 negotiating mandate light on finance goals
Brussels, 14 August (Argus) — An EU draft negotiating mandate ahead of the UN Cop 29 climate summit reiterates calls for a global approach to carbon pricing and stronger climate plans, but remains light on climate finance commitments. EU environment ministers are working on the EU's negotiating mandate for the Cop 29 climate talks in Baku in 11-22 November. Conclusions are expected to be adopted in October. The current text calls on other jurisdictions to "introduce or improve" their own carbon pricing mechanisms, including carbon markets aligned with the Paris Agreement. The EU wants "action" to scale up global carbon pricing and promote harmonisation. Negotiations on outstanding elements of Article 6 of the Paris climate agreement, which includes two market-based carbon pricing mechanisms, will continue at Cop 29. But the draft merely reconfirms the EU's commitment to existing climate finance goals, although finance is set to be the overarching theme of the Baku summit. In Baku, Cop parties will have to agree on a new climate finance goal — known as the new collective quantified goal (NCQG). This represents the next stage of the $100bn/yr of climate finance that developed countries agreed to deliver to developing countries over 2020-25. The EU's draft recalls that the bloc and its member states are the world's largest climate finance contributors, providing "at least around" a third of the world's public climate finance. The EU also notes the "overachievement", by developed countries, of the collective $100bn/yr goal for climate finance. Although developed nations surpassed the goal by $15.9bn in 2022 , it was missed in 2020 and 2021, according to the OECD. Some developing countries have called for at least $1 trillion-1.3 trillion/yr for the new goal, but developed countries have yet to come forward with an amount. Barring future input from EU finance ministers, the current draft text vaguely "invites" other countries to scale up international climate finance. The text also emphasises that public finance alone cannot deliver the levels of funding needed to transition to a climate-neutral global economy. Mobilisation of "private, philanthropic, and innovative" climate finance is essential, the text states. The draft also further urges nationally determined contributions (NDCs) — climate plans — to be aligned with the Paris agreement's 1.5°C global warming limit. The Cop 28 final text last year encouraged parties to have "ambitious, economy-wide emission reduction targets, covering all greenhouse gases, sectors and categories and aligned with limiting global warming to 1.5 °C" in their next NDCs. Countries are expected to hand in updated climate plans to the UN by February 2025. The EU reiterates the importance of transitioning away from fossil fuels, tripling renewable energy capacity, and doubling annual energy efficiency gains by 2030, also agreed at Cop 28. The draft climate conclusions further note that NDCs are "collectively" far from being on track towards limiting global warming to 1.5°C and achieving the Paris agreement's long-term goals. But the ministers' draft text makes no mention of any need to readjust the EU's targets, particularly the commitment to a 55pc reduction in greenhouse gas (GHG) emissions by 2030. The European Commission's communication earlier this year, on a 90pc net GHG emissions reduction by 2040 for the bloc, compared with 1990 levels, only "represents a basis" for discussions on an EU NDC to be submitted ahead of Cop 30. With a nod to Azerbaijan's political situation, the text adds that climate transition needs to be just and follow a "human-rights-based approach". By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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