Countries at the UN Cop 29 climate talks in Baku, Azerbaijan, on late Saturday adopted the rules for international carbon trading under the Paris Agreement, a rare bright spot in contentious negotiations that have dragged on well past their scheduled end.
After adopting rules for Article 6.2 and Article 6.4 of the Paris Agreement during a late evening plenary, ministers and negotiators applauded in recognition of their efforts. The decisions come a year after the carbon market rules were supposed to have been adopted at Cop 28 in Dubai, nine years after Cop 29 in Paris, and about 24 hours after the Baku talks were scheduled to end.
"We have ended a decade-long wait and unlocked a critical tool for keeping 1.5 degrees in reach," Cop 29 president Mukhtar Babayev said. "Climate change is a transnational challenge and Article 6 will enable transnational solutions. Because the atmosphere does not care where emissions savings are made."
Article 6.2 and Article 6.4 govern how countries can use carbon credits to meet their greenhouse gas (GHG) emissions-reduction pledges, known as nationally determined contributions (NDCs). Article 6 aims to help set rules on global carbon trade.
Article 6 discussions helped get Cop 29 off to a positive start, with the adoption of key standards for the creation of carbon credits under the Paris accord. But after that, negotiators still had to resolve a number of issues, most notably the design of an international registry to keep track of the credits.
The talks ultimately settled on a "dual layer" approach, agreed to create a registry to issue and trade credits that would be run by the UN and would be separate from the Article 6 registry, which would only serve an accounting function. The text also says that the inclusion of any emissions credits — known as internationally transferable mitigation outcome (Itmo) units — in the UN registry does not represent any sort of validation of their environmental integrity, in response to concerns raised by the US and others.
Further refinements were made to the decision text over the last three days before the Saturday night decision, including the details on what countries need to include in electronic reporting of the credits.
Carbon market supporters have generally backed the Baku texts, although some do not agree with all of the details. But they say the text does not harm or constrain international carbon trading, meeting their main objective for Baku.
Saturday standoff
But Cop 29 has reached a stalemate in negotiations on a new climate finance goal, as developed and developing countries struggle to bridge a huge divide on how much the latter should receive from the former. The lack of progress has raised the possibility the talks could collapse and end without any agreement at all.
"This is the final stretch you have all been working very hard and I know that none of us want to leave Baku without a good outcome," Babayev said. "However, time is not on our side."
The cop presidency suspended the plenary after the Article 6 decisions to give countries more time to try to reach an agreement, saying it would resume "later tonight."
Earlier in the evening, delegates from the Alliance of Small Island States (AOSIS) and the Least Developed Countries (LDCs) group staged a temporary walkout to protest what they say has been a process that lacks inclusion.
"The process is not including us as much as it should be, and when it does, and we provide input, our inputs are being ignored," said Evans Njewa, a Malawai environment official who chairs the LDC Group.
The most recent negotiating text, released on Friday, angered developing country officials by proposing that developed economies provide $250bn/yr in climate finance by 2035, from a broad range of sources, not just public funds.
Developing economies earlier this week floated numbers of $440bn-$600mn/yr for a public finance layer. They also called for $1.3 trillion/yr in total climate finance from developed countries, a sum which the latest draft instead calls for "all actors" to work toward.
As a potential compromise, some countries, including Brazil and Somalia, have suggested at least $300bn/yr and up to $350bn/yr or $390bn/yr.
Further eroding trust among delegates were reports that an official from Saudi Arabia had been allowed to make changes to negotiating text.
"At Cop 29, we are witnessing a geopolitical power play by some fossil fuel states at the expense of the poorest. As the EU, we strongly oppose abandoning the path set in Dubai," German foreign affairs minister Annalena Baerbock said.
