Cop: First UN carbon project registrations 'in 2H 2024'

The first offsetting projects under the new UN carbon market mechanism could be registered in the second half of next year, a member of its regulator said at the UN Cop 28 climate conference in Dubai.

If countries approve the supervisory body's recommendations on requirements for admissible methodologies for the new carbon market's projects at Cop 28, then the mechanism under Article 6.4 of the Paris climate agreement could become operational next year, the body's vice-chair, Mbaye Diagne, said on 3 December, with the first project registrations conceivable in the second half of 2024. The mechanism broadly replaces the Kyoto Protocol's clean development mechanism.

The recommendations on methodology requirements are one of two major Article 6.4-specific topics on which participants are expected to take a decision at Cop 28, alongside the supervisory body's recommendations on how to include carbon removals in the mechanism.

The recommendations' main methodology principles include "encouraging ambition over time", being "real, transparent, conservative, credible", and below business-as-usual baselines against which an activity's performance is measured. A much-debated "baseline contraction factor" is to ensure that the amount of creditable reductions is gradually decreased.

Another important principle is contributing to the "equitable sharing of mitigation benefits between the participating countries" — for instance, by ensuring that the duration of a carbon credit activity is shorter than the life span of the technology implemented.

Concern has been voiced, including within the Article 6.4 supervisory body itself, that excessively stringent principles may make projects under the mechanism excessively complicated and financially unattractive.

The "single-most important and robust avenue" is for Article 6.4 projects to offer "integrity and benefits", Zurich-base carbon market consultant Mischa Classen told Argus. This will allow for higher acceptance not just from the regulators governing carbon pricing schemes that could become demand centres for the future emissions reductions generated under Article 6.4, Classen said, but also from voluntary buyers.

Andrea Bonzanni, international policy director at the International Emissions Trading Association (Ieta), on 3 December urged participants to make decisions rapidly on methodologies, so that project developers can start to work with them. But Bonzanni warned that Article 6.4 is "not the only game in town", and it will need to be competitive not only with the voluntary carbon market but also with Article 6.2 of the Paris deal. Under this framework, countries sign bilateral agreements generating internationally transferred mitigation outcomes, to be used mainly but not exclusively towards the buyer country's nationally determined contributions to the Paris agreement.

Speaking for Ieta's 300-plus members, Bonzanni said Article 6.4 has the "big advantage" of being identified with "quality and integrity". But if the mechanism ultimately turns out to be too complex and costly, the overall amount of projects "might be lower than necessary", he said.

More than 60 bilateral agreements have been signed so far under Article 6.2 between the six buyer countries — Australia, Japan, Singapore, South Korea, Sweden, Switzerland — and more than 40 host countries.

Boosting Article 6.4 might create competition with Article 6.2 activities, according to Rueban Manokara of the National Climate Change Secretariat of Singapore. But for Singapore, Articles 6.2 and 6.4 are "complementary", he said.

By Chloe Jardine