Talks on finalizing the details of an international carbon market under the Paris Agreement continue to inch forward at the UN Cop 29 climate conference in Baku, Azerbaijan, but with key sticking points yet to be resolved.
The ministers leading the carbon market talks released new texts for Article 6.2 and Article 6.4 late on Tuesday and plan to hold consultations this afternoon as they try to bridge the remaining gaps. Those two sections of the Paris Agreement govern how countries can use carbon credits to meet their GHG emissions-reduction pledges, known as nationally determined contributions (NDCs). Article 6 aims to help set rules on global carbon trade.
"We are very encouraged by the constructive approach by all groups and parties and hope we continue in this mode", New Zealand environment minister Simon Watts said on Wednesday during a stocktake of the negotiations held by the Cop presidency.
Talks in Baku on Article 6 got off to a positive start, with parties agreeing to carbon credit standards, which provided a sense of optimism to the negotiations. But countries remain divided on certain issues, such as whether the Article 6.2 registry is meant to serve only an accounting function or can also be a transaction registry.
Most parties say they could live with the Article 6.2 registry lacking the ability to issue credits, known as internationally transferable mitigation outcome (Itmo) units, but they are divided on whether it should be able to transfer and hold the units, said Singapore minister of sustainability and environment Grace Fu, who is facilitating the talks with Watts.
"Our preliminary view is that a potential landing could be to explore a dual registry system," she said.
Under this approach the Paris registry would only serve an accounting function, while the UN Framework Convention on Climate Change secretariat could provide separate system that would "provide parties with issuance functionality," Fu said.
Watts also said that there are "divergent views" on other issues, including how to address "inconsistencies" with carbon credits, such as avoiding double counting of emissions reductions, but did not provide any details.
"We are monitoring these issues as well for the final agreement," he said.
The latest 6.2 negotiating text says that Itmos found to inconsistent cannot count toward a country's NDC or any other international emissions mitigation purposes until a review is completed and those issues are resolved. In addition, the text calls for a team of technical experts to determine whether any inconsistencies are "significant" and that any found to be significant and "persistent" to be made public.
