Negotiators at the UN Cop 29 climate summit in Baku, Azerbaijan, appear close to a final agreement on the details of an international carbon market under the Paris Agreement.
The ministers leading the final discussions on 21 November released updated texts for Article 6.2 and Article 6.4 of the accord that attempt to bridge the gap on remaining issues. It is not yet clear if these are the final texts, but any work left may only involve some "small tweaks", International Emissions Trading Association (Ieta) international policy director Andrea Bonzanni said.
Those two sections of the Paris Agreement 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.
EU energy commissioner Wopke Hoekstra called Article 6 one area of the talks "where at least the text is a bit encouraging." "We've always been pleading for more progress on Article 6," he said. "We've stressed the tremendous importance of transparency, predictability, credibility of these items."
On the key issue of the Article 6 credit registry, the text reflects the idea of a "dual layer" approach that Singapore environment minister Grace Fu suggested on 20 November. The text calls for the creation of 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. "It looks like they managed to make both sides happy," Bonzanni said.
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.
"There was a concern that if the Itmos are in a UN registry, they may be seen as automatically having legitimacy or UN endorsement," Bonzanni said. The US should be happy with that language, he added.
But the EU got only some of what it has sought over the past year. Most notably, the latest text does not include a definition of a "cooperative approach," essentially what it means for countries to buy and sell emissions units under Article 6.
An earlier draft of the text included a definition, but there were concerns that it "could have restrained the markets significantly" and created confusion around certain requirements for when countries authorise Itmos, Bonzanni said. "I believe the presidency did a good job by making tough calls."
Ieta is not happy with everything in the text, but at the same time "there is nothing harmful" to trading in it, Bonzanni said.
