COP29 has started at a blistering pace with the approval of the Article 6.4 mechanism, laying the foundation for countries to trade carbon emission reductions.
Through these trades higher emitting economies will ideally be able to achieve their climate goals (called Nationally Determined Contributions, or NDCs) under the Paris Agreement. This will also allow for much needed funds to flow towards developing countries that have the potential to develop carbon projects or protect existing carbon sinks.
Mukhtar Babayev, president of COP29 said: “By matching buyers and sellers efficiently, such markets could reduce the cost of implementing NDCs by 250 billion dollars a year.” He also praised the spirit of compromise that made the deal a reality.
The move comes after the Article 6.4 Supervisory Body – the group of experts tasked with creating the framework of a emissions market under the Paris Agreement – finalized two key standards related to carbon removal and developing and assessing projects for a UN-supervised carbon market in October.
The Supervisory Body seemingly overstepped its mandate by enacting the framework before COP29 but today’s development confirms it was the right call and becomes part of a substantial milestone not only for carbon markets but also the Paris Agreement itself.
The approval will also likely allow for formal alignment with the existing voluntary carbon markets with standards like the ICVCM already in sync with Article 6.4.
Article 6.4 draws criticism
Not everyone was happy with the fast-tracked decision making process. Opponents voiced concerns on a number of issues ranging from the impact of carbon removal – seen by some environmental organizations as questionable – to the procedure itself which limits room for debate.
Erika Lennon, Senior Lawyer for the Center for International Envrionmental Law said in a statement: “Today, States allowed this rogue move from the Supervisory Body to prevail in the quest to start COP29 with a “win.” But this is hardly a win for people or the planet. Approving these carbon market rules without discussion or debate, sets a dangerous precedent for the entire negotiation process.
This is very concerning from a procedural standpoint: it bypasses States’ ability to even discuss, much less revise the standards before they go into effect. States’ oversight is all the more critical as the Supervisory Body’s efforts to get this done has resulted in risky rules that will lead to human rights violations and environmental harm.”
A new stage for carbon removal
The same environmental groups see carbon dioxide removal (CDR) as a get out of jail free card for companies and countries with high emissions. Regardless, the work of the Supervisory Board was also focused on CDR standards, with methodologies that open the door for a broad range of approaches to be part of a dynamic market that would generate much needed demand.
The CDR industry has seen rapid growth but has been largely driven by voluntary demand and offtake agreements from tech companies. Industry experts have pointed out that the lack of reliable standards has been weighing it down.
With one important hurdle now in the rear view mirror, this UN-issued standard could become the foundation for standardizing all types of carbon removal that span atmospheric, geological and ocean approaches, as well as utilization.
The work on Article 6.4 appears set to continue with delegates commenting that its approval at this stage of its development was necessary for – perhaps the main theme of COP29 – financing developing countries in support of their climate goals.
