High road to Dubai COP28: Why discussions on carbon credits are important at upcoming Bonn climate conference
- June 3, 2023
- Posted by: OptimizeIAS Team
- Category: DPS Topics
No Comments
High road to Dubai COP28: Why discussions on carbon credits are important at upcoming Bonn climate conference
Subject: Environment
Section: Climate change
Context:
- Carbon markets will be a key discussion topic at the Bonn Climate Change Conference in Germany, scheduled from June 5-15, 2023.
Details:
- The Bonn Conference will advance the work on how countries can cooperate to fulfil their nationally determined contributions (NDC) through provisions made under Article 6 of the UN-mandated Paris climate pact.
- More than 66 per cent of countries plan to use carbon credits to meet their NDCs.
About Bonn climate change conference (BCCC):
- The conference’s main objective was to examine and put into action measures for addressing climate change, including specifics on how the Paris Agreement will operate after it enters into force in 2020.
- The Talanoa Dialogue, a process intended to help countries improve and implement their Nationally Determined Contributions by 2020, was launched at the end of COP23 of BCCC..
- It was dubbed the “Fiji Momentum for Implementation,” which outlined the steps that must be taken in 2018 to make the Paris Agreement operational.
Carbon markets:
- Carbon markets are trading systems in which carbon credits are sold and bought.
- Article 6 of the Paris Agreement deals with trading carbon credits.
- Clause 6.2 allows countries to trade greenhouse gas emission reduction outcomes, and 6.4 establishes a market for trading these reductions between countries under UN supervision.
- Credits are certificates representing one tonne of carbon dioxide equivalent that has either been prevented from entering (emissions reductions) or removed from the atmosphere (CO2 removals).
- They can be generated from projects such as restoring forests, setting up renewable energy, managing industrial gases, etc.
- Rules for carbon markets:
- The parties created a rulebook for carbon markets in CoP26, Glasgow.
- Concerns over the carbon markets:
- Transparency is an issue in carbon markets.
- Under 6.2, parties decided to keep information on carbon credits hidden after they had justified the reasons to the reviewers.
- If the review team spots inconsistencies, the party is encouraged to address them. They, however, cannot make confidential findings public, according to the adopted decision on Article 6 at COP27.
- Some countries used national security to push confidentiality.
- ‘Carbon removal’ means removing carbon dioxide from the atmosphere. It can be land-based, like afforestation or reforestation, ocean-based and engineering-based such as direct air capture (where big machines suck CO2).
- Mitigation contribution emissions:
- Credits not authorised for NDCs or other international mitigation purposes — but could still be sold on voluntary carbon markets, are named “Mitigation contribution emissions”.
- Thus, corporates cannot use credits to offset their emissions when emission reductions are counted by a country.
The Bonn conferences’ Subsidiary Body for Scientific and Technological Advice (SBSTA):
- SBSTA’s agenda for Article 6.4 involves further work on the rules, modalities and procedures developed last year at Sharm-el-sheikh.
- The Supervisory body will discuss removal activities based on the information note released by the secretariat. The note has attracted negative attention for its favoured stance on ‘nature-based removals’ as against ‘engineered removals’.
Internationally transferred mitigation outcomes (ITMOs):
- Under ITMO, the aim is to establish bilateral or mini-multilateral markets—similar to the EU Emissions Trading System.
- It is also about securing the overall mitigation of global emissions.
- Internationally transferred mitigation outcomes (ITMOs) use a carbon dioxide equivalent [CO2e] metric for a new set of market provisions or other greenhouse gas (GHG) mitigation outcomes that are defined under Article 6 of the Paris Agreement.
- Under Article 6.2 of the Paris Agreement,ITMOs differ from previous offset schemes, as they count toward countries’ Nationally Determined Contributions (NDCs), support overall mitigation in global emissions (for Article 6.4) and involve more substantial government participation than under the Clean Development Mechanism of the Kyoto Protocol. Although the Paris Agreement rulebook is not fully finalized, enough has been agreed for some countries to begin engaging and planning for ITMO transactions.