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COP25: World leaders debate global carbon trading playbook

  • Written by  Matt Maynard
  • Published in Climate
COP25: World leaders debate global carbon trading playbook
09 Dec
The Paris Agreement has reached adolescence. Its final stages of development require consensus on the highly contentious Article Six

Any good parent knows you should never make a rule that you can’t enforce. In the first week, however, of the UN COP25 climate change conference, the troublesome Article Six policy of the Paris Agreement was a 2015 promise some nations were perhaps beginning to regret. Article Six allows countries and companies to potentially leverage emissions savings they create overseas for continued or even increased emissions at home. The mechanism is currently as vague as it sounds.

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Countries are currently in the process of ratcheting down their nationally determined contributions (NDC) to the Paris Climate Agreement. Commitments need to be drastically increased if catastrophic warming of 1.5˚C is to be avoided. How Article Six is tightened and defined over the second and final week of COP25 will hopefully seal-up a potentially disastrous carbon leakage that could otherwise invalidate global efforts to combat climate change and exacerbate human rights violations. Many environmental organisations, Indigenous people and activists at COP25 are asking for carbon trading to be scrapped altogether. A marketisation of the global environment and climate, they argue, is the essence of the problem humanity is confronting. By no means can it be part of the solution.

indigenous unfcccIndigenous representation at COP25 is high (Image: UNFCCC)


The United Nations Framework Convention on Climate Change (UNFCCC) designated a full 30-minute press conference last Monday to just explaining Article Six. Unfortunately it got off to a baffling and worrying start when lobbyist data from some of the world’s largest fossil fuel producers was used to prop up the case for carbon markets. ‘Cost savings of $250bn per year in 2030,’ Yamide Dagnet told delegates about the carbon market mechanisms of the Paris Agreement, ‘makes it non-negotiable.’ Dagnet is a senior associate from the global research organisation, the World Resources Institute (WRI). The evidence she was sharing was compiled by the International Emissions Trading Association (IETA). This business lobbying group includes BP, as well as Shell, whose chief climate change advisor David Hone boasted at last year’s COP24 that the company could take some credit for the Paris Agreement opening the way to carbon trading.

Carbon markets under Article Six could actually cause an increase in overall global greenhouse gas emissions as well as stimulating ‘perverse incentives’ for nations to set less ambitious NDCs, according to peer reviewed research from the Stockholm Environment Institute. The institute found that putting limits on carbon transfers between countries could help address these risks, but the IETA is calling for so-called Internationally Transferred Mitigation Outcomes to have no limits for either the seller or buyer. Dagnet and her WRI team were unable to reply to Geographical about why they were presenting business lobbying materials to UNFCCC delegates rather than peer reviewed climate science. Yet Dagnet did warn in her speech that without proper oversight and robustness, the Paris Agreement’s carbon markets would be characterised by ‘cheating, greenwashing and deceiving people.’

fridaysfuture john englartActivists from Fridays for Future were given a platform to get their message out to the world's leaders (Image: John Englart)

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Article Six, when it is finalised, could enable developing nations to provide less polluting fossil fuels such as natural gas to nations reliant on more polluting coal. In exchange they could receive carbon credits that they could use to help meet their NDC, despite not having made any emission reductions at home. ‘Significantly increasing energy exports,’ says Alberta’s Premier Jason Kenney of the gas-rich province’s plans to engage coal dependent nations, is ‘the global gamechanger on greenhouse gas emissions that Canada can play in the foreseeable future.’ That’s a pipe dream in the context of the Intergovernmental Panel on Climate Change’s radical decarbonisation timeline, requiring a 45 per cent global slash in emissions by 2030 to stand a chance of limiting warming to 1.5˚C. A carbon market that creates false incentives for nations such as Canada to expand fossil fuel drilling, infrastructure and supply chains will lock countries into development pathways where rapid decarbonisation becomes unviable.

Delegates at COP25 are also discussing the rules to ensure Article Six leads to real emission reduction. Corresponding credits will only be awarded for activities that would otherwise not have happened under business as usual. Although proving this additionality is difficult. The Stockholm Environment Institute identifies a ‘hot air’ phenomenon, whereby countries have gamed the Paris Agreement in presenting NDCs that are actually higher than their business-as-usual emission predictions. By deliberately overestimating how much they will pollute, countries expect that when the global carbon market begins, they could automatically gain carbon credits which they could then potentially sell to other countries. The Swedish research – featuring a frontispiece with dozens of multicoloured hot air balloons – suggests that this ‘hot air’ built into existing NDCs is enough to cancel out all real mitigative efforts by countries that have been more ethical in their carbon accounting.

Preventing double counting in carbon markets is a further sticking point in Article Six negotiations. If Canada does succeed in marketising gas exports to replace coal use in a secondary country, it’s unclear which of the two nations would receive the carbon credit. While stricter regulation and transparency may help alleviate these issues, there is a growing clamour from a very diverse group of actors at COP25 arguing it’s not the markets that need to change, but the system itself.

greta unfcccGreta Thunberg made it to the conference on Friday (Image: UNFCCC)


‘Climate is not a game,’ a Fridays for Future young leader from Canada, scolded the COP25 politicians currently attempting to wrestle Article Six’s control dials to the climate crisis. ‘After 25 years,’ she continued, ‘of (this) fake international regime… we are asking you to stop.’ The global Fridays for Future school striking movement is in force at the conference and was bolstered late on Friday by the arrival in Madrid of the Swedish teen Greta Thunberg who founded the movement. ‘We cannot rely on market based solutions to solve the climate crisis,’ Joel Peña, an Indigenous Mapuche youth, told the conference. ‘What happened in Chile is just a symptom of a global problem,’ he added of the nation whose plans to hold the COP collapsed last month under protests against inequalities created under its neoliberal system.

United sentiment from Fridays for Future was reinforced by the French NGO Planète Amazon on Tuesday. Researcher Cassandra Smithies from the Global Justice Ecology Project explained how monetarily incentivised programmes such as the REDD+ project in the Atlantic Forest in Brazil have resulted in communities being confronted by armed guards when going into the forest to collect food. Tom Goldtooth, from the Indigenous Environmental Network, described the entire accord made in Paris as a trade agreement that seeks to marketise the natural world. ‘The adoption of Article Six,’ he concluded in a subsequent conference appearance with Friends of the Earth International on Thursday, ‘will open the door to decades of inaction, distraction and corporate power grabbing.’

Stewardship of the greatest threat that has ever faced mankind is at a crossroads at COP25. Global leaders continue to meet behind closed doors to discuss the marketisation of global carbon. As quickly as business leaders see the advantages of getting behind it, there is growing sense among civil society that Article Six is the Paris Agreement’s Trojan Horse allowing for emissions as usual. Strict, consistent and enforceable rules seem the best hope for keeping it on the reigns for now.

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