GLASGOW, (Thomson Reuters Foundation) – Negotiations on rules for global carbon markets at the COP26 U.N. climate talks in Scotland are tough, but there are hopes of a breakthrough after years of deadlock, the Norwegian minister trying to broker a deal said today.
Carbon trading regulations have been elusive and were omitted from a “rulebook” agreed in 2018 for the Paris climate accord, the landmark 2015 deal among almost 200 nations to limit global warming.
Norway and Singapore are now leading efforts for a deal on carbon markets in Glasgow.
“It’s difficult,” Norwegian Climate and Environment Minister Espen Barth Eide told the Thomson Reuters Foundation on the sidelines of COP26, noting past failures to agree on rules to govern the vaguely worded Article 6.
Still, he noted, there is “a can-do mood”. “Nobody wants to be the villain in Glasgow so far,” he added.
The two-week talks, seeking to advance progress under the Paris deal, are due to end on Friday – and Article 6 is one of several flashpoints.
Some countries, such as Bolivia, oppose any carbon trading, saying it will harm “Mother Earth” and create “business climate millionaires”.
Other developing nations, like small island states at risk of rising seas, want guarantees of a share of revenues from any trading to help them cope with global warming.
And many developed nations favour carbon markets, often quoting the International Emissions Trading Association which estimates that efficient international markets could cut $250 billion a year by 2030 from the cost of limiting climate change.
Among innovations, Article 6 would set up a Sustainable Development Mechanism that could allow, for instance, a rich nation to offset its industrial emissions by paying a poor country to protect tropical forests, or to set up a wind farm or solar power plant.
But there are no agreed rules for accounting for emissions savings generated by such initiatives.
“One of the main motives now is to ensure that there should be no double reporting” of the emissions reductions by both the seller and the buyer, Barth Eide said.
Article 6 could also pave the way to link existing carbon markets, such as in Europe or Canada, to improve volume and pricing.
Barth Eide said disputes remained over developing nations’ insistence that a share of the proceeds from all carbon trading should go to help them cope with rising temperatures, more droughts, floods, heatwaves and rising sea levels.
The Alliance of Small Island States (AOSIS), for instance, wants a 5% levy on all international transactions, an idea opposed by rich nations which say the extra costs would shackle trading.
Some delegates fear Article 6 might fail to be resolved in Glasgow and could be delayed again to 2022 when the 27th Conference of the Parties (COP) is slated to be held in Egypt.
“For the credibility of this COP series, we can’t keep this open forever,” Barth Eide said.
Asked if another year’s delay would be disastrous for the Paris Agreement, he said he did not think so, but added there was not much time to lose and the urgency of reining in climate change called for “a good result”.
Other thorny issues include how far carbon credits from a pre-Paris trading system – widely viewed as a failure because of loose accounting and over-supply – could be carried over.
Emerging economies with large amounts of credits from cuts in industrial emissions and forest protection – such as China, India and Brazil – favour a carry-over, while many developed nations fear they would flood any new international market.