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In the final week, the Parties acknowledged that reaching the 1.5°C goal implies moving away from fossil fuels, though the formal ratcheting of ambition was postponed to COP27. Anouk Faure from EcoAct’s Climate Innovation & Knowledge Center (CLICK) looks at the most important outcomes.
The Glasgow Climate Pact
The Glasgow Climate Pact was the final decision adopted by the 196 Parties to the Paris Agreement and reaffirmed the goal of limiting the increase in global temperature to well below 2°C and if possible, under 1.5°C, above pre-industrial levels. It was unprecedented in that it called upon Parties to accelerate efforts “[…] towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies.” While the initial text declared an exit of fossil fuels and related subsidies, the words “phase-down” and “inefficient” were added by India, supported last minute by China, unfortunately diluting the initial boldness of the Pact.
And yet, it is significant that the Pact recognised that current Nationally Determined Contributions (NDCs) are far from on track to reach this goal. The 1.5°C goal requires greenhouse gas (GHG) emissions to be reduced by 45% by 2030 compared to 2010 levels, yet current NDCs amount to a 14% increase of GHG. The COP Presidency therefore called on Parties to revisit and strengthen the 2030 targets in their NDCs as necessary to align with the Paris Agreement temperature goal by the end of 2022. Thereafter, Parties will have to update their NDCs every five years in line with the decision adopted on “common timeframes”.
Climate warming scenarios
According to The Carbon Brief, analysis of climate warming scenarios reveals widespread agreement between four different groups assessing the climate outcomes of COP26. They suggest that current policies will lead to a best-estimate of around 2.6°C to 2.7°C warming by 2100 (with an uncertainty range of 2°C to 3.6°C). If countries meet both conditional and unconditional NDCs for the near-term target of 2030, projected warming by 2100 falls to 2.4°C (1.8C to 3.3C). Finally, if countries meet their long-term net-zero promises, global warming would be reduced to around 1.8°C (1.4C to 2.6C) by 2100, though temperatures would likely peak around 1.9°C in the middle of the century before declining.
The adoption of Article 6
One positive outcome of COP26 was the important breakthrough for international cooperation as Article 6 was finally adopted.
Article 6 of the Paris Agreement aims to promote a cohesive, inclusive and balanced approach to help governments implement their NDCs through voluntary international cooperation. This cooperation mechanism, if properly designed, should make it easier to attain reduction targets and increase ambition. In particular, Article 6.2 and 6.4 aim to establish a policy foundation for market-based approaches to trade emission reductions. At COP26, the Parties managed to find compromise on issues that had previously stood in the way of agreement over the past 6 years:
- To counter concerns on double-counting, any carbon credits generated and sold will need to be recorded and added to the selling country’s NDC target.
- Countries agreed that 5% of proceeds from the sale of carbon credits must be collected and go towards financing climate adaptation in poorer countries.
- In order to increase emissions mitigation 2% of credits will be cancelled and therefore not allowed to count towards climate targets.
A resolution has been found to attend to credits generated by the Kyoto Protocol’s Clean Development Mechanism (CDM). Credits will be allowed to transition, but only those created post 2013 and they will only be allowed to count towards the achievement of initial NDCs (2025 or 2030 targets for most countries). A Glasgow Committee on non-market approaches was also established to implement the work programme of Article 6.8. It will meet bi-annually along with the Subsidiary Body for Scientific and Technological Advice (SBSTA), starting in June 2022.
Article 6 and carbon markets
Article 6 is a step forward for international carbon markets as it clarifies the rules on offsetting. Carbon credits, also referred to as Internationally Transferred Mitigation Outcomes (ITMOs) will also be allowed to be used “for other international mitigation purposes” or “for other purposes” (i.e., private actors can buy ITMOs for compliance with The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) or to support their climate targets and objectives). Therefore, the new framework is an opportunity to channel important sources of climate finance from private funds. The voluntary carbon market will likely and progressively adhere to these new rules for the purpose of ensuring all offsetting is aligned with the Paris Agreement.
However, less ambitious options were chosen on adaptation finance and the transition of CDM
As many parties (typically growing economies that are vulnerable to climate change) feared, the Share of Proceeds – a levy on Article 6 transaction to finance the adaptation fund – is only mandatory for the Sustainable Development Mechanism created by article 6.4 (which will replace the Clean Development Mechanism under the Kyoto Protocol) and not the international transfer of credits between countries entering ad-hoc agreements (6.2 activities), which eliminates potentially important sources of adaptation finance.
In addition to this, the rules exempt the older CDM credits (known as certified emissions reductions CERS) from the rules of accounting and adjustment which poses a high risk of credits being counted by both buyer and seller country. This may lead to “windfall” emission reductions units for developed Parties which could slow down incentives to carry out new mitigation actions, especially as the potential supply of CER units is 320m tonnes of CO2.
Climate and adaptation finance postponed to COP27
No formal decision was taken on adaptation finance, except through Article 6, but Parties are requested to submit their adaptations communication before COP27 (only 35 have done so to date).
A clearer roadmap for climate finance post-2025 has also be pushed to next year’s agenda for COP27, as the COP Presidency noted, “…with deep regret that the goal of developed country Parties to mobilise jointly USD 100 billion per year by 2020 in the context of meaningful mitigation actions and transparency on implementation has not yet been met”.