Nature @ COP 27 Daily Brief – Nov. 12

• Blue Ambition Loop. The Ocean & Climate Platform, alongside the World Resources Institute (WRI), the High-level Climate Champions (HLC), the Global Ocean Trust and the UN Global Compact, undertook a mapping exercise to track, aggregate and visualise progress made by non-state actors towards ocean-based climate actions. Released yesterday, the ‘Blue Ambition Loop: Achieving Ambitious 2030 Ocean-Climate Action’ report is a short visual summary of findings. It addresses five key sectors: marine conservation, ocean-based transport, marine renewable energy, aquatic food production and coastal tourism.
• Blue Carbon. Three new reports based on work supported by the Bezos Earth Fund were released yesterday by Environmental Defense Fund (EDF), highlighting the potential of different blue carbon interventions to help in the fight against climate change and act as natural climate solutions (NCS), some of which may be marketable with further research and economic and policy action. The three blue carbon reports highlight the state of the science on nearshore blue carbon pathways, which have historically received the most attention, as well as emerging NCS that have been proposed for the open ocean and those involving seaweed aquaculture.
• Blue Carbon Principles. On a related note, The World Economic Forum’s Friends of Ocean Action, Salesforce and others have produced the High-Quality Blue Carbon Principles & Guidance to ensure that blue carbon stakeholders are engaging the market effectively and with integrity.
• 1t.org in India. 1t.org announced the first four Indian companies pledging to conserve, restore and grow trees and forests: Vedanta, ReNew Power, CSC Group and Mahindra. Following the launch of the 1t.org India Platform last March, companies are committing to action on forests within this decade to support livelihoods and ecosystem restoration. This was part of 12 additional corporate pledges made at COP27, which take the commitments to a total of 6.9 billion trees from a total of 80 companies. At least 5 of those companies have included mangroves in their pledges.
• Water security in Bangladesh. The Netherlands has provided funding for an SNV project that will enhance water security in Bangladesh. Working with the government of Bangladesh, SNV will contribute to improving sanitation, solid waste, and drainage water management to protect the health and well-being of city populations. The project will be conducted over the course of five years in twelve locations, with a budget of € 6.4 million.

With many questions coming in around the state of Article 6 discussions, we thought it would be useful to share this helpful primer from Browning Environmental Communications.

5 things to expect at COP27 on carbon markets
 
While there are still contentious points to negotiate in Article 6 of the Paris Agreement, carbon markets will not take as much of a front-row seat as they did at COP26. The Article 6 Rulebook was a landmark decision last year, which has subsequently led to the formation of the Article 6.4 Supervisory Body this year, which will continue to move forward on the Article 6.4 agreed guidance. 
 
In spite of this, negotiations are still due on issues that remained unresolved last year, including on Article 6.2 (bilateral emissions reductions trading) and Article 6.4 (carbon trading under a UN-managed mechanism). These will likely be addressed in the upcoming COP27 negotiations, as well as how Article 6 developments apply to the voluntary carbon market.

1. Emissions avoidance

One topic left undecided at COP26 was the language surrounding emissions avoidance. Article 6 explicitly references emissions mitigation in terms of reductions and removals but what constitutes avoidance, and whether this can be included in mitigation efforts, is to date unspecified. 
 
Indeed, at the pre-COP negotiations in June, many countries concluded mitigation activities are wholly captured under removals and reductions, with little added benefit of avoidance. These discussions will likely continue in the coming weeks.
 
Pedro Martins Barata, Senior Director, EU Climate Policy, Environmental Defense Fund: “One of the issues that was left a little bit undecided in Glasgow was some language about emissions avoidance and what it actually means. As the Article 6 framework gets further implemented and detailed, there will be fewer and fewer of these ‘larger than life’ issues that we still have from Glasgow.”

2. What is a removal?

A further term left to be defined is that of emissions removals. Under the widely understood definition of emissions mitigation (see takeaway 2), removals constitute half of what is eligible for emissions trading under Article 6. 
 
Nevertheless, the role of nature-based removals and technology such as Carbon Capture and Storage still requires further clarity – including rules on use, monitoring, reporting, and emissions reversals – which will be one of the jobs of the Article 6.4 Supervisory Body. The faster clarity is provided, the quicker countries can implement their related strategies.
 
Lina Barrera, Vice President for International Policy, Conservation International: “The Article 6 Supervisory Body will be working on recommendations for activities involving removals and how they will be treated under Article 6.4. Since removals are half of what’s eligible – the other half being reductions – the faster we can get clarity on those rules, the sooner countries and project developers can start implementing, and we definitely want to see that moving as quickly as possible.” 

3. Share of Proceeds in the voluntary carbon market

One decision that came from COP26 was that of Share of Proceeds under Article 6.4. This requires that an equivalent of 5% of the “share of proceeds” from carbon markets linked to the UN-managed mechanism (as per Article 6.4) must be transferred to the Global Adaptation Fund. Subsequently, these funds will be used to finance developing countries’ climate adaptation efforts.
 
Whether, or how far, Share of Proceeds should be applied to the voluntary carbon market, which by its nature is not bound to one mechanism, or one state, is contentious, and is expected to be debated at COP27 – being only the fifth UNFCCC COP to be held in Africa, COP27 is a particularly timely event to develop this issue. 

4. Corresponding Adjustments

Corresponding Adjustments (CAs) will prevent a country from double-counting its emissions reductions: if Country A trades carbon to Country B, Country A must remove these emissions reductions from its own records so that Country B can use them on its. This much was agreed-upon last year in Glasgow.
 
Despite these developments, the issue has continued to prove highly contentious among negotiators and interested parties. This includes, as well, whether this international accounting mechanism might apply to the voluntary carbon market: countries must decide whether private companies can take CAs, meaning the country cannot count the emissions reduction, or not. And, if so, what price premium might be associated with such trades. 
 
What’s more, it is still unclear how the accounting of CA should be aligned with single-year targets, which constitute many Nationally Determined Contributions goals (e.g., targets of 2025, 2030, 2050).
 
Derik Broekhoff, Senior Scientist, Stockholm Environment Institute: “The real work on Article 6, parallel to the negotiations, is the work that needs to be done at the country level – both among buyer countries, which are figuring out to what extent they want to engage in international market mechanisms in achievement of their NDCs, and for seller countries – to develop the capacity to engage in these trades.”

5. What should be done about the Clean Development Mechanism? 

The development of Article 6 of the Paris Agreement has in turn created many discussions on what happens to the Kyoto Protocol’s Clean Development Mechanism (CDM). Over 250 methodologies have been developed under the CDM, and leaders must still decide on whether these can be upgraded or adapted for use under Article 6.4.
 
A second consideration, which was a last-minute compromise last year, is the allowance of CDM ‘Certified Emission Reductions’ (credits) generated from January 1, 2013, to be applied towards Nationally Determined Contributions. Discussions are expected to continue on this point.

Koronivia

Quick update:  As of last night, key asks have been included in a draft text such as: a focus on implementation of action, a comprehensive and widened scope to encompass food systems, collaboration across UNFCCC, and leveraging means of implementation. However, this is just a draft and the text has not been discussed yet and seems to be causing some division among parties.