Article 6 raises questions at Bonn conference

Negotiations on future carbon markets are advancing at the UN's climate change conference that is taking place in Bonn, Germany, from 6-16 June, although some divisive issues have been raised in what would otherwise appear to have been broadly constructive, technical discussions.

The conference is hosting parties for negotiations on technical issues in the run-up to the UN Cop 27 climate conference, which is to take place in Sharm-el-Sheikh, Egypt, in November.

Article 6 of the Paris climate deal lays down the rules for voluntary international co-operation on climate action, including through the trading of emissions reductions - known as ITMOs - between countries (Article 6.2) and the creation of a new mechanism enabling CO2-cutting projects togenerate emissions-reduction credits - essentially a successor to the Kyoto Protocol's clean development mechanism CDM (Article 6.4).

The main issue on Article 6.2 on the table at Bonn is the exact reporting requirements - what a country would need to disclose in the Article 6.2 "template", what information should be treated as confidential, but also what registries should be involved. Transparency on this issue will be crucial for the integrity of the new credits, environmental non-governmental organisation Carbon Market Watch (CMW) policy officer Jonathan Crook said.

Some parties are calling for voluntary carbon market registries to be eligible for Article 6.

The Chinese delegation on 14 June was heard to have created a stir as it balked against what it sees as too-strict reporting requirements under Article 6.2.

Consultancy Perspectives Climate Group's senior founding partner Axel Michaelowa, an observer with direct access to the negotiations, says lowering the standards for reporting will compromise the integrity and quality of carbon credits. This could turn Article 6.2 into a "loophole", Michaelowa warned. "Naming and shaming is the only way to make Article 6.2 credible," he said.

The Chinese and their allies in the Like-Minded Developing Countries group should not be allowed to undermine Article 6.2 with "whateverism", Michaelowa said. It is not clear why they decided to wait until the Tuesday of the second week of the conference to voice their dissent, Michaelowa said.

But EU delegation member Lambert Schneider of research institute Oko-Institut expects the issue to be resolved by the end of the talks.

A move by the Coalition of Rainforest Nations towards essentially allowing the use of REDD+ credits - reduced emissions from deforestation and forest degradation - to be allowed under Article 6.2 as ITMOs is the only issue in Bonn where decisions taken at the last UN climate change conference, Cop 26 in Glasgow last November, have been openly rejected, Schneider said.

Most parties were heard to have disagreed with the coalition, although some say it appears better organised and is enjoying more support on the issue than in Glasgow.

The main issue for Article 6.4 at Bonn is the continued absence of the mandated supervisory body for Article 6.4 activities. As the conference kicked off, all regions except Asia-Pacific and Caribbean-Latin America had their required two members plus two alternate members in place. Asia-Pacific appears to have agreed on its representatives with the help of some coaxing from Japan, but there seems to be persistent strong disagreement among delegates of the Caribbean-Latin America region over which members to send.

Article 6.4 discussions also focus on ensuring that while the scheme allows for some limited transition of credits under the CDM, much higher standards will be set, including ensuring the rights of indigenous people and carrying out "meaningful" consultations.

The first credits under Article 6.4 are expected to be issued two to two and a half years after the supervisory body is in place, given that the body will be responsible for the methodologies. Although this may appear late, environmental law firm the Center for International Environmental Law senior attorney Erika Lennon said the board should take the time it needs to ensure the utmost integrity of the credits.

Other remaining Article 6.4 issues include the processes for implementing the mandated 5pc share of proceeds and the overall mitigation outcome, under which 2pc of the credits must be cancelled.

Unlike Cop gatherings, there are no specific deadlines to be met at the Bonn conference.

By Chloe Jardine

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