It was one of the last technical points of the Paris agreement. The COP26 in Glasgow agreed on Saturday 13 November on the rules for applying Article 6 of the Treaty. It governs the carbon markets which will allow the exchange of emission reductions between countries. An unrecognized article, but which has the power to “make or destroy” the agreement, according to the specialized site Carbon Brief (in English). Franceinfo helps you to see more clearly about this progress, which may seem very technical but which is crucial in the fight against global warming.
What is a carbon market?
The principle of a carbon market is to allow a country that is unable to meet its greenhouse gas emission reduction targets to buy the reductions generated by another country or a company to compensate for its poor performance. balance sheet. For example, country A can buy a loan, which will allow country B to build a photovoltaic power plant rather than a coal power plant. Country B benefits from renewable energy and country A offsets its emissions. Well supervised, such a market makes it possible to free up new financing for the reduction of emissions.
What is section 6?
Less known than article 2, which sets the goal of limiting global warming “clearly below 2 ° C”, article 6 is one of the 29 articles of the Paris agreement (in PDF). It provides for the creation of three mechanisms of “voluntary cooperation” between countries to reduce greenhouse gas emissions, the engine of global warming.
Two are market based. The first, developed in paragraph 2, is only open to States. It allows country B, which has done better than expected to reduce its greenhouse gas emissions, to sell its surplus to country A which fails to meet its targets.
The second, developed in paragraph 4, is open to the private sector. It plans to create a new international carbon market, under the supervision of the UN, to trade in emission reductions created by the private or public sector. These emission reductions can take different forms: construction of a wind or solar power plant, restoration of a forest …
Why is it important?
Under the Paris Agreement, each country has submitted a Nationally Determined Contribution (CDN), namely a target for reducing greenhouse gas emissions. However, according to the UN, 71% of countries plan to use one of the mechanisms of Article 6 to fulfill their NDC. Establishing clear and effective rules is therefore essential for a real reduction in greenhouse gas emissions and for limiting global warming.
Since 2015, different conceptions of Article 6 have clashed. Some countries, such as Brazil, China and India, wanted to integrate into the new mechanisms the credits accumulated in the previous carbon market, governed by the Kyoto protocol and in force until 2020. These countries could thus use credits that have already reduced emissions in the past rather than contributing to further emission reductions.
Another battle was being played out around double counting, a key issue to prevent emission reductions from being double counted, in the buying country and in the selling country. An adjustment mechanism must be put in place to avoid it, but Brazil was pushing to escape it.
What has been decided?
The signatory countries have agreed on an adjustment mechanism, which prevents any double accounting, on the two markets. “We must remain vigilant, there is always a risk of abuse, but the message sent is clear”, welcomes Gilles Dufrasne, from the NGO Carbon market watch. He also welcomes the fact that the States have agreed indirectly to limit the validity of credits in time.
However, this specialist in carbon markets sees a “big black point” in the text signed in Glasgow: indeed, India, China and Brazil partially won the case on the credits generated via the Kyoto protocol. They will thus be able to transfer those registered from 2013, ie 300 million credits (out of a total of 4 billion), and enter the new market with a starting jackpot. “It’s still huge, it represents around 1 / 5th of European emissions from heavy industry, aviation and energy”, he argues.
He also sees a risk in the possibility – limited in time – for States to generate carbon credits from political decisions and measures, whereas this was only possible from very specific projects until now. “It’s very complicated to measure the exact impact of a policy ton by ton. It opens the door to a lot of emissions”, he regrets. In general, Gilles Dufrasne considers that article 6 remains “more of a risk than an opportunity”. “It’s not the worst deal, he believes. But it is not robust and does not encourage more ambitions. We will have to monitor its use and implementation. “