There have been disappointments amid the headlines because the gavel got here down on the United Nations Local weather Change Convention, COP29, in Baku, Azerbaijan. COP29 did obtain some notable outcomes, significantly on Article 6 of the Paris Agreement, which lays out how nations can commerce carbon credit to realize their local weather targets. In the meantime, local weather finance — 2024’s overarching theme — sparked intense debate over its sources and definitions. A headline determine was agreed upon, however growing nations had been left looking for better readability and stronger commitments.
Subrata Chakrabarty, Affiliate Program Director of the Local weather, Economics and Finance Program at WRI India, was in Baku following the negotiations carefully. Subrata decodes key takeaways on Article 6 and Local weather Finance in dialog with Shalini Singh. The next is an edited transcript of their dialog.
Shalini: The primary day of COP29 noticed a major, but unconventional, improvement. What key motion was taken concerning Article 6 on Day 1 of COP29?
Subrata: The Supervisory Physique, which takes care of the implementation of a brand new carbon market mechanism (Article 6.4), adopted two key requirements — one on methodology requirements for calculating emissions reductions and one other on activities involving carbon removals. Historically, these requirements would have been submitted to the COP as suggestions for additional evaluation and endorsement. Nevertheless, negotiations on Article 6 have been happening for 9 years, and to expedite issues, the Supervisory Physique went a step additional by not solely revising its suggestions, following earlier rejections, but in addition operationalizing these requirements. It additionally requested that the COP endorse this method whereas leaving room for added steering.
Shalini: As local weather finance was the central theme this yr at COP29, might you inform us in regards to the new finance targets and the related points round it?
Subrata: The New Collective Quantified Goal (NCQG) will change the present $100 billion annual goal after 2025. It’s a delicate matter of negotiation between developed and growing nations. Earlier than COP29, there have been intensive discussions between 2022 and 2024 to form the NCQG, together with 11 technical skilled dialogues, two high-level ministerial classes, and three formal negotiations.
Three essential points dominated the debates round local weather finance – the quantum of finance, the contributor base, and the supply and high quality of finance. On the quantum, growing nations demanded that the NCQG align with their assessed wants, whereas developed nations had been reluctant to commit with out readability on the contributor base. Developed nations argued that economically superior growing nations, equivalent to China and the petrostates within the Gulf area must also contribute.
The supply and high quality of finance had been significantly contentious. Creating nations, particularly the least developed nations and small island states, insisted that the monetary circulate beneath NCQG be primarily within the type of grants reasonably than concessional loans as they’re unable to shoulder the extra debt burden to fight local weather change.
Shalini: So, what had been the ultimate outcomes on local weather finance at COP29 and what are the implications for India?
Subrata: The negotiations on local weather finance had been intense and contentious, with vital gaps between the calls for of growing nations and the ultimate outcomes. The growing nations rejected the preliminary determine of $250 billion. Negotiating blocks just like the Alliance of Small Island States (AOSIS) and Least Creating Nations (LDCs) walked out of the negotiations.
The headline of $1.3 trillion on the quantum calls on contributions from all actors — not simply developed nations — and contains $300 billion yearly by 2035 particularly for growing nations. Developed nations are anticipated to guide in mobilizing this quantity, with finance sourced from public, non-public, bilateral and multilateral flows.
Nevertheless, key calls for from growing nations stay unmet. Notably, there was no clear definition of local weather finance, which was a longstanding demand to make sure transparency and accountability. Sub-goals for vital areas like adaptation and loss and injury had been left undefined. For India, adaptation funding was a prime precedence, but it surely remained unresolved. The “Baku to Belem” roadmap to mobilize the extra $1.3 trillion is to be developed by COP30.
In abstract, COP29 delivered a long-term quantum for local weather finance, but it surely fell in need of the monetary wants voiced by growing nations.
Shalini: Again to Article 6, the problem of operationalizing the carbon markets has been at a standstill since COP26 at Glasgow. We lastly have some outcomes. Are you able to briefly describe among the selections that had been agreed upon?
Subrata: For years, the operationalization of Article 6 has been slowed down by technical disagreements. At COP29, we lastly noticed progress on a number of key points. One of many greatest sticking factors has been the method of authorizing emission reductions that one nation can switch to a different (referred to as Internationally Transferred Mitigating Outcomes (ITMOs)). Two questions had been on the coronary heart of this debate: one was about altering, revising or revoking the authorization, and the second was concerning the timing of the authorization. The choice at COP29 gives nations with the pliability to vary the authorization. Nevertheless, these adjustments is not going to apply retroactively to ITMOs which have already modified arms until all concerned events explicitly agree. This strikes a steadiness between flexibility for nations and stability within the system. By way of timing, the authorization might occur anytime between the date of issuance of the credit and earlier than the switch of Article 6.4 emission reductions in or out of the mechanism registry. This provides readability whereas giving nations room to adapt based mostly on their circumstances.
The second challenge with Article 6 is interoperability between registries, i.e. between the worldwide registry, mechanism registry and the host nation registries, wherever relevant. At COP29, nations agreed to ascertain mechanisms that allow information sharing and visibility throughout these registries. It will permit the monitoring and switch of approved Article 6.4 emission reductions as ITMOs whereas minimizing errors and stopping duplication.
The choice adopted at COP29 additionally clarifies that the first time a rustic authorizes the worldwide switch of its mitigation end result, it’ll set off an accounting mechanism to keep away from double counting (referred to as the “corresponding adjustment”). This clarification enhances transparency and accountability inside the carbon market framework.
Moreover, events adopted a course of to establish, notify and proper inconsistencies between the Article 6 database and the data reported yearly. This step will guarantee better accuracy, transparency and belief within the system whereas enhancing its long-term performance
Shalini: Earlier than we finish, might you assist demystify and set the document straight about India calling out the COP29 presidency?
Subrata: In the course of the closing plenary of COP29, the spirit of consensus-based decision-making was undermined. India had formally requested the chance to talk earlier than the NCQG choice was adopted. Regardless of notifying the COP29 presidency and the UNFCCC secretariat, the adoption was rushed via with out providing India the ground to make its assertion. India condemned this as a “stage-managed” course of, expressing deep disappointment with the inadequacy of the NCQG goal and the method by which it was adopted. Nigeria and Bolivia echoed India’s objections.
Total, COP29 in Baku marked progress however left vital challenges unresolved. For India and different susceptible nations, the outcomes spotlight a stark actuality: the trail to equitable local weather motion stays steep and can want better dedication from world leaders. Because the world seems towards COP30 in Belém, Brazil, it’s vital that the frameworks established in Baku translate into tangible outcomes.
Learn extra about Article 6 right here.
With inputs and coordination by Steffi Olickal and Shreyas Joshi.
