During the opening plenary session, the agreement on Article 6.4 of the Paris Agreement was approved. However, the standards adopted by the Supervisory Body are not truly final. The Azerbaijani presidency applied pressure to reach an agreement quickly and showcase the result. This, however, sets a precedent: the agreement was reached by bypassing discussions between national delegations.
It seems like a reissue of last year’s COP. In Dubai, on the first day of negotiations, the final agreement on the Loss and Damage mechanism was unexpectedly reached. The Emirati presidency claimed the victory. A change of venue, but the same script this year. The opening session of COP29 in Baku passed the text of the agreement on Article 6.4 of the Paris Agreement, which will establish a global carbon market.
A “Revolutionary” Tool?
Once again, the COP presidency, led by Azerbaijan, was quick to claim ownership of the result. It is described as a “decisive success,” according to a statement. In reality, the core of the negotiation in Baku revolves around climate finance. In comparison, the global carbon market, which has been under discussion for 10 years, is a much less urgent outcome than the redistribution of resources needed to enable even the poorest countries to tackle the climate crisis.
This is well understood by the COP29 president, Mukhtar Babayev, who tried to mix the two issues by linking them. The standards emerging from the agreement on Article 6.4 of the Paris Agreement will be “a revolutionary tool to direct resources towards the developing world,” Babayev stated.
Global Carbon Market: What is it, what is it for, and how does it work?
Let’s take a closer look at what the global carbon market is, its purposes, and how it is supposed to function.
What is the global carbon market?
The global carbon market refers to an emissions and carbon credit trading mechanism under the Paris Agreement, specifically Article 6. Article 6 allows states to “pursue voluntary cooperation” to meet their climate goals.
What is it for?
According to negotiators, the international exchange of carbon credits serves as a complementary tool to strengthen global cooperation in mitigating the climate crisis. It is also intended to provide more flexibility, allowing more ambitious countries to trade credits with those lagging behind their goals. This reflects one of the key principles of climate diplomacy: “common but differentiated responsibilities.”
The text of the Paris Agreement reached at COP21 outlines only general principles. For the Article 6 mechanism to function, detailed rules are needed to regulate every aspect of it. Negotiations on these details have been ongoing since 2015. At COP26 in Glasgow in 2021, significant progress was made. This year, COP29 in Baku finalized the issue by passing a final text.
How does it work?
Article 6 of the Paris Agreement addresses two distinct aspects. One falls under Article 6.2 and involves bilateral and multilateral exchanges of emission reductions and removals. These exchanges occur through credits, called ITMOs (Internationally Transferred Mitigation Outcomes). The other aspect, established by Article 6.4, concerns the creation and operation of a global carbon market. This latter aspect is the focus of the agreement reached on November 11 in Azerbaijan.
What does the agreement on Article 6.4 of the Paris Agreement entail?
Let’s take a closer look at how the agreement on Article 6.4 of the Paris Agreement was reached and what it involves.
A Text Without Negotiations
In fact, the agreement on Article 6.4 of the Paris Agreement signed in Baku is not the result of political negotiations between parties. Delegates approved a text prepared by technical experts in recent months, already defined in detail. This is irregular: usually, technical contributions present texts with alternative options, which are then discussed at the political level.
The COP29 presidency proposed this solution to quickly close the Article 6.4 dossier. Essentially, they presented the delegates with a complete text to accept or reject, without the possibility of making changes.
What does the COP29 agreement on the global carbon market entail?
During the opening plenary session, the climate conference in Baku approved international standards that must be followed to create carbon credits to be traded on the emerging global market. The standards were formally adopted by the supervisory body of Article 6.4 (the Supervisory Body).
The Article 6.4 Supervisory Body (SBM) is a UN entity tasked with overseeing the global carbon market. When operational, projects generating carbon credits will need to be approved and registered by the SBM (in addition to obtaining approval from the country where they are implemented). The credits generated can be purchased by countries, companies, or even individuals.
The standards approved in Baku create a framework intended to ensure the highest integrity of the global carbon market and facilitate the transition from the old system, the Clean Development Mechanism (CDM), established under the Kyoto Protocol.
One of the issues addressed is double counting, meaning how to prevent emission reductions represented by carbon credits from being counted multiple times, for example, in national or corporate emission inventories. The standards ensure that both reductions and removals are real, additional, verified, and measurable.
Criticism of the Agreement Reached at COP29 in Baku on Article 6.4
Is the matter settled? Far from it. The standards approved in Baku are not final. They can be amended in future COPs, improving the rules for the global carbon market, but also potentially loosening the requirements. The COP presidency included this flexibility to convince delegates to approve the agreement at COP29, even though many countries still had criticisms and reservations.
For example, Tuvalu’s delegate spoke during the opening plenary, explaining that they reluctantly accepted the agreement on Article 6.4 of the Paris Agreement and expressed concern about the tendency to push agreements through without allowing delegates to carefully review the texts.
Many observers criticized both the process and the content of the agreement. Among them was Isa Mulder of Carbon Market Watch, one of the NGOs closely following the Article 6 negotiations. According to Mulder, the agreement reached at COP29 “sets a terrible precedent for transparency and proper governance.”
The process followed to approve Article 6.4 is “a clear indication of how this COP will unfold and how the UNFCCC is yielding to the undermining of the UN process and procedures, where even the Parties don’t count,” said Souparns Lahiri of the Global Forest Coalition. “Approving this proposal without discussing or debating it sets a dangerous precedent for the entire negotiating process,” echoed Erika Lennon of CIEL.
Content-wise, the criticism continues. According to Kelly Stone of ActionAid USA, “the so-called removals that can be credited under Article 6.4 are defined so broadly that they include everything from harmful geoengineering to ‘storage in products.’ This poses deep risks of harm to communities and means the mechanism will be filled with junk credits that fail to deliver on their climate promises.”
Approving standards that are not definitive, yet presented as already operational, creates “a gray area” that risks “undermining urgent climate action” and represents “a false solution to fill the climate finance gap,” commented An Lambrechts of Greenpeace International.
