Article 6 Takes a Wrong Turn

14 December 2018

ECO is still dizzy from the speed at which things collapsed in the Article 6 discussions. After three years of discussions, it seems Parties finally started to move and agree on key rules for markets. And it doesn’t look good. So, ECO wonders: in which world have Parties been living, and in which world do they want to live?

While the new text requires corresponding adjustments for some credits, it fails at the most basic task of avoiding double counting. ECO thought there was widespread recognition among Parties that double counting was unacceptable, yet the text does not mention, at any point, when a corresponding adjustment will be applied. Parties will be able to sell out emission reductions, assuring buyers that corresponding adjustments will be applied to avoid double counting, but only apply these corresponding adjustments at the end of their NDC period. There is no timeline. The option to exempt domestic transfers (say from a country to an airline based in the same country) from any corresponding adjustments is also still included, although bracketed.

Further, Parties must ensure that consistent accounting rules are applied regardless of whether transfers occur inside or outside an NDC, if outside NDC transfers are allowed. If Parties are able to issue credits from sectors and gases not covered by their NDCs, without applying corresponding adjustments for those, this would leave a disincentive against ambition, and a mess for the world trying to understand how ambitious countries” efforts really are.

There is also nothing preventing Parties from carrying over surplus “effort” under the KP (often only reflecting a weak target) into their NDCs, by using excess Assigned Amount Units (AAUs) to overachieve NDCs, and selling the resulting excess as an Internationally Transferred Mitigation Outcome (ITMO). Oh wait, isn’t this exactly what Australia openly announced they wanted to do earlier this week? Yes, it is.

And finally, South Korea seemed to have left behind the “Environmental Integrity” of their group, EIG, as they suggested they would meet their 2030 NDC target by counting all credits acquired over the 2021-2030 period. This means a country could do nothing for the next 12 years (what did the IPCC report say again? Something about 12 years left?), and then buy a whole lot of credits to meet their single year target. Yes, it’s as bad as it sounds. And it’s in the text.

And what about overall mitigation, which ECO wrote about a few days ago? Well, it is left to Parties to decide how to achieve it, and how they define it. You think the existence of a market in itself leads to Overall Mitigation in Global Emissions (OMGE)? Go for it. No rules will force Parties to adopt specific provisions to achieve OMGE.

ECO still cannot believe that Parties would consider piping in new hot air into Article 6!

If Parties are going to double-back on avoiding double counting, then they”ve turned their backs on Environmental Integrity in the Paris Agreement.

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