Why the COP25 carbon market discussion failure matters
Nearly 200 nations gathered in Madrid last week for the 25th annual United Nations climate change conference. Representatives were there for two weeks to decide on international action — the longest amount of time that this process has lasted — and the outcomes did not meet expectations.
"The international community lost an important opportunity to show increased ambition on mitigation, adaptation [and] finance to tackle the climate crisis. But we must not give up, and I will not give up," tweeted U.N. Secretary-General António Guterres.
The conference concluded and largely missed the opportunity to address key priorities — namely, setting higher ambitions and working to settle the details of two outstanding rules of the Paris Climate Agreement: Article 6, which addresses how countries can reduce their emissions using international carbon markets, and Article 8, which focuses on loss and damage that underdeveloped countries have endured due to the climate crisis and how those nations will be compensated.
Regarding the latter, delegates said the United States insisted on using language to protect itself from liability and defended its position saying it's the biggest humantarian in the world, according to the New York Times. While this rule was not finalized at the talks, negotiators ended up making the decision to establish a working group for Article 8, which then would create an action plan.
Progress on Article 6 fell even more short. After going into overtime in negotiations, countries couldn't agree on how carbon markets should be regulated. Discussions about carbon markets reportedly will pick back in during COP26 next year in Glasgow. But the fact that there was little progress during the two weeks in Madrid on Article 6, one of the most anticipated discussions for this year’s COP, is widely seen as a failure.
"There is no sugarcoating it: The negotiations fell far short of what was expected. Instead of leading the charge for more ambition, most of the large emitters were missing in action or obstructive," said Helen Mountford, vice president for climate and economics at World Resources Institute, in a statement. "This reflects how disconnected many national leaders are from the urgency of the science and the demands of their citizens. They need to wake up in 2020."
While it’s imperative to get the rules right — and that takes time and effort — it’s just as important, if not more, to finalize the rules as soon as possible, as countries must continue to implement solutions to address their impacts on climate change.
Vox’s Umair Irfan wrote that the carbon markets system "could serve as a vehicle for countries to adopt more ambitious goals for cutting their greenhouse gas emissions by allowing them to pay for reductions in emissions where they are most effective, which may not be inside their own borders."
Ahead of COP25, World Resources Institute wrote this about the potential benefits for the global carbon market, if rules are designed well:
International cooperation through carbon markets can bring additional public and private finance and catalyze emissions reductions in a country hosting the mitigation activity. And for purchasing or acquiring countries, using carbon markets enables access to a wider pool of opportunities to reduce emissions. This might lead to higher ambition, given that mitigation can be made more cost-effective, which provides flexibility.
A major problem with this failure is that it leaves the smaller countries that have contributed the least to climate change but are currently experiencing its impacts the most alone. They need larger countries — which are also the largest polluters — to step up and do more. The time to act was yesterday.
Still, in other arenas in and around COP25, other reports were released, commitments made and actions taken during the second week at COP. Here are just some:
Bloomberg Philanthropies released its Accelerating America’s Pledge report. It analyzes potential outcomes from bottom-up approaches to address the climate emergency. That is, efforts from states, cities and businesses are already making a significant difference — "potentially enough to reduce emissions 25 percent below 2005 levels by 2030," according to the report. Additionally, it outlines steps needed to implement an "all-in" scenario that includes efforts from the U.S. federal government, if there is an administration change in 2020.
More than 175 companies committed to set science-based targets. "This is absolutely necessary to allow all businesses to drastically reduce the greenhouse gases for which we're responsible," Michael Fletcher, chief commercial officer for retail at the Co-operative Group, told BusinessGreen. "We can get there, but not if we don't act urgently and work together."
About a handful of private sector companies — including Goldman Sachs and Hudson Pacific Properties — signed up to the World Green Building Council’s Net Zero Carbon Buildings Commitment, which requires them to slash emissions from their buildings to net zero. The companies join more than 30 others that made the commitment as early as the Global Climate Action Summit in September 2018.
CDP released a report that analyzed environmental data from 7,000 suppliers on behalf of 125 major corporate buyers and found that more than 30 major corporates are engaging with suppliers assist with their switch to renewables. "With just 4 percent of suppliers reporting a renewable energy target we're not seeing that level of ambition yet," Sonya Bhonsle, global director of supply chains at CDP, told GreenBiz last week. "We need to see all buyers engaging proactively with their suppliers to unlock this huge opportunity."