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Although finalizing a deal on Article 6 of the Paris Agreement
is a task yet unfulfilled at the COP26 meeting in Glasgow,
representatives of Switzerland called the country's bilateral
carbon-trading agreements with six nations the model for a global
Article 6 pact.
"Article 6.2 of the Paris Climate Agreement is alive," Swiss
Minister of Transport Simonetta Sommaruga told reporters on 11
November.
Peru, Ghana, Senegal, Georgia, Vanuatu, and Dominica each signed
carbon trading plans with Switzerland that will provide frameworks
for them to produce verifiable carbon reduction credits that the
Swiss will purchase and use as part of meeting their emissions
reduction obligations under their nationally determined
contribution (NDC). Some of the agreements were signed prior to
COP26, and others were inked at the climate meeting.
The use of these credits—in which carbon reduction is
carried out in a least-cost manner anywhere in the world and then
used to offset emissions generated somewhere else—could remove
an additional 5 billion metric tons/year of CO2 by 2030, according
to a study from the International Emissions Trading
Association (IETA). IETA said participants would save about
$250 billion annually, compared with the investment that would be
required to reduce their own emissions by a like amount.
Alok Sharma, president of COP26, emphasized in a speech on 11
November that finalizing Article 6 is a linchpin for the
conference, but a huge challenge. The draft conference language,
released on 10 November, only had the term "placeholder" for the
section representing the rule book where Article 6 language would
be inserted.
"There is still a lot more work to be done," Sharma said. "We
are working hard to find solutions to some of the most intractable
solutions … [including] Article 6, and issues of finance."
"We still have a monumental challenge ahead of us, but
collectively we have no choice but to rise to the challenge," he
said.
Switzerland's program
Switzerland's NDC, updated in
September, makes an explicit connection between its environmental
goals and the use of Article 6 credits.
The country raised its commitment to reducing GHG emissions "by
at least 50%" below 1990 levels by 2030 and net zero by 2050. It
also states that "internationally transferred mitigation outcomes
(ITMOs) from cooperation with Article 6 of the Paris Agreement will
partly be used." By law, Switzerland limited itself to using ITMOs
for no more than 25% of its GHG cuts, and it also committed to
using offsets to compensate for the emissions of imported goods,
which countries typically do not consider part of their NDC.
"Switzerland and the transferring countries … together we
pioneered Article 6 cooperation," Sommaruga said. "This agreement
allows the trade of emission reductions, the so-called ITMOs, that
meet the standard of the Paris Agreement ... A carbon market
aligned with the Paris Agreement is now accessible."
The nations generating credits are known as "transferring
countries" because they are transferring carbon reduction credits
to another nation.
The agreements signed by the parties demonstrate that the
Article 6.2 framework "can be enacted and operated in a transparent
way," said Alex Hanafi, director of multilateral climate strategy
at Environmental Defense Fund, in a conversation with Net-Zero
Business Daily.
The Paris Agreement laid out a model in Article 6.2 that
countries can adopt, and Switzerland made it clear several years
ago that it would pursue bilateral agreements on the Article 6
principles, Hanafi said. It's the first country to run with that
model and actually sign agreements, but Japan and Sweden have
announced intentions to set up programs along similar lines.
"Countries will need long-term cooperation [on emissions
reductions], regardless of Article 6. There is enough guidance in
Article 6.2 already, and the Swiss example is a manifestation of
that fact," he said. "But you can probably accelerate that
investment significantly if you have standardized rules [for GHG
credits] that are strong and transparent and understood by all
parties," because more countries and private investors will
participate.
Principles to follow
Sommagura said that the single-most important aspect of the
Swiss deals is that they have safeguards to ensure that credits are
not double-counted. In other words, after a credit is generated and
transferred to Switzerland, it will be retired by both countries
and cannot be used again.
"The high standards of integrity and sustainability are set,"
Sommagura pledged. "Emission reductions achieved cannot be
double-counted nor claimed.... Each climate project meets specific
authorization by both involved governments, and we are aiming high.
We only recognize climate protection projects that otherwise would
not have occurred in the host country."
Should there be any evidence of double-counting or other
violations, "Switzerland will not be able to claim any emissions
reductions," she said.
Many nongovernmental organizations support these types of
voluntary carbon market programs, but they are wary about how they
are managed, said Vanessa Perez-Cirera, global deputy lead for
climate and energy at the World Wildlife Fund.
In addition to avoidance of double-counting, Perez-Cirera laid
out three principles by which these programs must be guided:
"Using carbon markets to further mitigation goals should only
happen once the buyer country has an NDC that is aligned with the
1.5-degree trajectory;"
"These transactions would likely lead to cost savings for the
buyer country. These savings must be reinvested in climate
action;"
"These bilateral agreements must observe the highest social and
environmental standards in all of the host countries ... and [get
credits only from] highly valuable projects, not low-hanging
fruits."
Ministers from five of the six countries with agreements with
Switzerland also were on the panel, and they shared their visions
for their programs.
Ghana's Minister of Environment, Science, Technology, and
Innovation Kwaku Afiyie said Switzerland is funding the installation of cooking stoves
for up to 5 million households, weaning them from using wood and
dung for cooking. A technical committee is verifying the work so
far and making a final determination about the credits to be
issued. Two projects to process landfill gas are in the planning
stage as well, he said.
For the Caribbean island nation of Dominica, which is still
reeling from the impacts of Hurricane Maria in 2017, funding from
wealthy nations will enable the government to build a clean,
resilient power system, said its representative. "We do have a
plan, but this plan needs resources … in the form of human capital
and finance," he said.
"We believe that we are the pioneers to successfully implement
Article 6 of the Paris Agreement … to reduce emissions, have a
transparent system, and ensure that it brings a concrete economic
and social benefit ... [It] show other parties of the Paris
Agreement … that, in reality, Article 6 can become workable and can
be operationalized," added Georgian deputy minister of
Environmental Protection and Agriculture Nino Tandilashvili.
Posted 11 November 2021 by Kevin Adler, Chief Editor