COP26: Switzerland touts Article 6-style agreements

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