Day 2: 8 November 2022
Art made from waste materials, on display at the Turkish pavilion
Welcome to our Day 2 briefing from COP27 in Sharm El-Sheikh. As leaders continued to make national statements, the focus outside the plenary halls and negotiating rooms shifted to carbon markets, with some important announcements relevant to stakeholders in the voluntary sector.
Formal talks to finalise the draft Article 6 texts continued today, with groups meeting to discuss both Articles 6.2 and 6.4.
The 6.2 negotiators discussed reporting requirements for Parties making use of the mechanism, while the 6.4 group went through the entire draft text section by section.
The 6.4 talks did not encounter too many points of contention, but there remain some fundamental elements of contention, including around the role of non-authorised emission reductions.
The discussions will continue tomorrow, though the Article 6.2 group was also scheduled to hold an “informal informal” meeting this evening, to which observers including IETA were not admitted.
Net zero, VCM in the spotlight
Away from the negotiations, there were some notable announcements involving the voluntary carbon market.
The UN’s High Level Expert Group on net zero commitments of non-state entities (HLEG) published its first report, with recommendations and principles on how to set and achieve voluntary net-zero and net-zero aligned targets.
The HLEG, established at COP26 by UN Secretary-General Antonio Guterres and chaired by former Canadian climate minister Catherine McKenna, unveiled its report at a side event on Tuesday with a robust message for non-state actors.
“[Existing] criteria and benchmarks for net-zero commitments have varying levels of rigour and loopholes wide enough to drive a diesel truck through,” Guterres told the event.
“The message is clear to all those managing existing voluntary initiatives – as well as CEOs, mayors, and governors committing to net-zero: abide by this standard and update your guidelines right away – and certainly no later than COP28.”
“If you announce publicly that you are a climate leader, committed to net zero, you cannot claim to be net zero while continuing to build and invest in new fossil fuel supply,” McKenna said.
“High integrity credits can have a role to play, but in addition to the hard work that you must do to decarbonise. That funding [from offset purchases] can be used to support decarbonising efforts in developing countries.”
The report sets out 10 recommendations for entities that choose to purchase voluntary carbon offsets, emphasising that these credits need to represent commitments that go beyond established net zero pathways.
It also lays down five principles for non-state net zero pledges:
The report endorsed the detailed work being done on both the supply and demand sides by the Integrity Council for the Voluntary Carbon Market (IC-VCM), the Voluntary Carbon Markets Integrity Initiative (VCMI), and the Science-Based Targets Initiative.
- Ambition which delivers significant near- and medium-term emissions reductions on a path to global net zero by 2050;
- Demonstrate integrity by aligning commitments with actions and investments;
- Radical transparency in sharing relevant, non-competitive, comparable data on plans and progress;
- Established credibility through plans based in science and third-party accountability;
- Demonstrable commitment to both equity and justice in all actions.
The HLEG report endorses the contribution that the voluntary carbon market is making to accelerating climate action, and together with the work of the IC-VCM, VCMI and others is helping to drive greater transparency and robustness of standards that we welcome.
Earlier, the African Carbon Markets Initiative (ACMI) was launched with the publication of a report that sets out a pathway to creating a $1.5 billion a year voluntary carbon market by 2050.
The ACMI targets generating – and retiring – more than 300 million offsets a year by 2030, and lists 13 programmes to develop the voluntary market across Africa.
The initiative is seeking to sign up advance commitments to buy at least 50 million credits at a price of $10/tonne, which would generate as much revenue as the entire continent earned from carbon finance between 2010 and 2020, the report’s authors said.
We are also keenly awaiting the International Standards Organisation’s launch on Friday of its Net Zero Guidelines, which will be yet another confirmation that the various strands of the VCM are converging in terms of transparency, accountability and ambition. The ISO itself has noted “a very good level of alignment between the two documents and their recommendations” and it hopes its Net Zero Guidelines will be used as a “common reference point” for net zero action.
And to further underline the point about convergence, the US’ Energy Transition Accelerator that we mentioned in yesterday’s newsletter is due to be formally unveiled tomorrow (Wednesday). We understand that the Accelerator will also underline the importance for commercial entities to implement SBTi-aligned targets, and to only use voluntary offsets to achieve mitigation beyond those goals.
IETA COP27 Business Hub news
IETA’s Business Hub is located in Area C, Zone 5, Pavilion 123 – our neighbouring pavilions at this year’s event are the International Chamber of Commerce, the GEF, the Coalition of Rainforest Nations and the Republic of Guinea.
There’s a lot to participate in every day! Remember that some of our side events will be webcast, and you can join by finding the relevant QR code in the Business Hub programme.
Wednesday’s programme at the #COP27BizHub kicks off at 0930 hrs with ICROA’s opening event on private sector finance in support of ambitious country goals. ICROA’s managing director Andrea Abrahams will moderate a discussion with government representatives from Ecuador, South Africa, the Dominican Republic and Singapore. We’ll hear how the VCM can work alongside Article 6 to help finance ambitious NDCs.
At 1100 hrs, the Global Carbon Council will update us on its programme and discuss the experience of stakeholders. Speakers from Mercuria, Climate Partner, VNV Advisory and the GCC will participate.
Germany’s federal climate action ministry will return to the IETA Business Hub at 1200 hrs, along with the Global Green Growth Institute, to launch the Community of Practice for Article 6 Implementing Countries. The consortium led by GGGI and a consortium of experts, will advise countries on implementing Article 6.
In the afternoon, Mercuria will host an event focusing on Ghana’s approach to Article 6.2 implementation, with speakers from Ghana and Switzerland. The event begins at 1330 hrs.
At 1500 hrs, Carbon Finance Labs will introduce a system for digital product level reporting to improve carbon footprints across production chains. The session will include an interactive workshop to demonstrate the new tool.
IndigoAg will join us at 1630 hrs to discuss how to scale up agricultural soil carbon markets, reviewing the state of play around the world and how it can progress in the future.
Finally, at 1800 hrs IETA’s director of carbon market development, Simon Henry, will host a session on forest-based solutions, in which a panel of stakeholders will explore the various policy pathways for forest carbon that support government objectives, corporate net zero targets, and broader social and environmental benefits.
We’d like to thank all our main partners, supporting partners and sponsors who are making IETA’s programme at COP27 possible. Your help and participation is appreciated!