Climate Emergency CoP 25: What to expect from the second week

The first week of CoP 25 was dominated by ‘technical’ negotiators — subject experts who are very familiar with the differences, for example, between a “best available technologies” approach, and a “performance-based” approach, and a “benchmark baseline” approach to generating carbon credits.

In the second week, political representatives have to make sense of such options and find trade-offs which protect national interests, securing their preferred option in one section of text while accepting a less-preferred option elsewhere. The key issues that they will be discussing are carbon markets (more details here) and ‘loss and damage’ (more details here).

Regarding markets, negotiators are discussing draft guidelines or rules to flesh out and operate under the authority of Article 6 of the Paris Agreement. Regarding loss and damage, the aim is to develop a work programme defining the functions of the Warsaw International Mechanism for Loss and Damage for the next two years.

The text that was published over the weekend on markets and loss and damage is ‘streamlined’ — a limited number of pages, and a limited number of options, with each option representing a relatively clear choice. This does not mean that negotiators cannot add more options.  

But after burning — in one negotiator’s estimate — tens of thousands of person-hours (particularly on rules for markets), there is a desire to look for compromise rather than re-open old wounds. So the current options placed before political representatives have some gravity. The centre of that gravity, however, is not quite right.

For example, one of the biggest issues regarding markets is whether Kyoto-era credits can be used towards new national targets set under the Paris Agreement. Four billion of these credits are still available, with the potential to overwhelm and crash any new market.

One part of the text, dealing with bilateral and mini-multilateral markets under Article 6.2, has clear options — one option prohibits use of Kyoto-era credits; the other is a ‘blank’ option, which effectively means that such use is not authorised. Whichever option is made final, Kyoto-era credits are not likely to be carried over into bilateral or mini-multilateral markets.

Under Article 6.4, the Paris Agreement creates a centralised, global market referred to as the Sustainable Development Mechanism (SDM). The draft text under Article 6.4 also includes an option to simply prohibit such a transition of credits, but this prohibition is less likely to make the final version of the document. 

This is because there are multiple sections which try to regulate / prescribe how Kyoto-era credits can transition into new markets. Effectively, these are options to allow such a transition (as opposed to in the Article 6.2 document, where the option is simply ‘no text’).

Hence, despite the current existence of similar-looking options in the Article 6.2 and Article 6.4 texts, the momentum in each text is in opposite directions. We are heading for different regulatory regimes governing the SDM on one hand and bilateral/mini-multilateral markets on the other hand, an outcome which has to be avoided.

That is just one issue affecting markets. A similar dynamic is at play with options aimed at addressing all the other issues — how to ensure an ‘overall mitigation of global emissions’, how to deal with the fact that different national targets are operating on different time frames, how to safeguard human rights, and how to set a ‘baseline’ beyond which emissions reductions can generate credits. Too many of these sections have good options, paired with very weak options which are worse than no rules.

This framing of options also affects the loss and damage text. The aim of developing countries is to secure a ‘new and additional’ source of finance for loss and damage. Developed countries object, on the grounds that this would be tantamount to an admission of liability for climate change.

Ideally, the options in the text should be limited to either —

1. A new fund under the Warsaw International Mechanism, or
2. An instruction to pre-existing funds like the Green Climate Fund to add ‘loss and damage’ to their priorities.

The text published on the morning of Decmber 9, 2019, however, includes options to effectively deny new and additional finance, including —

• Instruct developing countries to make use of existing finance, or
• Instruct different technical bodies under the UNFCCC to coordinate with each other on this issue.

In sum, apart from a few areas, the range of options still on the table is still too large. Technical negotiators did not turn up in Madrid last week with enough of a mandate to find early compromise, and any compromise will have to be found by ministers in the coming week.

Finding such compromise is going to be extra difficult because the key issues at CoP 25 — markets and ‘loss and damage’ — are not naturally linked. An example of linked issues is reporting rules on national targets and reporting rules on carbon credits — it is possible to compromise on one, in the hope that it will be made up for by strong text on the other issue. That is less possible here.

In Katowice last year, there were a much larger set of linked issues on the table, which should have made trade-offs easier. Still, markets fell off the table at the last minute, and the consequences of that continue to haunt negotiations today. Some form of last-minute consensus is still likely — but it is unlikely to be a consensus that produces rules for markets and finance for loss and damage that remotely matches the scale of the crisis.

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