COP28 Round-Up: Lack of progress on Article 6 could create a valuable opportunity for the Voluntary Carbon Market

19 December, 2023 | Charlotte Gadd
Categories: Carbon Offsetting, Climate Change, Conferences

Overarching every Conference of the Parties (COP) since the 2015 Paris Agreement is the agreement to limit an increase in global average temperatures to 1.5 degrees Celsius. Scientists say that to limit warming to 1.5 degrees by the end of the century Greenhouse Gas emissions would need to peak by 2025 and see a 43% reduction by 2030. Despite this urgency many have argued that negotiations have not recognised this imminent threat, there were however still some significant outcomes. Here is a summary of the key developments.

Firstly, and possibly the biggest outcome from COP28, a transition away from fossil fuels has been officially agreed by members and put into text. Whilst many have argued that this ‘transition away’ is not strong enough, the fact that this is the first time that reducing fossil fuels has been mentioned in any capacity in nearly thirty years indicates a huge step towards reducing emissions. Also, the fact that this was able to be achieved with the largest number of fossil fuel industry representatives at a COP to date and a fossil fuel company owner presiding over the negotiations signals that fossil fuel companies have realised that solely relying on fossil fuel is not sustainable and needs to come to an end.

118 countries have pledged to triple the world’s renewable energy capacity by 2030, suggesting large investment in renewable energy projects and could go hand in hand with a transition away from fossil fuels.

More advancements have been made on the Loss and Damage Fund that was implemented at COP27, which aims to provide financial assistance to nations who are most vulnerable and impacted by the effects of climate change. At COP28 wealthy nations pledged $700 million to this fund, however there is a lack of clarity around how this money will be given and when. There are also issues around this figure not being enough to mitigate the impacts of climate change with some estimates for the necessary loss and damage fund being $100bn – $580bn.

Finally, there were high hopes that COP28 would clarify outstanding questions around the implementation of Article 6. Article 6 which concerns the establishment of two types of carbon markets: Article 6.2 involves bilateral or multilateral carbon trading agreements between countries and Article 6.4 involves the establishment of a global carbon market overseen by the UN Supervisory Body. Unfortunately, little progress was made on Article 6 at COP28 with countries unable to reach an agreement on draft texts. Sticking points still remain around removal activities and methodological requirements. However, as Dirk Forrister CEO of IETA said Article 6.2 can still be implemented and “countries can and should implement international carbon markets under article 6.2. While the lack of consensus at COP28 is disappointing, we are excited by the numerous agreements signed and projects underway”. Despite there not being an official agreement on the text surrounding Article 6.4, this does not necessarily mean bad news for the Voluntary Carbon Market and could present an opportunity for Project Developers such as CO2balance to bridge the gap in providing high quality carbon credits whilst points around article 6.4 are being clarified.