Felix von Geyer – Glasgow
No hard targets from China to 2030, no flicker of any federal carbon pricing from the United States, the Co-operation Agreement signed Wednesday between the two countries offered nothing new from the world’s two largest emitters, together responsible for almost half of the world’s global emissions.
Even closer study of the agreement offered only an “intention” in 2025 for the two countries to agree Nationally Determined Commitments to 2035.
That said however, Zhenhua stated that Beijing now wants to expand its existing carbon trading system to include sectors other than power generation to accelerate the transition.
“We hope to sort out Article 6 for a global carbon market,” Zhenhua said in answer to neworator.com’s question about carbon border adjustment mechanisms that usually are interpreted by countries as a tax on countries refusing to significantly mitigate their carbon emissions.
While no new ambition nor initiatives revealed by either country, China could be encouraged to transform Article 6 in line with a hard emissions target.
Where traditionally countries take on national commitments, co-ordinating an international carbon market requires attacking the problem at source. Ideally any cap should be placed on the carbon versus energy content of fuel and energy as it comes to market. A science-based cap of between 25-40 percent as of 2023 with a mechanism to increase that cap between 3-5 percent annually would send the market signal, to investors and help avoid stranded assets and capital that could be invested elsewhere.
Moreover, the cap would apply to suppliers, providers and distributors of fossil fuels and clean energy, creating the global carbon club advocated by environmental economist William Nordhaus. After trading their carbon credits amongst themselves, offsetting remaining carbon credits through green clean infrastructure initiatives, emissions reducing industrial processes, landfill methane that would be created to replace the former joint implementation and Clean Development Mechanism under Kyoto.
Alternatively emissions credits can be traded under the REDD+ avoided deforestation mechanism. As Kevin Conrad of the Coalition of Rainforest Nations who negotiates for Papua New Guinea told media Friday, there is more carbon stored in the world’s forests than in all the world’s fossil fuels.
Ideally such an approach would include every nation as developing and least developed countries would not need to make any Nationally Determined Commitment but instead would be pegging the same international energy standards and thus close out the so-called carbon leakage debate.
Countries not co-operating would be subject to a carbon border adjustment mechanism, ideally tradeable under World Trade Organization guidelines. In turn these could be converted into green bonds and deposited within the Loss and Damage mechanism or Adaptation fund for developing and least developed countries (LDCs) to adapt to climate change.
As the Glasgow COP26 talks progress, ambition is still high on every negotiator’s wishlist with Article 6 international carbon market issues being slated to be put into a new mechanism to be negotiated and finalized next year.