This week marks the start of the 27th UNFCCC Conference of the Parties (CoP) in Sharm el Sheik, Egypt. The effects of climate change are globally widespread and have affected the lives of many people, as well as the environment. For vulnerable countries, the negative impact has become a daily reality. This year, ‘Loss and damage’ will be a central theme at the CoP with the focus of the plenary discussions being on adaptation, climate finance, food security and restoring nature and biodiversity. An overview of the full two weeks’ agenda suggests that mitigation is of great importance, with ‘Decarbonisation’, including methane, being a hot topic too.
Climate action and targeting Net Zero is daily business for Climate Neutral Group (CNG) – we are passionate and driven to make a real impact through our expertise in carbon footprinting, reduction, offsetting, and climate-neutral certification. Since Article 6 of the Paris Agreement will be operationalised, our attendance at the CoP will focus on this area, but we will also call for climate action in general and contribute to raising awareness around the urgency and importance of climate action for businesses.
From the adoption of Art. 6 to operationalisation
Last year’s CoP in Glasgow was important because the rules for the global carbon market under the Paris Agreement (so-called Article 6) were adopted at the conference. This outcome means that countries will now also be allowed to invest in emissions reductions and sequestration projects from other countries, to help meet part of their own climate targets. It was also agreed that the former Kyoto Protocols’ Clean Development Mechanism (CDM) will be replaced by a new mechanism under article 6.4 of the Paris Agreement.
Changes in the Voluntary Carbon Market (VCM)
The carbon credits CNG’s clients purchase for voluntary offsetting are mostly issued by Gold Standard and Verra carbon standards. We expect that the Art. 6 rules will have no impact on the voluntary offsetting mechanism. However, it is possible that countries may want to converge Art. 6 and voluntary carbon market practices with regards to domestic projects. As such, CNG will follow these developments closely.
This year’s CoP bears special significance since the Supervisory Body overseeing the Art. 6.4 Mechanism will have to decide how the last Clean Development Mechanism (CDM) credits will be issued and used as well as how existing CDM projects will transition into the new mechanism.
Offsetting contributes to climate financing
With a 5% share of the proceeds, the new Art. 6.4 mechanism will fund the Adaptation Fund to help finance protection measures for the most vulnerable countries against climate threats (flooding and droughts). This is another reason why carbon markets are important. To give an idea of just how important they are, the Co-Chair of the Global Centre on Adaptation (GCA), Feike Sijbesma, went so far as to state that “80% of the funding for adaptation needs to come from the private sector” at the GCA summit in Rotterdam last month.
If this is to take place, the world needs both a voluntary carbon market as well as a regulatory one which will allow companies as well as countries to engage in effective transfers of finance and the greenhouse gas credits derived from this finance (carbon offsets), in a transparent and fair carbon accounting system.
Importance of Carbon Offsetting project development
This year the parties must meet to negotiate the rules by which this new Article 6 entity must operate. For a company like CNG whose business lies in emission reductions, carbon offset development and carbon trading, these two weeks will have a major impact on how the market develops over the years to come. Not only that, but as a company, we remain convinced that the further development of a vibrant market, to finance nature-based carbon restoration and removal projects (forest, mangrove, regenerative agriculture), is critical if we are to have any hope of keeping global warming well below 2 degrees centigrade and hopefully below 1.5 degrees.
Our Carbon Project Manager and expert, Gray Maguire attending CoP 27
As this year’s event is on the African Continent, Gray Maguire from our South African office is representing CNG to consult with and advise negotiators, adding our wealth of experience in carbon markets to their perspectives and positions. For South Africa, it is especially important to obtain finance for climate mitigation and adaptation. Since South African companies can offset part of their Carbon Tax liabilities with CDM, Gold Standard and Verra credits, it is crucial that they remain able to access carbon credits and make use of the new Article 6.4. mechanism. This Thursday, the 10th of November between 11:30 am and 12:30, Gray will be hosting a discussion panel with business leaders guiding the way in South African nature-based solutions investments. At the South African Pavilion, he will also discuss CNG’s AgriCarbon™ programme which will see its first carbon credits issued by Verra at the start of 2023. CNG’s expert on VCM and EU-ETS Jos Cozijnsen will follow the CoP remotely and align closely with Gray.
AgriCarbon™ is South Africa’s first internationally recognised carbon programme paying farmers for the carbon credits they generate from their sustainable land management practices.
To register for the Zoom event on AgriCarbon with Gray Maguire, please click here and add the link to your calendar.
Do you want to stay tuned about the CoP from CNG’s and Anthesis’ perspectives?
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