Shortly after IATP and 12,240 other Observer organizations (NGOs, intergovernmental organizations and United Nations entities) returned from the U.N. Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP27) in November 2022, work began for COP28 negotiations. The UNFCCC invited Observers and non-accredited organizations to respond to requests about how to implement COP27 decisions. This March, IATP submitted two responses concerning the Paris Agreement Article 6.4, a framework for registering greenhouse gas (GHG) offset credits and selling them to “non-Parties,” mostly corporations and banks.
The promise of Article 6.4 implementation for the governments selling offset credits (“Internationally Transferred Mitigation Outcomes” or ITMOs in UNFCCC terminology) is badly needed revenue. The promise for ITMO buyers is a way to claim progress towards achieving net-zero emissions without fundamentally transforming business models, production practices and fossil fuel dependent livelihoods. Government decisions at COP28 about how to implement Article 6.4 may determine how realistic these promises are.
As IATP noted in our March 15 submission, the International Energy Agency reported that the GHG emissions that cause climate change had reached an all-time high in 2022. The high would have been yet higher were it not for a global surge in renewable energy production. However, if GHG emissions are not cut rapidly and drastically, no amount of renewable energy can prevent increasingly severe and frequent damage from events and trends related to climate change, such as prolonged droughts. According to the Intergovernmental Panel on Climate Change (IPCC) 2022 report, to achieve the Paris Agreement goal of limiting global warming to 1.5⁰C above the mid-19th century baseline, global GHG emissions must fall “about 45% by 2030 from 2010 levels.” (p. 156)
IATP wrote to two UNFCCC expert groups that advise the government negotiators on how to achieve the Paris Agreement goals. The goals include measures to protect land rights and human rights in the areas where emissions reduction and avoidance projects, such as preventing deforestation, are organized and maintained. We wrote first to the Supervisory Body (SB) group of experts. At COP27, many Observer organizations and developing country governments rejected the SB’s recommendation on “removals,” an umbrella term that describes different technologies and practices that claim to reduce GHGs temporarily or more permanently. The Climate Land Action Rights Alliance (CLARA) wrote, “The definition of removals is so broad, that with the rest of the [Article 6.4] methodology undefined, it [the definition] will likely incentivize projects that present major risks to communities and may not even deliver on climate benefits.” IATP, a CLARA member, agrees. The SB provided little more than a list of removal technologies with no advice on their efficacy or feasibility for reducing GHG emissions. Fortunately, the SB was sent back to the drawing board.
At the SB’s March 7-10, 2023 meeting, among the first items on the agenda was to approve the work plan. In our February 28 letter, IATP urged the SB to revise its work plan so that it would not present a recommendation to negotiators for a decision on removals before it recommended a decision to governments on how to protect the human and land rights of those living near removals projects. IATP’s letter referenced a dozen studies and investigative journalism reports on removal projects fraud and misrepresentation of GHG emissions reduced or avoided. The lack of environmental integrity in these projects will result in cases of carbon market failure under the Article 6.4 framework. The letter referenced eight reports on the violation of human and land rights in the removals project areas by project developers. Project developers who cut costs by violating or ignoring rights likely would also cut costs by not monitoring projects and verifying emissions reductions. These cases are a small fraction of the environmental and social integrity failures in the trading of emissions avoidance and offset credits.
The SB work plan calls merely for a “Concept” paper that could provide governments with guidance on “Engagement with Local Communities and the Indigenous Peoples Platform” about emissions reduction and avoidance projects. By calling for the SB to make a recommendation to governments for a decision on how to protect land and human rights, IATP wants the SB and governments to publicly and formally recognize that the protection of rights is intrinsic to any projects to reduce or avoid GHG emissions. We also wrote that while COP27 decided that governments have the “national prerogative” to enforce those rights (or not), carbon offset emissions market participants have the right to buy or not government certified removal credits that enable corporations to claim that their purchase of those credits is offsetting corporate emissions on a path to “net-zero” emissions. (See here, here and here for more IATP analysis of flaws in “net-zero” accounting.) The SB will share more about whether it heeded IATP’s advice, at their next meeting, which takes place just before the next major UNFCCC meeting, June 5-15 in Bonn, Germany.
Our second Article 6.4 letter addressed the SB’s parent, the Subsidiary Body for Scientific and Technological Advice (SBSTA). COP27 government delegates asked the SBSTA to recommend to the SB by COP29 (2024) how it should approve and supervise the “national arrangements” for implementing Article 6.4 registration of and sales of removal project credits from Parties to the Paris Agreement to the private sector. In our view, this is a very important multipart request to the SBSTA. IATP chose to respond to two parts of the request, first on the question of whether emissions avoidance, such as not cutting down a forest, and conservation enhancement projects should be included in the definition of “removals” and thus be recognized as a source of credits for sale by Parties to the private sector.
We supported CLARA’s position that emissions avoidance projects should not be included in the definition of removals, since avoidance projects do not reduce emissions in any way that can be objectively measured. Furthermore, avoidance project developers have a strong economic incentive to greatly overestimate emissions avoided, e.g., by overestimating the amount of deforestation avoidedby their projects. IATP also supported CLARA’s position on conservation enhancement projects, since they do have biodiversity and sustainable development benefits. However, we advocated the inclusion of conservation enhancement projects in the Article 6.8 public finance mechanism as a way to more reliably and adequately finance adaptation to climate change projects and sustainable development than the uncertain and opaque share of proceeds from emissions offset sales. The SBSTA will discuss Article 6.8 implementation at the above-mentioned UNFCCC meeting in June in Bonn.
Our recommendation on “emissions avoidance” is easy to make on scientific grounds, but a difficult decision for developing country governments to make on climate finance grounds. The promises of wealthy countries to provide $100 billion annually for emissions reduction and climate adaptation projects have been unfulfilled for more than a decade. According to Bloomberg data, about one-third of all removal project types are for avoiding deforestation. (Figure 2, p. 15) These projects are often characterized as having low environmental integrity, i.e., the projects do not reduce or avoid the amount of emissions claimed by project developers and certified by offset credit issuers. As a result of the impact of integrity failure on offset credit prices, project credits sold on Voluntary Carbon Markets (VCMs) are very unreliable sources of climate finance.
VCM proponents project an increase in removal credit prices of up to 3,000% by 2029, based on policy scenarios in which all credits are traded according to a developing “high integrity” standard. Some governments in the developing countries that host most of these projects may decide that these projections are more persuasive promises than the current unfulfilled promises of climate finance from rich country governments.
The last request to the SBSTA that IATP addressed in its March 15 letter concerns “accounting for removals and crediting periods.” We described this topic as “the juncture at which the scientific and technological issues of removals are converted into the accounting logic of the financial markets” on which removal credits will be sold to corporations and banks for subsequent trading on VCMs.
Climate science and the science-based computer modeling of climate data are quantifying the growing gap between fossil fuel or “geological” emissions and land-based or “biogenic” removals, such as agricultural soil carbon sequestration projects. Contributing authors to the IPCC report wrote that based on current climate science, “Results indicate that a CO2 emission into the atmosphere is more effective at raising atmospheric CO2 than an equivalent CO2 removal is at lowering it, with the asymmetry increasing with the magnitude of the emission/removal.” (IATP emphasis) As CO₂ emissions and equivalent CO₂ removals increase, the degree of asymmetry increases.
This finding of climate science, agreed in 2021 by the IPCC with “medium confidence,” (Chapter 188.8.131.52) presents policy makers with difficult choices. IATP urges negotiators to base policy on the consensus science, rather than deviate from the consensus to arrive at an outcome that is politically palatable. However, the Summary for Policy Makers of the Synthesis Report of the IPCC’s Sixth Assessment Report, released on March 20, gives policy makers no support for emissions offset trading and from which removal credits would be derived. A prior “Summary for Policy Makers” that diverged from IPCC consensus science was persuasively critiqued by the Heinrich Böll Foundation and the Center for Environmental Law.
At a more granular level, IATP urged the SB and SBSTA to heed Carbon Market Watch’s (CMW) advice to the SB on “principles for carbon dioxide removal accounting.” The principles require that emissions reduction accounting and removals accounting and crediting for the purpose of trading removal credits must be kept separate, in part because “There is not only no equivalence between fossil and biogenic carbon, but also between various ‘types’ of biogenic carbon. There is a spectrum of natural removals, according to their quality, longevity and stability.” (p. 22) CMW, drawing on several academic sources, identified false equivalences in CO₂ accounting and crediting that ignore climate science, ignore the spectrum of nature-based removals and that could enable validation of credits derived from projects that had violated human and land rights.
Finally, IATP asked the SB to incorporate the findings of CarbonPlan’s detailed analysis of orthodox CO₂ “tonne-year accounting” into its recommendation on removals and accounting methodologies to government negotiators at COP28. Consequent to the IPCC consensus on the asymmetry between fossil fuel derived emissions and land-based removals, CarbonPlan explained how a metric tonne of emissions does not equal a metric tonne of removals. Emissions offset contracts (both in cash and futures markets since 2021) must not state, or imply in contract marketing materials, that buying a tonne of emissions removals is reducing GHG emissions by a tonne. If VCM proponents continue to make claims about following a path to net-zero emissions by buying emissions removal contracts, they will fall prey to the false equivalences identified by CMW and CarbonPlan.
Clever financial engineering and contract design may reduce litigation against market participants buying contracts and advertising their “net zero” progress. But as CMW concluded in its “principles for carbon dioxide removal accounting,” “The atmosphere cannot be cheated.” Any accounting and crediting of removals in Article 6.4 implementation that does not reduce emissions absolutely is trying, in vain, to cheat.