Frederic Gagnon-Lebrun, Senior Director of Climate Policy, Finance and Carbon Markets:
On the whole, there were moves in the right direction, such as the agreement on a Loss and Damage Fund to support vulnerable countries in dealing with the effects of climate change. We even saw some significant financial commitments made by the EU and the U.S., among others.
The conference was also a culmination of the
so-called 'global stocktake', which is a central outcome, as it contains every element that was under negotiation and can now be used by countries to develop stronger climate action plans due by 2025, and set targets for 2035/2040. As part of the global stocktake, an agreement was reached to globally 'transition away from fossil fuels by 2050' as well as triple renewable energy capacity.
While this decision does not 'close the books' on phasing out fossil fuels, many are hailing this as the
“beginning of the end" of the fossil fuel era. We must not lose this momentum. We must focus on the collaborations, supportive policy incentives, and financing solutions that can help accelerate this shift.
Ritika Tewari, Senior Managing Consultant for Climate Policy, Finance and Carbon Markets:
While there was progress on some fronts, as Frederic mentions, there was none on others. This was the case for Article 6, which sets out the rules for global market-based collaboration around emissions reductions. It is seen as an essential enabler in providing countries and businesses with a key pathway to meet and accelerate their climate goals.
This year, there were no decisions made on Articles 6.2 and 6.4, which govern the implementation of bilateral agreements and compliance carbon markets (more on that
here, for context).
The lack of agreement on Article 6.4 specifically is discouraging for several reasons. The operationalization of Article 6.4 would have provided a new structure for a global carbon market, with the UN deciding on the rules regarding eligibility.
These markets will not be operationalized within the next year, before a return to the negotiation table at COP29. In the meantime, our team will be closely following the work of the Article 6.4 Supervisory Body, which has a mandate to review work on Article 6.4 throughout 2024. In the words of
Andrea Bonzanni, International Policy Director at IETA: “We have missed an opportunity to expedite the operationalisation of a crediting mechanism that would have set a high bar on environmental integrity, safeguards, and human rights."
Negotiators also failed to agree on the key details under Article 6.2, which sets out rules for country-to-country collaboration. However, these markets differ from 6.4 in that they are already in use by countries. While the lack of consensus on 6.2 is disappointing, countries will continue to implement international carbon markets under Article 6.2, and it is exciting to see several projects moving ahead in this space.
No agreement on Article 6 also delays the VCM's integration with the Paris Agreement accounting framework - the so-called 'hybrid' scenario. Many market stakeholders who were looking forward to direction from the multilateral process were left disappointed. However, this still leaves the door open for countries, standards, and bodies to deliberate and demonstrate high-integrity rules of engagement in close collaboration with one another, as well as introducing initiatives through existing mechanisms.