Parties divided on carbon trading system as UN climate talks end

The United Nations’ three-week climate talks have ended with parties still divided on the contentious carbon market trading system. 

The crunch issues around the carbon markets and adaptation finance are not new to parties at the UN Framework Convention on Climate Change (UNFCCC). Both issues were left deadlocked at the Conference of the Parties 25 (COP25) in Madrid, Spain, in 2019. 

“COP26 must be a success. These issues require leadership, political will and political decisions. Pending items must be wrapped up to fully implement the Paris Agreement and support must be unleashed so that all nations can take ambitious action. The UN stands ready to support all countries in these efforts,” said UNFCCC secretary Patrica Espinosa after the conclusion of the talks on Thursday. 

The international carbon markets fall under article six of the 2015 Paris Agreement, meant to keep global warming below 1.5 degrees celsius. 

The carbon market is essentially a trading system in which one country can pay for greenhouse gas emissions in another country and then use that credit to count towards its own emission reduction targets. 

Climate activists believe it will present big polluters with accountability loopholes. 

To prevent a situation where loopholes are used to cheat the system, parties at COP need to develop rules, which was among the unfinished business of COP25. 

The carbon market was established under the Kyoto Protocol, an accord that expired at the end of 2019, but was not without controversy. 

The Stockholm Environment Institute found that under the old carbon trading system, accounting irregularities increased carbon emissions (600 million tonnes of CO2 equivalent). 

“The evaluation clearly shows that oversight of an international market mechanism by the host country alone is insufficient to ensure environmental integrity,” the authors said.

The talks are regarded as informal and no decisions are set to go on record. Instead, they will form a basis for the COP26 talks in Glasgow, Scotland, in November. 

“Each and every G7 country has committed to increasing finance, including increasing funds for adaptation. Japan, Canada  and Germany have put new money on the table, committing to increase their finance by 2025,” said incoming COP26 president Alok Sharma. 

He called on countries at the G20 energy and climate ministerial committees to draw on the leadership shown at G7. 

“We cannot be complacent and we all understand that there is still a significant amount of work that needs to be done to ensure COP26 is a success,” he said.

“The next few months are vital as the UK presidency continues to reach out to parties, driving progress and creating space to reach compromises. It is important that we meet in Glasgow having done our homework ahead of COP26,” he added.

He emphasised that COP26 must also align with the latest available science on climate change, which will be released by the Intergovernmental Panel on Climate Change (IPCC) later this year. The IPCC is currently preparing its Sixth Assessment Report.

Espinosa commended the fact that there had been a large number of observers joining discussions in the past three weeks — about 90% of parties had allowed observers to join. 

“The next five months are crucial,” she said. “We must not let remaining divisions stall the process towards success.”

The UNFCCC executive secretary called on leadership and trust to define the remaining months ahead of the conference. 

Sharma told reporters that the COP presidency was exploring options with the UN for delegates overseas to get Covid vaccines so that they are able to attend the Glasgow meeting in person. 

“Prime Minister [Boris] Johnson made an announcement a few days ago that in order to have more delegates attend in person, we will vaccinate accredited delegates who otherwise could not get vaccinated,” he said. 

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