Big diplomatic decisions receive much more media and political attention than the many steps necessary to implement the decisions. So it was with the 26th Conference of the Parties (COP26) of the United Nations Framework Convention on Climate Change (UNFCCC) meeting in Glasgow, Scotland. The COP26 decisions on Article 6 of the 2015 Paris Agreement included a decision on how to implement Article 6.4. Article 6.4 governs the registry of government-authorized greenhouse gas emissions offset credits for sale to “non-Parties,” mostly to multi-national corporations and financial institutions. These authorized credits (as well as unauthorized credits) could be traded on cash markets and serve as underlying assets for emissions offset futures trading, including that overseen by the U.S. Commodity Futures Trading Commission (CFTC).
The Article 6.4 decision (3/CMA.3) provides for the creation of a Supervisory Body, composed of representatives of UNFCCC governments. The Supervisory Body’s role is to recommend to future COPs how to implement the registry that is tasked with recording and reporting on offset trading to achieve Paris Agreement objectives. Here, we outline issues that may be included in the Supervisory Body’s recommendation to COP 27. To judge by the Supervisory Body’s work plan and draft generic recommendation to COP27, a decision to validate emissions “removal activities,” i.e., emissions offset projects, could be made in advance of any decision on how to protect the human and land rights of those affected by the various “removal activities.”
Monitoring the Supervisory Body
In theory, monitoring the Supervisory Body for implementation of Article 6.4 is technologically feasible since the Supervisory Body negotiations are webcast. The CFTC could apply to become an accredited observer and thereby monitor implication in the markets in its jurisdiction. In fact, IATP advised the CFTC to monitor the COP negotiations in response to a question about international cooperation in the CFTC’s Request for Information on climate-related financial risks. However, in practice, effective monitoring of such a complex and influential process in real time is difficult. As Carbon Market Watch (CMW) noted of its efforts to advise the Supervisory Body in advance of its September 19-22 meeting in Bonn, Germany, documents for public comment were not posted in time to enable comments. Despite the unavailability of discussion documents in advance of the meeting (they have since been posted), CMW submitted comments on topics authorized for implementation by COP26 in Glasgow, Scotland.
Some of these comments point to important issues that the Supervisory Body’s draft 2022-2023 workplan indicates will not be decided at its November 3-5 meeting in Sharm el-Sheikh. For example, the Supervisory Body will not work on Engagement with Local Communities and the Indigenous Peoples Platform (LCIPP) until mid-2023 (p. 4), even though a large portion of land-based offset projects are located or planned to be located on LCIPP territories.
IATP signed a letter to the CFTC coordinated by Americans for Financial Reform/Amazon Watch that documented extensive land and human rights violations in offset projects from which private standards organizations verified credits for sale in Voluntary Carbon Markets (VCMs). The UNFCCC authorized emissions offset trading registry would lose credibility among governments and the public if the Supervisory Body fast tracked offset credit trading in advance of an independent grievance mechanism called for at COP26. Such a grievance mechanism is essential to protect not just the environmental and social integrity of the authorized offset credits, but also human and land rights, which are integral to that integrity.
On October 25, the UNFCCC Secretariat posted a draft recommendation for the Supervisory Body to consider for advising COP27 on the implementation of 6.4. (A6.4-SB003-AA-A03) The recommendation applies to “generic removal activities and does not include detailed requirements in respect of specific types of removal activities such as land-based removal activities and engineering-based removal activities.” (p.4) The draft recommendation also provides options for definitions and other general rubrics towards a 6.4 implementation decision at the COP27.
Regarding the prevention of harm by offset project developers, the Secretariat recommendation is likewise generic: “A removal activity shall be designed so as not [to] have negative impacts on biodiversity, land and soils, ecosystem health, human health, food security, local livelihoods, and the rights of the indigenous peoples taking into account the host Party's national plans.” (p. 8) The design of offset projects shall avoid these negative impacts, unless the implementation of a government’s plan for emissions mitigation allows these negative impacts to occur. Because this generic recommendation is only a general framework for a Supervisory Body recommendation to COP 27, we comment on other Supervisory Body documents might help elucidate the issues often obscured by diplomatic protocol and UNFCCC procedures.
A COP27 decision to validate “removal activities” for offset trading?
The Supervisory Body workplan indicates that it will recommend to COP27 the adoption of decisions that could fast-track emissions trading in advance of any mechanism to protect integrity and rights. “Regulation for removal activities” is scheduled for decision making at the COP27 (p. 7). If the definition of “removals” conflates temporary “nature based” (mostly agriculture and forestry derived) offsets with purportedly permanent offsets based on Carbon Capture and Storage (CCS), Carbon Capture and Utilization (CCU) and other engineering-based technologies, the Supervisory Body will justify its “removals” decision recommendation to the COP on the scientifically false delusion that short-cycle biogenic carbon offsets can compensate for the long carbon cycle of fossil fuel emissions. CMW warned the Supervisory Body against “setting rules that would create the false impression that biological carbon and geological carbon are equivalent. This means that credits issued on the basis of temporary carbon storage, such as sequestration in natural sinks, should either not be eligible for offsetting claims or should be time-bound (i.e., with an expiration date like under the CDM [Clean Development Mechanism, now phased out by the terms of the UNFCCC Paris Agreement]).”
From the viewpoint of climate science, temporary carbon storage converted into offset credits cannot result in a global reduction in emissions, called “Overall Mitigation of Global Emissions” in the UNFCCC lexicon, while absolute emissions continue to increase. (According to the International Energy Agency (IEA), greenhouse gas emissions hit an all-time high in 2021, although IEA anticipates slower growth in global emissions in 2022, largely due to governments’ investments in clean energy.)
But the Supervisory Body is a diplomatic body informed by the UNFCCC Secretariat, itself a diplomatic entity. The Secretariat’s “Information Note: Removal activities under the Article 6.4 mechanism” is an important public-facing basis for the Supervisory Body’s recommended decision on “removal activities” to the COP in advance of any other issue in Article 6.4. As such, the Information Note merits more comment than can be given in this short analysis. Alternatively, the Supervisory Body may decide to follow the Secretariat’s recommendation at the conclusion of its briefer Concept Note (p. 17); rather than a decision recommended by the Supervisory Body to the COP about removal activities, the Supervisory Body would instead provide guidance to the Secretariat about further work on removal activities.
The Information Note is missing any analysis of which removal activities are more effective, less effective, ineffective or counter effective for the purpose of absolute emissions reductions to achieve the Paris Agreement target of not exceeding warming the planet by more than 1.5⁰C above the 19th century baseline. Lacking this analysis, the Supervisory Body might recommend a COP decision on “removal activities” that validates indiscriminately all “land-based removal activities” (i.e., emissions offsets) and all “engineering-based removal activities” whether they can perform reliably and at scale to achieve absolute emissions reductions required to achieve the 1.5⁰C Paris Agreement target.
Diplomatically massaging the IPCC analysis of the use of “engineering-based removal activities”
The Information Note’s “Summary description of engineering-based removal activities” (pp. 59-63) is based on the Intergovernmental Panel on Climate Change’s (IPCC) Sixth Assessment Working Group III Report. (Footnote 1, p. 59) The summary briefly acknowledges some of the technological risks and costs of engineering-based removals. But the acknowledgment is very muted relative to the risks detailed in the report itself. According to the Center for International Environmental Law (CIEL) and the Heinrich Böll Stiftung (HBS), “The IPCC’s own findings repeatedly warn that CCS and CDR [Carbon Dioxide Removal] are unproven at scale, unavailable in the near term, are of uncertain benefit for the climate, and pose significant risks of harm to humans and nature.” (p. 4)
Although these technologies lack proof of performance at a commercial scale, governments still have heavily subsidized their research and construction. In September, the Biden administration announced nearly $5 billion in “funding opportunities” for CCS research. The latest U.S. federal infrastructure bill spares the private sector the full cost of their carbon capture and storage technologies by paying for 80% of the pilot projects and regional hubs for those technologies, up to $12.1 billion over the duration of the bill. But the founders of the first CCS company characterized the Biden administration’s massive investment in CCS as “slowing the transition away from fossil fuels” and a waste of taxpayer money better spent on renewable energy expansion. The corporate demand for offset credits leads to technology and litigation risks that are not referenced in the “Summary description.” For example, Bloomberg Green reported on October 26 that a British entrepreneur has a memorandum of understanding to sell two million tons of offset credits to Respira, a new VCM player, before even building the Bioenergy Capture and Storage facility from which the credits would be derived.
However, the members of the Supervisory Body will likely be more influenced by the Summary Report for Policy Makers of the IPCC Working Group III and the hundreds of fossil fuel lobbyists at COP27 than by the IPPC report itself. Regarding the Summary Report, CIEL and HBS stated in April, “The Working Group III report also reaffirms the dangers of governments’ overreliance on unproven technologies like carbon capture and storage and technological carbon dioxide removal. Yet, these warnings are buried and downplayed in the report, particularly in the heavily negotiated Summary for Policymakers, among an array of models and pathways that rely on precisely such technologies, project continued use of fossil fuels for decades, and overwhelmingly assume that the world will go beyond 1.5°C for decades or longer – with surprisingly little attention paid to the human and environmental consequences such assumptions entail.” (p. 1). Underlying the Information Note’s apparently neutral presentation of removal options are emissions reductions pathways that assume a future of fossil fuel dependency at least until 2050.
To support continued reliance on fossil fuels, the political massaging of the IPCC Working Group III report imagines a future in which engineering-based removals will reverse or at least mitigate the irreversible climate tipping points that could manifest by 2030 or earlier. According to a September 2022 study, “Six CTPs [Climate Tipping Points] become likely (with a further four possible) within the Paris Agreement range of 1.5 to <2°C warming, including collapse of the Greenland and West Antarctic ice sheets, die-off of low-latitude coral reefs, and widespread abrupt permafrost thaw. An additional CTP becomes likely and another three possible at the ~2.6°C of warming expected under current policies.” In the pendulum between despair triggered by CTP and techno-optimism about reversing the momentum towards an unlivable 2.6⁰C world, there lies at least one interim question for COP delegates to consider.
Is it feasible to invest on the scale and provide the huge amounts of energy, water and land required by engineering-based removal activities and still have sufficient climate finance to enable a just transition to a 1.5⁰C world? For example, a just-released academic study estimates that the land-based emissions offsets committed by nearly 200 governments under terms of the Paris Agreement would require an area of about 1.2 billion hectares, larger than the territory of the U.S. Furthermore, would a Supervisory Body decision to validate all “engineering-based removal activities,” with their long development times and dependence on public policy and subsidies to “risk proof” private sector investment in those technologies, represent an entrenchment of “current policies” to support emissions generated by fossil fuels by other means?
Even if other factors, e.g., failure to put relevant proposals for a Loss and Damage financial facility for the most climate vulnerable countries on the COP 27agenda, block a delegate decision on a Supervisory Body recommendation on removals, the pressure for a long-term fossil fuel enabling removal activities decision will remain. A subsequent Information Note for COP28 must provide the “broader perspective” promised at the outset of the 2022 note, but unfulfilled in the listing of methodological issues associated with each removal type. That broader perspective must include the social, environmental and economic consequences of removal activities failure to prevent an overshoot of the 1.5⁰C target.
Nearly absent: agriculture in land-based removal activities
IATP has more experience with analyzing land-based removal activities, i.e., temporary emissions reductions projects and their conversion into tradeable offset credits, than with engineering-based removals. In the Information Note’s table of land-based removal activities, only one activity — soil organic carbon enhancement — is specifically agricultural. (p. 9) In the listing of methodological issues and solutions in the Information Note, there is nothing specific to agriculture nor to the industrial meat and dairy emissions, which IATP has estimated in our work on emissions from industrial livestock and the meat and dairy processing industries. IATP proposed to COP27 several solutions for climate and agriculture, both regarding emissions mitigation and adaptation to climate change. We also evaluated proposals from others regarding agricultural production and climate change.
Remarkably, the Information Note’s listing of methodological issues and solutions for removal activities has nothing to say about methane despite the Sixth Assessment Report’s conclusion that “Strong, rapid and sustained reductions in CH4 [methane] emissions would also limit the warming effect resulting from declining aerosol pollution and would improve air quality.” (p. 27) The Global Methane Assessment concluded in 2021 that cutting methane emissions 45% by 2030 was both necessary and feasible. Since agricultural emissions form a large part of methane emissions, it is a failing of the Secretariat to not have at least summarized the methodological issues and solutions for achieving the methane mitigation target for the Supervisory Body. However controversial the quantification of emissions and the means to their reduction might be, the Secretariat and the Supervisory Body will do no favors to the COP or the climate by eliding agriculture and methane from COP decision making.
Why is Article 6.4 implementation such a big deal in the larger scheme of things?
The hope that offset trading can result somehow in direct financing of emissions reductions beyond the financing of “removal activities” themselves is rooted in broader political conflicts that have resulted in woefully inadequate political commitments and financial investments relative to the scale of climate change, characterized by the U.N. Secretary General as one of three planetary emergencies. The U.N. Environment Programme’s Emissions Gap 2022 report is subtitled The Closing Window. The gap describes the wide difference between the emissions reductions promised by governments, particularly those whose countries are the largest GHG emitters, and the reductions required under climate science models to keep the planet and its residents from experiencing severe and prolonged climate impacts. The COP priority for the highest-emitting countries and industries is to implement Article 6.4. This priority— over any more direct form of financing mitigation, adaptation and loss and damage — is an expression of that closing window of hope.
Corporate lobbies often characterize offset trading as a secondary and supplementary tool to meet net-zero emissions targets. For example, a Business Roundtable report states, “A corporate net-zero commitment seeks to reduce emissions as far as possible as the primary strategy. Offsets are only considered once strategies to avoid, reduce, and substitute have been implemented.” Yet, the option of buying government-authorized offset credits, rather than investing in the primary strategy, elevates the Article 6.4 implementation negotiations at COP27 to a prominence unwarranted by the poor, or in some cases, nonexistent environmental performance of indiscriminately validated removal activities and the tradeable credits generated by those activities.
