Kate Abnett and Jake Spring

(Reuters] – The negotiations to resolve rules regarding carbon markets began on Saturday. However, talks continued into overtime at U.N. COP26 climate summit.

The new draft documents for Article 6 implementation of the 2015 Paris Agreement were released on Saturday. They show progress in resolving the three key issues that prevented a deal at U.N. climate conference.

Article 6 sets the standards for countries that can buy offset credits to reduce their emissions.

Both countries and companies with large forest covers are interested in a strong deal in Glasgow on government-led carbon markets. This is also in the hope of legitimizing fast-growing voluntary offset markets.

Some are wary about making hasty deals, as they have to balance these interests with concerns that the offsetting might go too far and allow countries to continue releasing climate-warming gasses.

TASING TRANSACTIONS

Two tracks are available in relation to climate adaptation funding.

Taxes would not apply to bilateral offsets trades between countries. It suggests that the rich, even the United States, have given in to the demands of the levy.

A separate, centralised system will issue offsets. 5% of offsets proceeds will go to an adaptation fund in developing countries.

As part of that program, offset credits up to 2% will be cancelled. It will stop other countries from using these credits as an offset to achieve their climate goals, thereby increasing overall emission cuts.

OLD CREDITS

A stubborn blockage was also encountered when it came to whether the carbon credits that were created under the Kyoto Protocol (predecessor of the Paris Agreement) should be added in the new offset system.

Negotiators were negotiating a compromise to set a cutoff date. Credits issued prior to that date would not be carried forward.

All offsets from 2013 will be transferred to the new text. According to analysis done by Oko-Institut and the NewClimate Institute, this would permit 320,000,000 offsets each representing one tonne CO2 to be entered the new market.

Campaigners have warned against over-financing the market with older credits and have raised questions about some of the climate benefits.

Mixed reactions were received to the latest compromise.

The 2013 date was “not good.” It will now be the buyer countries’ job to say “no” to them,” explained Brad Schallert (non-profit World Wildlife Fund) carbon markets expert.

Some countries declared it unfair that the old credits be permitted in the new marketplace, while other countries feared credit awarded under REDD+, a forest management scheme.

Juan Carlos Monterrey Gomez was the lead negotiator in Panama. He stated, “Panama won’t accept Article 6 as it stands currently.” “Forests should be included in this agreement. If not, no way, no how, no deal.”

Reuters received a report from a negotiator in another country stating that the draft proposal might include forest credits.

“DOUBLE COUNTING”

Unanimity was evident in the matter of credit claimability. Credits could be claimed both by the country that sells them and the country that buys them.

Japan’s proposal may have solved the problem and has the backing of both Brazil and America. An Article 6 deal was destroyed by Brazil’s refusal to allow double counting in the past.

The new proposal would allow the country that creates credit to decide whether it can be sold to other countries to contribute towards climate goals.

In order to make sure that emissions cuts are only one-to-one, if the transaction is authorized and closed, each country will add an emission unit (or subtract) to their national tally.

These same rules will apply to credits being used in broader ways toward “other global mitigation purposes”. Experts suggest that this wording could be used to include a global scheme of offsetting aviation emission, which would ensure that double counting is not possible.

Kelley Kizzier (Vice President at Environmental Defense Fund), who chaired Article 6 negotiations at previous U.N. summits, said, “It is a strong text about double counting.” “It does the job it should.”