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Forests at the climate conference COP27

12 December 2022

Forests at the climate conference COP27

Introduction

The 27th United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP27) included an historic breakthrough in establishing a new fund for Loss and Damage, but also a perceived lack of ambition in the new Mitigation Work Programme set up at COP26 in Glasgow.

Speaking in the closing plenary, European Union (EU) Vice-President Frans Timmermans said the final deal puts “unnecessary barriers” in the way of limiting temperature rise to 1.5°C, and allows countries to “hide from their responsibilities.” This was in response to the EU offer to agree to a Loss and Damage Fund if all other countries agreed to update their national climate commitments to be in line with the 1.5°C, including to peak emissions by 2025. Denounced as “blackmail” by many observers, the EU demands ignored the crucial principles of equity and common but differentiated responsibilities, which state that countries and regions that have contributed most to the climate crisis should lead both in reducing emissions and in providing finance for vulnerable nations. In the end, the EU supported the Fund as did the United States of America (USA) in COP27’s final days.

Forests featured in many places, most prominently in the Sharm el-Sheikh Implementation Plan, also known as the Cover Decision, which reaffirms the 1.5°C temperature commitment; and Article 6, which establishes new cooperative approaches to the Paris Agreement. Glasgow forest pledges were reaffirmed and new momentum and optimism surrounded incoming Brazilian president Luiz Inácio Lula da Silva, who drew crowds to speeches recommitting Brazil to zero deforestation and degradation, pledging to create a ministry of Indigenous and native peoples, and proposed to host the 2025 COP in Brazil. 

 

Sharm el-Sheikh implementation plan 

Negotiations over the Cover Decision focussed on a reference to phasing out or down all fossil fuels. While India proposed the “equitable phase-out of all fossil fuels”, many countries – in particular the USA – balked at the word “equitable”, calling instead for a phase out of “unabated” coal and fossil fuels. Although many countries called for “all fossil fuels” to be phased out or down, no such language was included in the final Decision. 

Discussions about whether forests should be mentioned at all provoked disagreement and remained contentious until the end. The Coalition for Rainforest Nations wanted to refer to Reduced Emissions from Deforestation and Degradation (REDD+), prompting Bolivia and Argentina to respond that a balanced approach was needed, and that the text should refer to joint mitigation and adaptation approaches. The penultimate version of the text referred to the recent United Nations Environment Assembly (UNEA) resolution that described Nature Based Solutions (NBS) but didn’t mention the term. In the final Heads of Delegation meeting, Bolivia asked for the reference to UNEA to be deleted, saying it is outside the UNFCCC framework, while Brazil asked to delete the whole paragraph on forests as they did not want a reference to UNEA or NBS. However, the USA, supported by Norway, Iceland and Chile, called for NBS to be referenced in the final text, and it was.  

This first reference to NBS in a UNFCCC decision caused widespread concern as it introduces new language to prepare the way for financialisation and trading of forest carbon.

 

Mitigation Work Programme 

COP27 finalised the details of the mitigation work programme established as part of the Glasgow Climate Pact, whose objective is to “urgently scale up mitigation ambition and implementation in this critical decade”. Its scope includes all sectors covered in the 2006 Intergovernmental Panel on Climate Change (IPCC) Guidelines for National Greenhouse Gas Inventories: energy; industrial processes; agriculture, forestry and land use; and waste.  

The work programme will run until 2026 under the guidance of two co-chairs, with at least two annual “global dialogues” on topics based on Party and observer submissions; these will inform an annual report presented at each COP and made available for the Global Stocktake. Developed countries pushed for greater ambition, but there were tensions around whether the programme should prescribe additional national targets, including sectoral ones. Developing countries thought this would prescribe unjustified additional mitigation burdens, if not coupled with adequate climate finance.  

 

Article 6 on international cooperation 

The Article 6 ‘rulebook’, which governs international trade of mitigation outcomes under the Paris Agreement, was completed at COP26 in Glasgow, with detail on definitions and procedures to be agreed at COP27 before trading began. Although they reached agreements on Article 6’s main elements, ironing out details of many substantive aspects has been pushed to COP28.  

Article 6.2 

Negotiations on Article 6.2, which governs Internationally Transferred Mitigation Outcomes (ITMO) (international emissions trading between countries), delved into the technical details of how registries would work, what information Parties would provide to the 6.2 registry and procedures for the review process. The decision adopts guidance about tracking and reviewing ITMOs, a training programme for technical experts, the information countries would need to report when trading, confidentiality, and whether a country could revoke submitted credits if they subsequently decide they want to use them towards their Nationally Determined Contribution (NDC). 

The COP27 outcome asks the Secretariat to establish an interim reporting platform by 2023, until the centralised accounting and reporting platform and the Article 6 database are ready. This means that transfer of ITMOs can begin within months and indeed, Switzerland has already signed a Memorandum of Interest with Ghana for trading of ITMOs, using the carbon savings to help meet its own targets. 

Reporting and review: The COP27 decision requires an annual technical expert review of ITMOs, based on the principles of transparency, accuracy, completeness, consistency and comparability (Annex II); the review results will be published on the centralised reporting platform. While comprehensive, the Article 6.2 review is linked to the Paris Agreement review process. If persistent inconsistencies are identified in country reporting, these will be addressed by the Committee established under Article 15 of the Paris Agreement, which acts in a facilitative, non-punitive manner. Ultimately, no consequences are attached to the review process, which is not ambitious enough in terms of transparency and accountability.  

Confidentiality: One area of serious concern is that rules agreed will allow countries to designate information provided during the review as confidential. Unlimited and unjustified confidentiality is now baked into the Article 6.2 rulebook. While the decision states that Parties “should provide a basis” for protecting information (dropping the “shall” from earlier drafts), no requirements limit or constrain the amount of information that can be kept confidential. This encourages accounting tricks and undermines the integrity of the whole Article 6 mechanism; the least ambitious countries can keep trading activity secret. While earlier draft texts asked countries to further develop “rules that might constrain the use of confidentiality”, the final decision merely requests countries to develop “modalities for reviewing information that is confidential” by the end of 2023.

Article 6.4 

Article 6.4 will create a new international carbon market where credits, known as “Article 6.4 emissions reductions” (6.4ER) can be traded between government and private sector participants, creating new opportunities for double-counting and dissimulation. This new 6.4 mechanism effectively replaces the Clean Development Mechanism (CDM), and the decision from COP27 includes the transition of CDM credits to the new 6.4 database.

The COP27 decision also creates a new type of unit: “mitigation contribution ERs”. This refers to ‘non-authorised’ units, which were introduced in the Glasgow text as ERs that were implicitly left out of the requirement for corresponding adjustments, leaving the door open for “double-counting”. Naming these “contribution” units sends a signal that these units may not be used for countries’ climate targets or international trade, but only for “results-based climate finance, domestic mitigation pricing schemes, or domestic price-based measures”. 

While COP26 mandated the establishment of a Supervisory Body to set up and run this new carbon market, it was not put in place until during the intersessional in June 2022, and so had only four months to complete its programme of work for the first year. The Supervisory Body has been tasked with developing the transition process of CDM activities to the new 6.4 mechanism by COP28, meaning trading of units could begin in 2024. 

The final decision requests the Supervisory Body to continue work on activities involving carbon removals and the review of CDM methodologies. It asks the Subsidiary Body for Scientific and Technological Advice (SBSTA) to continue work on: 

  • Emissions avoidance and conservation enhancement activities 

  • Connecting the 6.4ER Database to the international (6.2) registry to be used as ITMOs 

  • Host Party authorisation of credits for use towards NDCs or for international transfer. 

Emissions Avoidance: Whether to include emissions avoidance along with emissions reductions and removals in Article 6.4 methodologies is still being discussed. The EU previously said that emissions avoidance would not be included and that all activities can be covered under methodologies that deal with emissions reductions and removals. The Philippines has asked that emissions avoidance be included to accommodate sustainable development pathways, where countries can be rewarded for lower emissions intensity development. The EU supports further work on this issue with a decision to be taken at COP28. There is also a request under Article 6.2. for “consideration of whether internationally transferred mitigation outcomes could include emissions avoidance”.  

On this emissions avoidance, as well as the issue of the timing and modalities of host Party authorisation of credits for use towards NDCs or for international transfer, the decision text invites Parties and observer organisations to submit views by 15 March 2023, for the Secretariat to compile into a synthesis report for discussion at a technical expert dialogue before COP28. 

Removals: Glasgow’s COP26 tasked the Supervisory Body to develop and approve new methodologies for the 6.4 mechanism, including transitioning CDM methodologies and activities involving removals. The recommendations on carbon removals and the work on other methodologies were developed at the third Supervisory Body meeting that ran late into the night on the eve of the COP27 conference.  

During COP27 negotiations, many parties objected to the Supervisory Body’s removals recommendations and expressed disappointment at the lack of progress on methodologies.  

The EU specifically noted that it was not happy with the recommendations; it stated that many are sceptical of markets and that 6.4 could be the mechanism that closes the ambition gap, setting the standard and showing how markets can work. The EU expressed concerns with the work on removals and disappointment with the lack of guidance on baselines and additionality. The UK stated that this was a significant gap. 

The Least Developed Countries (LDC) echoed the EU on the need for guidance on general principles for ambition, adding that environmental integrity should not be compromised for the sake of markets.   

The Argentina, Brazil and Uruguay grouping stated that it is “extremely problematic” that so critical a conceptual issue as the carbon removals recommendations included expressions, such as “durable storage”, that lacked concrete meaning. They joined the Africa Group of Negotiators in expressing disappointment that methodologies to transition from CDM had not yet been developed.  

St Kitts and Nevis voiced serious concerns about guidance that treats all removals the same, when in fact, different sources of removals, processes and storage types pose significant, varied risks. Science shows clearly that impermanent removals from land and oceans cannot compensate for fossil fuel emissions, they said, and these concerns must be addressed. 

Canada, Norway, the USA and Mexico all expressed strong concerns with the language on human rights. Canada said the current removals recommendations could be interpreted as a violation of rights and asked for language on human rights and the rights of Indigenous Peoples to be consistent with international law. Other countries that expressed concerns included Australia, Bolivia, Japan, Kenya, New Zealand, Norway and Singapore. 

The final decision text on Article 6.4 asks the Supervisory Body to give it another try, and invites Parties and observers to give submissions on these issues by 15 March 2023.  

Observers expressed disappointment that no more specific guidance was given, particularly about human rights, beyond “avoidance of other negative social and environmental impacts”, and that language requiring the Article 6.4 carbon market to “contribute to global efforts on climate change for scaling up mitigation ambition and implementation” was removed from the final decision. The Supervisory Body is to engage stakeholders in a structured consultation process, and deliver revised recommendations to the next COP in late 2023.  

Article 6.8 

Article 6.8, the framework for non-market approaches (NMAs), was established alongside the Paris Agreement’s market approaches (6.2 and 6.4). COP26 established a “Glasgow Committee” to gather examples of NMAs in a technical report ahead of COP27 which gave examples of activities that could be supported as NMAs, such as blue carbon, social inclusivity, circular economy, just transition of the workforce, REDD+, debt for climate swaps and payments for ecosystems. 

The agreed text adopts a work programme schedule through to 2026, and includes operationalising a UNFCCC-hosted web portal for NMAs in 2023-24, and then implementing the work programme activities in 2025-26. In Egypt, parties disagreed on the purpose of the web portal. Some argued it should be a showcase for planned or existing work, whereas others said it should offer a “match-making” service to link projects with potential funders. The final decision does not take up the term ‘match-making’ (a key demand from Bolivia), but describes the platform as being used to “record and exchange” information on Parties seeking support for NMA and Parties submitting information on the support available. 

Use of the web portal will be voluntary, and an in-session workshop will be held in conjunction with each Glasgow Committee meeting for Parties to exchange information on best practices and lessons learnt. Perhaps most importantly, the SBSTA Chair (currently Tosi Mpanu Mpanu of the Democratic Republic of the Congo), has been requested to organise a meeting at the next intersessional in Bonn (June 2023) of financial entities serving the UNFCCC or Paris Agreement, including the Adaptation Fund, the Global Environment Facility, the Standing Committee on Finance the Paris Committee on Capacity Building, and the Local Communities and Indigenous Peoples Platform, to enhance collaboration between the Glasgow Committee for Art 6.8 implementation. 

 

Forest pledges  

Outside of the negotiating process, many pledges were made related to forests. Early in the conference, UK Prime Minister Rishi Sunak hosted a high-level event to announce the Forests and Climate Leaders’ Partnership (FCLP), a group of 26 countries – representing a third of the world’s forests – that will meet twice a year to track commitments on efforts to halt and reverse forest loss by 2030. The initiative is designed to build on the Glasgow forests and land use declaration, but fewer than a quarter of the original countries have signed up to the new initiative so far.  

Another initiative launched at COP26 that sits under the FCLP, the Forests, Agriculture Commodities and Trade (FACT) dialogue, co-chaired by Indonesia and the UK, continued to meet on the sidelines of COP27, hosting multiple events focussed on addressing climate change and the transformation of the global food system to support sustainability and protect forests, ecosystems and people. 

The Amazon Fund, which had been frozen in 2019 following Bolsonaro’s win, has been reinvigorated following a meeting between Luiz Inácio Lula da Silva of Brazil and Norway’s environment minister Espen Barth Eide; the fund’s main contributors, Norway and Germany, announced that they would participate again. During his speech to COP27 Lula da Silva promised that the new alliance would be “strengthened under my government” and called on the USA also to contribute to the Amazon Fund.

 

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