COP27 was hampered by listless Presidency leadership until late in the COP, old divisions – including on liability, and attempts to backslide on ambition, but talks closed with good, but not ideal, progress on some key issues including Loss and damage and global co-operation through carbon markets, said the Carbon Market Institute (CMI).
“This has been a disappointingly divided and disorganised COP but ended with rough progress in the formal talks which has kept the goal of limiting average global warming to 1.5oC alive alongside important developments in events, reports and commitments in the parallel pavilions,” said John Connor, CMI CEO.
“The question of support for at least some developing countries in dealing with unmanageable climate impacts, or “Loss and Damage,” has dominated here and was seen as a third and final test of trust for developed nations as only a few, including Australia, strengthened emission reduction pledges from COP26 and financing still falling short of previous pledges.”
“The final Loss and Damage decision is incomplete and as yet unfunded, but nonetheless historic, as developed countries agree to provide funding to a facility for developing countries as well as through a “mosaic” of existing channels.”
“Good, if not ideal progress was made in fleshing out rules for global cooperation and investment in carbon markets under Article 6 which will allow some ongoing investment in projects while common rules are further developed. However, progress needs to be mindful of wake-up calls on human rights, environmental integrity and transparency.
The Article 6.2 decision, which covers carbon trading agreements between countries, advanced with details and timelines for the common framework of reporting registries and databases. As seen with the agreement between Switzerland and Ghana highlighted at the COP, countries are already making agreements under Article 6.2.
It is vital to make progress here to provide common reporting frameworks and enable transparency to boost investments that can support climate action as well as help achieve other social and environmental co-benefits. Countries can and should co-operate to reduce costs and increase ambition of nationally determined contributions, but they need to ensure maximum transparency.
Less progress than may have been hoped was achieved under Article 6.4 intended to support broader corporate investments and engagement. A significant work program has been laid out for next year for the newly established Supervisory Body to bring recommendations back to countries at COP28 and it will be important all engage to ensure investments can be mobilised with environmental integrity and transparency.”
“At the concurrent G20, key developments included a $20 billion investment to assist decarbonisation of Indonesia’s coal power fleet, and a thawing of US-China relations allowing climate co-operation to recommence. Back at the COP, the visit of Brazilian President-elect Luiz Inácio Lula da Silva recommitting Brazil to the Paris Agreement was warmly welcomed. Additionally, the agenda to reform global financial institutional arrangements so they are fit for purpose for the 21st century and its climate challenges was significantly boosted, including with Australian support.
“There were also important contributions to the evolving ecosystem of corporate accountability to prevent greenwashing in voluntary carbon markets with the UN High Level Expert Group claims and the International Standards Board issuing guidance on corporate and other non-state actor voluntary net-zero claims.
These rightly prioritise corporations’ own emission reduction pathways, but as we noted it’s important to clarify that the UNHLEG report highlights the need for high integrity carbon credits but does not recommend relegation of their use to later years, contrary to some interpretations.”
At p. 19 the UNHLEG report states:
As best-practice guidelines develop, non-state actors meeting their interim targets on their net zero pathway are strongly encouraged to balance out the rest of their annual unabated emissions by purchasing high-integrity carbon credits.
“This is an important point as companies should have both a credible decarbonisation pathway and a program to address current emissions and environmental impact. Guidance for corporations, such as that to come from the Voluntary Carbon Markets Integrity Initiative early next year, will be important to ensure that high ambition is recognised, as are credible decarbonisation pathways, and action on other social and environmental impacts.
“Finally, Australia’s greater ambition as one of the few nations to come to COP27 with a stronger 2030 target was recognised with a greater role in supporting the negotiations. Minister Chris Bowen consistently reinforced the need not to backslide on COP26 outcomes and resolutely supported the 1.5oC goal.
“Australia engaged closely with Pacific nations, who will have heightened influence as Australia seeks their support for COP31 in 2026, an influence that will extend through the important 2025 COP where countries will come together with even greater ambition expected in the next Nationally Determined Contributions” concluded Connor
Note for editors
CMI was represented at COP27 by Janet Hallows, Director Climate Programs and nature-based solutions and John Connor, CMI CEO, who was the head of the Fijian Government’s COP23 Presidency Secretariat. CMI supported a delegation from Australian business.
CMI has formal business organisation observer status with the UNFCCC and hosted or participated in numerous panel sessions in the Australian Pavilion and other venues at COP27.
For information on COP27 and CMI’s events and updates, visit our Cop27 Hub here.
About the Carbon Market Institute
The Carbon Market Institute (CMI) is a member-based institute accelerating the transition towards a negative emissions, nature positive world. It champions best practice in carbon markets and climate policy, and its nearly 150 members include primary producers, carbon project developers, Indigenous organisations, legal, technology and advisory services, insurers, banks, investors, corporate entities and emission intensive industries. The positions put forward constitute CMI’s independent view and do not purport to represent any CMI individual, member company, or industry sector. CMI’s latest Advocacy Policy Positions Statement can be viewed here.
For further information, contact John Connor on 0413 968 475 or john.connor@carbonmarketinstitute.org
