In Madrid last week, the UNFCCC’s 25th Conference of Parties (COP25) took place, bringing together national government delegations; civil society, business, and finance observers. With most of the Paris Agreement rule book complete, negotiations focused mostly on the rules of Article 6, aiming to finalise how carbon markets will evolve post-2020 as countries begin implementation of the first of their Nationally Determined Contributions (NDCs) and their related emission reduction targets.
Other issues under discussion at COP25 included: management and financing of loss and damage (responding to impacts that can’t be adapted to); common time frames for post 2030 NDCs; financial commitments to assist developing and vulnerable countries; gender action plans, and; just transition initiatives.
This was the longest COP in history, extending some 44 hours after scheduled closing. It was attended by nearly 27 000 delegates. This included a large private sector presence at COP25, eager to understand the implications of negotiated carbon market rules. Private sector representatives were also keen to share knowledge, build capacity and collaboration to drive corporate ambition and support the development as well as implementation of climate solutions.
CMI again led a delegation of its business members to the COP and participated in many events and engaged across the spectrum of negotiations. This included hosting a Side Event in the Moana Blue Pacific Pavilion entitled “Carbon Markets in the Pacific: Practice and Potential.”
Inspired by the Pacific’s love of Rugby Sevens in this report we outline our seven key takeaways from COP25, these include:
- Postponing carbon market rules to COP26 is a missed opportunity, building on and communicating the respected integrity of Australia’s carbon market assumes greater importance as a result;
- All countries were urged to consider the gap between current commitments and agreed warming goals in re-communicating or updating their NDCs at COP26, Australia’s proposed use of Kyoto carryover will remain under international scrutiny and Australia should use policy processes underway to update its 2030 commitments and develop a 2050 Long Term Strategy by the September 2020 Pacific Island Forum;
- More business and investors see the inevitability of net-zero emissions and, recognising governments can’t always lead alone, are joining ambition alliances with increasing investments and engagement;
- Liability, litigation and rebellion are intensifying risks for companies and governments that can’t show credible, long-term climate action plans;
- Nature based carbon reduction activities assume greater strategic importance, not just offsets but as a key partner in solutions in addition to industrial decarbonisation activities;
- Voluntary markets play an important role in enabling companies to meet their stated climate change commitments. These markets are growing and will evolve alongside and occasionally within NDCs as the latter are updated and reviewed, and as Article 6 rules are further defined;
- Australian business and government experience can play a greater role in Asia Pacific with climate legislation and carbon markets there stepping up.