Would a decision on Article 6 of the Paris Agreement do more harm than good?

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The COP 25 climate negotiations ongoing in Madrid have been focused in large part on a certain component of the Paris Agreement on climate change, the foremost goal of which is to see countries reduce their greenhouse gas emissions to limit global warming. However, halfway through this COP, there are concerns that an agreement reached on Article 6 – the component in question – could potentially have deleterious effects on the environment and human rights as well as undermine the core of the Agreement.

“This is less political in terms of making the Paris Agreement look good  – this is about money, ambition and cost of action,” says Steve Leonard, climate change policy analyst with the Center for International Forestry Research (CIFOR), who has been engaged in the climate negotiations for more than a decade.

In the four years since 2015 when parties signed the Paris Agreement at COP 21 in its namesake city, a Rulebook has been developed to provide frameworks on how signatories should implement their commitments to the Agreement and work to reach its goals. The presentation of the Rulebook last year was the major outcome at the end of COP 24 in Katowice, Poland.

The Rulebook was completed save for on one Article of the agreement – that being Article 6, which addresses carbon trading and markets.

“It’s a very contentious issue,” says Leonard. “What to do about carbon markets has been hanging around in this process under different names – markets, new markets, non-markets, cooperative approaches – and it’s gone through all sorts of machinations for over a decade. This is not a new issue, and so parties are very entrenched in their positions around this.”

The interests invested in these negotiations can be largely divided into three camps: developed countries, developing countries and parts of the private sector interested in carbon trading, namely the fossil fuel industry and aviation.

“You’ve got developed countries coming at this from a few different angles,” says Leonard. “You’ve got some that seem to want to undermine the process. You’ve got some that struggle to take domestic climate action because the cost is politically high for them at the national level, and so they want to pay other countries to reduce their emissions. And you’ve got some that are trying to do the right thing, that are trying to see strong safeguards and strong human rights outcomes.”

The same angles are reflected in the positions of developing countries, says Leonard, with the addition of countries that are also aiming to generate revenue through selling emissions reductions.

As for the fossil fuel industry, Leonard says that, generally speaking, its longstanding goal in climate negotiations has been to thwart climate action and avoid having to reduce emissions, and Article 6 could potentially be beneficial for this bid.

“They want Article 6. They want a weak market. They want to be able to offset and delay the phase out.”

Phasing out greenhouse gas emissions is particularly difficult for fossil fuel companies, Leonard says, because it can dampen their profits in the short-term, and “legally, if they’re not making a profit, they’re not adhering to the fiduciary obligations that they have to shareholders.”

Tuvalu, on behalf of least developed countries, has been the primary party pushing for the inclusion of human rights and safeguards in the Article 6 Rulebook. If human rights and safeguards for communities where nature-based projects related to the carbon market occur are not part of the framework, these projects can potentially be carried out in ways damaging to livelihoods. Leonard says this occurred under the Kyoto Protocol’s Clean Development Mechanism, which was a mistake that should not be repeated

“Some countries that want to see carbon trading know that ensuring respect for human rights and having safeguards is good because it helps to de-risk, and it’s good to have the mechanism in there to give legitimacy,” says Leonard. “Unfortunately, however, all we have seen here is the weakening of safeguards, and the latest version of the draft decision released over the weekend has deleted all references to human rights. This is a major concern.”

The negotiations around the text of Articles is a highly technical process, and outcomes are often dependent on the details. The text of Article 6 is currently divided into two sections, including the COP decisions in one part and an annex in the other, the latter of which serves as the Rulebook. The annex is substantive text of the framework, while the COP decision outlines more generally the next steps to be taken on carbon markets.

“A lot of the text in the annex has been getting moved into the COP decision, so things, including safeguards, are being put into the basket of ‘we’ll do this later,’” says Leonard. This “too-hard” basket is now overflowing, he says.

While an outcome for Article 6 reached by the end of this week could serve as a ‘political moment’ for the COP’s finale, Leonard and other critics are wary of the dangers that would be embedded in the Rulebook and would rather it be delayed and further negotiated to something that is better for the communities on the ground.

“If there’s an outcome here that allows for emissions trading that enables any zero-sum offsetting while increasing risks for front-line forest defenders, that undermines the Paris Agreement,” says Leonard. “And so I would rather see no outcome than a bad outcome. And that doesn’t bother me at all. This is a marathon. This is a long game. The Paris Agreement is there to stay.”