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Carbon markets shape agenda at UN climate summit

The COP25 discussions also face a backdrop of uncertain geopolitics and intensifying public pressure.

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People gather for the Global Climate Strike in London, United Kingdom

Protestors gather in London, UK, to call for climate action ahead of COP25 as part of the Global Climate Strike movement.Credit: Mike Kemp/In Pictures/Getty

Four years after pledging to limit global warming to no more than 2°C above pre-industrial levels, representatives of nearly 200 countries are meeting this week to put the finishing touches to the 2015 Paris climate accord.

Discussions at the annual United Nations' climate conference, COP25, are expected to focus on international carbon markets, which have the potential to reduce the overall cost of global climate-mitigation efforts.

But the talks, which start today in Madrid and last until 13 December, also take place against a backdrop of shifting geopolitics that has created uncertainty over who will lead global efforts to tackle climate change, and of intensifying public pressure on governments to take action.

Despite pledges to curb emissions, atmospheric greenhouse-gas concentrations reached a new peak in 2018, the World Meteorological Organization said last week. A UN climate report released on 26 November warns that the Paris agreement’s 2 °C goal might soon be out of reach as emissions continue to rise.

“Remaining countries must reassert their will to get on, and accelerate the pace of action, despite mounting challenges,” says Bob Ward, policy and communications director at the Grantham Research Institute on Climate Change and the Environment in London.

Unfinished business

At last year’s conference, nations agreed on a set of rules for tracking and reporting greenhouse-gas emissions and for reviewing collective progress. However, they failed to establish clear rules around carbon markets through which emissions made in one country can be offset by investing in low-carbon technologies elsewhere. Although it is unclear whether negotiators will be able to reach agreement this time around, Article 6 of the Paris agreement — which aims to promote voluntary international cooperation between nations — is a central point on the agenda, and offsetting will almost certainly be discussed.

Voluntary offsetting schemes are already in use to make certain goods and services, such as passenger flights, ‘carbon neutral’. Many countries, including New Zealand, Sweden and the United Kingdom, rely to some extent on offsetting to achieve their emission-reduction goals.

Critics say that offsetting schemes allow rich countries to dodge responsibility for cutting their own emissions. But a well-organized international carbon market with clear, practical rules could save up to US$250 billion in climate-mitigation costs, says Stefano De Clara, a policy adviser at the International Emissions Trading Association in Brussels. “It would engage businesses in climate action and facilitate the linkage of existing carbon pricing systems,” he says. “In the end, everyone could be better off through collaboration.”

Analysts have warned that poorly planned offsetting schemes could actually hinder efforts to curb global emissions. Under the Paris agreement, countries must adjust their emission-reduction pledges every five years, in line with new scientific evidence about what will be required to stabilize the climate. Without proper rules and bookkeeping, offsetting could simply move emission-reduction efforts around the world, instead of reducing overall emissions, says Gilles Dufrasne, an environmental economist with the Brussels-based international climate policy watchdog Carbon Market Watch.

Jacob Werksman, a climate-policy adviser at the European Commission, warns that there are some sticking points that negotiators in Madrid might not be able to resolve. For example, some countries expect that excess carbon credits from the expiring 1997 Kyoto Protocol, the previous international climate treaty, will remain eligible for use under the Paris agreement. Such a concession would “severely undermine” the agreement, Werksman says.

Political climate

This year’s talks are also facing intense public scrutiny. The rapidly growing climate-protest movement, which has taken centre stage in recent months, is changing the overall conversation on climate change, says Valèrie Masson-Delmotte, a co-chair of the Intergovernmental Panel on Climate Change.

Politics are shifting, too. The United States’ official withdrawal from the Paris agreement puts the nation in a strange position for this year’s talks. It will remain a member of the UN Framework Convention on Climate Change, an international treaty under which both the Kyoto Protocol and the Paris agreement were negotiated. And US representatives will still attend future COP meetings — including next year’s meeting in Glasgow, UK. But unless a new US government revokes the decision to quit the Paris agreement, the country will no longer participate in negotiations concerning the rules and implementation of the accord. The White House also announced in October that climate will not be on the agenda of the next G7 summit, due to take place in Florida next year.

Hopes for leadership rest on the European Union, says Oliver Geden, a policy researcher at the German Institute for International and Security Affairs in Berlin. On 28 November, the European Parliament voted to declare a ‘climate and environmental emergency’, a move that will put pressure on EU member states to approve the European Commission’s plans to cut emissions by 55% by 2030, and to achieve net-zero emissions by 2050.

“At this time it’s up to the EU to demonstrate that the Paris agreement can deliver after all,” says Geden. “That’s a tough nut to crack.”

Nature 576, 17-18 (2019)

doi: 10.1038/d41586-019-03695-x

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