Stocktake COP – Stage Set for Biggest Climate Conference in Dubai

Stocktake COP – Stage Set for Biggest Climate Conference in Dubai

The state of climate negotiations at the 28th Conference of the Parties (COP28) is set against a backdrop of geopolitical tensions and challenging macroeconomic conditions. This situation sharply contrasts with the momentum leading up to COP26 in Glasgow two years ago. As COP28 unfolds, only a limited number of countries have submitted enhanced national determined contributions (NDCs), and the fight against inflation and energy security has taken precedence over the climate crisis on the agendas of governments worldwide.

In the face of this challenging landscape, there are still positive indicators of ongoing commitment to increasing climate ambition. Initiatives such as the Inflation Reduction Act (IRA) and the expansion of the EU Emissions Trading System (ETS) demonstrate that countries remain dedicated to bolstering climate action. Additionally, several developing and emerging economies are discussing the implementation of carbon pricing instruments. Nevertheless, the prevailing atmosphere at COP28 is anticipated to markedly deviate from the resolute achievements witnessed during COP26.

Key Agenda Items and Challenges:

  1. Global Stocktake (GST) and Loss & Damage (L&D):
    One of the focal points at COP28 is the conclusion of the first Global Stocktake and addressing Loss & Damage. The GST is a regular process embedded in the Paris Agreement, aimed at reviewing and assessing current NDCs every five years. The general consensus acknowledges that existing NDCs are substantially insufficient to achieve the goals of the Paris Agreement, creating what is known as the “ambition gap.” The associated financial gap, as well as the lack of clarity on how to meet these ambitious targets, poses challenges.
  2. High-Level Declarations:
    With limited prospects for major negotiated outcomes, Parties are expected to focus on high-level declarations. A call to triple global renewable generation capacity to 11 TW by 2030 is likely to be adopted. However, certain contentious issues, such as commitments to peaking fossil fuel usage by 2030 and the phase-out of unabated fossil fuels by 2050, face resistance, primarily due to the lack of a clear definition for the term ‘unabated’ and the role of carbon capture and sequestration (CCS).
  3. UAE Presidency’s Priorities:
    The UAE Presidency has outlined its positions and priorities for COP28, emphasizing the need to triple renewable capacity by 2030, establish clear targets and indicators for adaptation, and enhance climate finance flows. The UAE is actively involved in sectoral initiatives, such as promoting the mutual recognition of certification schemes for clean hydrogen.
  4. Voluntary Carbon Market (VCM):
    The UAE Presidency has taken a keen interest in VCM matters, calling for carbon crediting standards to “align on high integrity.” This marks the first time a COP presidency has closely engaged with the VCM. The expectation is that the COP Presidency will advocate for end-to-end integrity, high-integrity transactions, and the interplay of Article 6 and the VCM as non-negotiated outcomes in Dubai.
  5. Extended Role of UAE:
    The role of the UAE is becoming increasingly prominent, with rumors suggesting the country may maintain its role for an additional 12 months. This scenario, while unprecedented, is gaining likelihood due to the absence of agreement among countries in the UN Eastern Europe grouping on hosting COP29.

Article 6 in the Negotiating Room:

After the landmark agreement at COP26, Article 6 is no longer in the political spotlight, allowing negotiators to focus on technical and operational matters. Key discussions revolve around cross-cutting themes, Article 6.2, and Article 6.4.

  1. Cross-Cutting Themes:
    Authorization and registries stand out as pivotal elements in the ongoing deliberations. The timing and extent of authorizations, along with the structure of registries, constitute core focal points. Negotiating Parties are seeking consensus on guidelines that govern the timing of authorizations, emphasizing the importance of early authorization to mitigate project risks. Registries present another area of disagreement, with a preference for a decentralized approach to guarantee both high integrity and innovation.
  2. Article 6.2:
    Negotiations focus on reporting templates and the review process. While an agreement on the format of the Initial Report was reached, ongoing discussions on annual and biennial reporting templates are crucial for transparent reporting. Environmental organisations supports a robust review process to ensure high-integrity transactions.
  3. Article 6.4:
    The crucial step towards operationalizing the Article 6.4 mechanism is the endorsement of recommendations by the Article 6.4 Supervisory Body (SB). Ongoing discussions are centered on vital guidance regarding methodologies and removals. A failure to conclude all guidance would result in a 12-month delay in operationalization. Timely finalization is strongly encouraged to enable the approval of methodologies under the Article 6.4 mechanism.

Article 6 in the Real World:

While negotiations within the UNFCCC are expected to continue for several years, countries can and should begin implementing Article 6 now. Over 80% of countries, as revealed in a review of NDCs by IETA, intend to use Article 6 or broader international support to achieve their climate goals. Around 50 countries (over 25% of the total) are already involved in Article 6 through MOUs, implementation agreements, or pilot projects.

Progress on national policy frameworks is anticipated to be more critical than UNFCCC negotiations for Article 6. The implementation of Article 6 is essential for achieving the goals of the Paris Agreement.

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