“Units from the Past”: Paris Agreement with no double counting

One of the conflicting topics of the climate negotiations in Madrid was the “double counting” of carbon reductions. during the negotiations, the Friends of the Earth and 160 other civil society organizations issued a statement in which they emphasized that carbon quotas and everything connected with them are profanations of greenhouse gas reductions, and those should have no place in the new climate agreement.

“Carbon markets are an important tool to enhance the ambition to reduce greenhouse gases”. This provision is enshrined in Article 6 of the Paris Agreement. in an ideal world, market mechanisms that the climate agreement parties can agree on should help find additional sources for financing more ambitious plans on the reduction of carbon footprint. during the negotiations, the Friends of the Earth and 160 other civil society organizations issued a statement in which they emphasized that carbon quotas and everything connected with them are profanations of greenhouse gas reductions, and those should have no place in the new climate agreement.  

“Market-based international cooperation and carbon credits allow countries to work more efficiently than they could have worked on their own,” claim the authors of the Environmental Defense Fund research, which states that through carbon offsets, countries should be able to achieve twice as much emission reductions as their current commitments.

However, critics of the carbon credit system argue that this is mere profanation. Providing loans for carbon offsetting projects, for example, on forest protection, will allow large polluters to buy quotas, instead of spending money on reducing their own emissions. In addition, there is a great temptation to “double count” reductions.

The fact is that carbon reductions are essentially the air, and its physical transmission is hard to fix. And when emission reductions are sold to another country or company abroad, a bona fide selling country must make an adjustment to its emissions and delete them from the total volume., i.e., fix the transfer of reductions for use elsewhere. In practice it may come up like this: emission reductions will be taken into account twice - both by the seller and the buyer.

The irritant of the “double counting” discussion is the fact that the negotiating document includes a Brazilian proposal stating that the host of the carbon reduction project “will benefit from mitigation activities that will result in emission reductions of the other side to fulfill its national specific contribution.” This wording, in fact, opens up a “green light” for double counting and justifies a negative reaction from observers.

The issue of “double counting” is just as relevant for large industrial markets. In Madrid and in the previous negotiations in Katowice, the observers’ attention was thrust into the International Civil Aviation Organization (ICAO), which created its own CORSIA Emission Reduction Scheme. To date, aviation emissions are not accounted for in any specific national contributions. But within the framework of this industry market, the issue of using quotas left over from the implementation of the Clean Development Mechanism (CDM) created under the Kyoto Protocol has surfaced. Taking into account the transnational nature of the activity and its global influence, numerous questions arise: who should pay for emissions and reductions, i.e., those who burned fuel or those who ordered flights, etc. According to experts, “adequate wording was found in Madrid’s draft decision to exclude double counting,” but as long as there is no general consensus on article 6 as a whole, the issue cannot be considered finally closed.

The position voiced in Madrid by Brazil, China and India insisting on the possibility of using Kyoto projects to reduce greenhouse gas emissions caused a flurry of discontent. Interestingly, other countries with unused quotas, including Russia and Ukraine, came to terms with the loss of “units from the past” and did not offer to use them in the Paris Agreement.

Developed countries, a large number of small and vulnerable developing states, and observing organizations strongly opposed the transfer of projects and CDM units. They emphasize that the infusion of Kyoto Protocol units into the Paris Agreement not only erodes its integrity but also negatively affects the prestige of the new agreement. Experts have estimated that the transfer of these loans will be equivalent to the continuous operation of 700 coal-fired power plants for 10 years - this data was provided by Sam Van den Place from Carbon Market Watch.

According to the majority of negotiators and representatives of civil society, the Paris Agreement should start working from scratch and get rid of excess cargo from the past.

The present conditions for trade and the overall situation are different than under the Kyoto Protocol. Countries have no quotas and emission commitments. The Paris Agreement introduces no international payments for greenhouse gas emissions, nor has it numerical guidelines or rigid mechanisms for specific energy technologies. It implies that payment systems, quotas or other carbon regulatory schemes will be developed at the national and sub-national levels.

It is imperative to emphasize that even without the permission and approval of the UN, countries can freely cooperate through markets. But the debate over market mechanisms does not arise from scratch: compliance with the UNFCCC criteria will undoubtedly increase the ratings of projects, make them attractive for investment, and influence the image of the parties to the Paris Agreement. Therefore, there are quite a few matters to argue about.

Most experts believe that despite the mistakes of the past, market mechanisms should not be excluded. However, there is no need to rest particular hopes on carbon credit trading: most countries of the Paris Agreement have no plans to fulfill their nationally defined contributions (NDC) through it, and therefore no influx of buyers and sellers in the climate market is expected.

The Climate Secretariat of the Russian Social and Ecological Union (RSEU / Friends of the Earth of Russia) supports the Statement of the Friends of the Earth and 160 other civil society organizations, which was made public during the negotiations. It emphasizes that carbon quotas and everything connected with them are mere profanations of greenhouse gas reductions, and they should have no place in the new climate agreement.

Countries that are serious about using carbon markets to enhance their ambitions must go ahead and set strict rules for international cooperation with a high level of integrity on the carbon markets. And in order to avoid reproaches from the public and vulnerable countries, one of the important points is the development of rules for avoiding double-counting of emission reductions and carbon emission sustainability standards.