Carbon markets are primarily “about nations collaborating with one another to unlock emissions discount alternatives that will not have occurred in any other case,” stated Benedict Chia, director-general of local weather change on the republic’s Nationwide Local weather Change Secretariat (NCCS) on Thursday.
He was talking on a panel at Asia Carbon Summit, beneath the city-state’s flagship power occasion Singapore Worldwide Vitality Week.
“If a rustic doesn’t have an excellent understanding of how a lot it’s emitting to a stage of certainty, then the inspiration on which you’re constructing this collaboration goes to be flimsy,” stated Chia. “The opposite necessary facet is the nation must have a strong emissions goal, and it must have a transparent understanding of the way it’s going to get to the goal.”
The “crux of the difficulty which bedevils plenty of cooperation,” he stated, is that “nations usually are not certain what they will correspondingly modify for.”
A corresponding adjustment is a switch of emissions reductions throughout nations’ greenhouse fuel inventories to forestall double counting. It’s required beneath Article 6 of the Paris Settlement, which outlines the framework for nations to satisfy their nationwide local weather targets by way of buying and selling carbon credit.
Earlier this month, the UN carbon physique authorised an ordinary for venture methodologies and carbon removals to avoid the bureaucratic COP course of, which stunted the progress made on carbon crediting guidelines final 12 months, so as to operationalise Article 6.4 – a key mechanism that may allow corporations to commerce credit linked to tasks that scale back emissions in different nations.
“A few of the very early nations that I spoke to had this mindset that ‘I’ll solely resolve whether or not I can promote you the credit score once I’m sure that I can meet my goal,’ which can be in 2028 or 2029 – which, I feel, utterly defeats the aim of carbon markets,” stated Chia.
Singapore-based carbon buying and selling platform ACX chief government Thomas McMahon, who spoke on a panel following Chia’s, stated that after COP26 in Glasgow, the extra well-defined Article 6 guidelines gave governments higher management over their carbon belongings, main some nations like Indonesia and Papua New Guinea to impose moratoriums on carbon credit score issuances to judge how a lot rainforest offsets they had been producing and the quantity they should meet their nationally decided contributions (NDCs).
Each nations are poised to carry their moratoriums by year-end. Within the meantime, Papua New Guinea has develop into one of many two nations to enter right into a definitive settlement with Singapore to commerce carbon offsets beneath Article 6.2. However the republic continues to wrestle with discovering provide for eligible credit, which led it launch a brand new public-private alliance in July.
“Neither of these [host] nations have produced carbon credit with corresponding changes connected to them. There’s nothing incorrect with that, however no person anticipated that to occur. So it’s an issue within the provide chain and the accounting chain, in order that must be labored out,” McMahon stated.
Negotiations at COP29 are anticipated to make clear the circumstances beneath which a carbon venture host nation can revoke authorisations for country-to-country carbon buying and selling offers beneath Article 6.2, which is a threat to venture builders and purchaser nations that Chia introduced up final month.
Driving standardisation in a decentralised market
Chia talked about that he sees additional room for standardisation within the voluntary carbon markets, past standardised contracts, which pool credit throughout a number of tasks that meet sure high quality necessities, with the goal of derisking them for buyers.
“Take, for instance, all the Article 6 course of by way of how models are generated, how they’re being transacted and the identifiers that associate with them. Should you look strictly at what has been agreed on the UNFCCC, it doesn’t go into all these particulars. It leaves plenty of flexibility for nations and events to resolve amongst themselves what truly works greatest,” stated Chia.
“Whereas that flexibility is sweet. we predict that there’s worth in driving higher standardisation. So Singapore, along with Gold Normal and Verra, is placing collectively what’s referred to as an Article 6 playbook, which tries to drive higher standardisation, harmonisation and consistency in processes.”
Chia stated that the playbook was reviewed by some key nations and non-governmental organisations at the Bonn Local weather Change Convention earlier this 12 months and that they’re planning on doing a “fuller examine” on the upcoming COP.
He shared that NCSS can also be hoping to launch some work it has been doing alongside “one of many worldwide organisations” – which Chia didn’t title – to provide you with “higher standardisation and authorisation types” that may assist insurers of carbon tasks higher perceive and scale back the dangers concerned at subsequent month’s local weather summit in Azerbaijan.
When requested about whether or not Asean ought to create its personal carbon customary, Chia stated that he sees worth in that, provided that among the generic emissions components, methodologies and instruments to evaluate additionality from present requirements don’t apply to the distinctive challenges confronted within the area.
Nevertheless, it’s a extra open-ended query as to who’s best-placed to develop the usual, stated Chia.
“Should you get some organisation that’s based mostly in Asia driving it, it’s a plus. As to what this organisation is, to be fairly trustworthy, I don’t have a solution,” he stated.
Final August, a brand new Asia-based carbon requirements physique referred to as Asia Carbon Institute launched in Singapore and Hong Kong. Alongside two Thai companions, it pushed for a “impartial carbon customary” for Asean, although no additional particulars have been introduced because the press launch.
In July, Malaysia additionally mooted a regional customary for carbon tasks, forward of its upcoming Asean chairmanship subsequent 12 months. The nation’s setting minister instructed Eco-Enterprise then that he has commenced talks along with his Thailand counterpart with a view to creating an Asean carbon framework.
Editor’s observe (30 October 2024): The headline and subheading of this story has been edited to present extra readability on the feedback of the audio system on the discussion board.
