COP27: UN fails to reach agreement on global carbon market methodology

Methodology guidelines for Article 6.4 global carbon market projects under the Paris Agreement will have to wait until next year after officials failed to reach agreement at a Nov. 5-6 meeting in Sharm El-Sheikh, Egypt, the UN said Nov. 9.

Article 6.4 creates a global carbon market overseen by a 12-member UN supervisory body. Project developers must register their projects with the body. A project must be approved by both the country where it is implemented and the supervisory body before it can start issuing UN-recognized credits. These credits can then be bought by countries, companies or individuals.

"The work on the issue of carbon removals and methodologies are highly complex. They have advanced in Sharm el-Sheikh, and will continue next year," the UN said.

Five meetings have been scheduled for 2023, with the first to take place from March 7-10 in Bonn, Germany.

The International Emissions Trading Association said failure to agree methodology guidelines was "chiefly due to disagreements over how to operationalize the requirement agreed at COP26 that methodologies should align with Paris Agreement objectives."

Members of the Article 6.4 supervisory body were able, however, to reach agreement on a draft recommendation that would create guidance for the crediting of carbon removals.

Players in the voluntary carbon market have been seeking clarity around Article 6.4 methodologies and rules, with sources noting reduced liquidity in the market in the run-up to COP27.

Of particular concern is which existing private certifiers and methodologies are to be accepted within an Article 6.4 crediting scheme.

"The real challenge is not so much to deliver the work, but to deliver it in a way that ensures the mechanism has the highest level of integrity and reliability, while still being as practical and easy to use as possible, and for the Supervisory Body to provide this as fast as possible," said Supervisory Body Vice-Chair Piotr Dombrowicki.

Platts assessed the price of nature-based carbon credits (CNC) at $5.55/mtCO2 Nov. 9, down 36% month on month, S&P Global Commodity Insights data showed.