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COP26: Global carbon market rulebook heads into crunch second week of negotiations

Highlights

Issues outstanding for six years

'Must build consensus': Sharma

Vulnerable nations in finance plea

  • Author
  • Henry Edwardes-Evans
  • Editor
  • Andy Critchlow
  • Commodity
  • Coal
  • Topic
  • COP26

Negotiations on rules establishing international carbon markets were heading into a tough second week at the UN's Climate Conference in Glasgow Nov. 5, COP26 President Alok Sharma warned during a press conference at the event.

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Agreeing the Paris Rulebook is a central aim of the COP26 summit, building greater trust and engagement in global carbon markets.

"The rubber is going to hit the road next week," Sharma said. "The issues we are discussing have been outstanding for six years."

Negotiations on the texts ahead of the resumption of high-level political talks Nov. 9 had exposed "a number of areas that are particularly political in relation to the Rulebook," Sharma said without giving details.

"What I'm reminding everyone is what their leaders said at the start of the summit: we must work together; build consensus; and keep 1.5 degrees C within reach," he said.

People around the world would find it "quite astonishing if, after six years and given the climate crisis we face, we can't resolve the Rulebook at this COP," he said.

Voluntary carbon credit values have been rising strongly in recent weeks, particularly nature-based products. Since S&P Global Platts launched its CNC nature-based carbon credit assessment in June its value has risen 154% to $11.80/mtCO2e.

In more general comments Sharma said closing the gap on global warming this century was an on-going process.

In August a report by the UN's Intergovernmental Panel on Climate Change noted the world had already warmed by around 1.2 degrees Celsius.

Limiting global warming to 1.5 degrees C, or even 2 degrees C, would be "beyond reach without immediate and large-scale reductions," involving a rapid switch to low carbon energy carriers, it said.

S&P Global Platts Analytics' Reference Case outlook assumes hydrocarbon liquid supply and demand to peak near 2040 at 111 million b/d and gradually decrease to 108 million b/d by 2050.

Its Two Degree outlook assumes total liquids supply drops steadily from current levels and reaches 65 million b/d (-40%) by 2050.

Global oil demand scenarios to 2050 S&P Global Platts Analytics and IEA

"In 2015 the Paris Agreement assessed the trajectory [of global warming this century] at four degrees. Now we are heading towards two degrees. There has been progress, but if there is a gap in ambition, collectively we have to decide how to close it in the coming years, that effort does not stop at this summit," Sharma said.

Climate Vulnerable Forum

Earlier in the day, Special Envoy to the Climate Vulnerable Forum Abul Kalam Azad again called on the developed world to ensure a minimum $500 billion in international finance was delivered to emerging and developing economies between 2020 and end-2024.

The CVF represents 55 of the world's countries most exposed to climate change, with an aggregated population of 1.5 billion people.

Developed nations had failed to deliver on the $100 billion/yr pledge last year, and looked liked to fail again this year and next, Azad said.

"Failure to deliver on an entirely achievable pledge under the Paris Agreement undermines the credibility of every promise made by the wealthy world, including their wider commitments to reduce carbon emissions," said Fiji's Minister of Economy Aijaz Sayed-Khaiyum.

While the process had stalled, costs were rising, delegates heard.

Climate financing needs were expected to increase to $5 trillion annually by 2030. Ahead of that, it needed to increase by some 436 billion/yr to 2023.

"Again this is entirely achievable," Sayed-Khaiyum said, noting global investment last year of $726 billion in fossil fuel development.