We need to use all forms of finance to implement the "UAE Consensus" commitment.
COP28 is a two-phase summit, with the first week mainly focused on actions and announcements outside the formal process, and the second week focused on negotiations. It delivers well but at the same time misses in different aspects.
Achieving consensus on phasing out fossil fuels has never been easy. The way forward for carbon markets under Article 6 is also unclear and the summary documents reflect these challenges.
However, the agreement reached – the “UAE Consensus” – speaks to the urgent need to cut emissions and mobilize significant additional financial resources to support sustainable development, adaptation and mitigation in developing countries. developing country. This is important progress.
The call to transition away from fossil fuels is a step in the right direction but doesn't go far enough:
- The Global Stocktake text doesn't get us back on track but it does signal the end for fossil fuels. Commitments to scale up renewable energy and energy efficiency have been well received, but this must be accompanied by a clear phase-out of coal, oil and gas for a just transition.
Increased financing is essential to make the transition away from fossil fuels a reality:
- There is little detail in the Global Stocktake on how developing countries will finance this transition. In the early days of COP28, we have seen a blueprint emerge for the way forward in global climate finance, but much remains to be done. It is positive to see some breakthroughs in financing – for example, the $30 billion climate-focused investment fund launched by the UAE in the opening days of COP. There is now greater focus on how to combine blended finance initiatives, private sector investment and public sector finance to redirect investment from the Global North to the Global South. This will be a key task at COP29.
- On loss and damage to developing countries, the agreement reached on the Loss and Damage Fund in the opening days was positive, with an initial commitment of $700 million. However, this number is still much lower than needed – with some estimates saying it needs to be $400 billion per year. We must now see concrete commitments to bring the Fund to a clear scale.
Carbon markets can play an important role in cutting emissions and supporting the transition away from fossil fuels; Failure to reach an agreement on Article 6 means this vital source of funding faces delays.
- If the structure of the carbon market is to be completed within two years as the United Nations and many governments have called for, policymakers must now advance and build on the work already done. This includes filling gaps in definitions and agreements on transparency, environmental and social safeguards, authorization, method approval and ensuring appropriate rules for exclusion. remove carbon.
- The failure to reach agreement on Article 6 for another year reinforces the need for a VCM of high integrity more than ever. This can provide a foundation and framework for integrity in carbon markets as they continue to develop, providing clarity and providing confidence that will free up financial resources and encourage deeper action about the corporate climate.
There is already widespread support for high-integrity VCMs, which could complement Article 6 markets as a key part of a broader package of global climate finance mechanisms:
- VCM, along with compliance markets, emerging Article 6 markets and effective government carbon pricing, can all provide financing for climate mitigation and sustainability efforts.
- Many global political, business and civil society leaders spoke out in support of VCM during COP28, noting in particular that only VCMs with high integrity can ensure that carbon finance is provided in a targeted, fair manner and the credits sold are real and verifiable. reduce emissions or eliminate them.
- This respective and complementary role of the different carbon regimes was highlighted at the Presidential roundtable on 4 December, moderated by Tariye Gbadegesin, Co-Chair, VCMI. Speakers emphasized the important role of high-integrity VCM in channeling climate finance from advanced economies to projects in emerging markets and developing economies to supporting ambitious decarbonization of 12 degrees. Many comments supported the work of VCMI and ICVCM in developing high integrity regulations.
Government endorsement of high-integrity VCMs is growing and is seeding nascent VCM management approaches:
- The CFTC, IOSCO, the UK Government and a group of major EU countries (Netherlands, Germany, France, Spain, Finland, Belgium and Austria) announced initiatives during COP28 to pave the way for increased Government action and regulation of VCM. All of these initiatives highlight the need for VCM operations to have high integrity – and many directly point to VCMI's work for companies to emulate. If these initiatives are to achieve their ambitions of success, they must be consistent with the work that VCMI and ICVCM have done to define integrity.
Companies now have a comprehensive end-to-end framework to follow to scale climate action. Many people confidently engage with VCM with high integrity:
- VCMI has partnered with SBTi, GHG Protocol and ICVCM to demonstrate how they collaborate to deliver clear, cohesive standards for corporate climate action. This has been widely welcomed by companies and many have consistently shown their support for the work of VCMI and ICVCM in delivering rules for high-integrity VCM.
- Many companies during COP28 have demonstrated their intention to participate in initiatives underpinned by high integrity. We heard from many climate-leading businesses – including Salesforce, Natura, Netflix and BCG – on how they're using high-integrity VCM to go beyond science-consistent emissions cuts their. Many leading companies have also expressed their desire to participate in the Energy Transition Accelerator (ETA); We are pleased to see reference to the VCMI guidance and look forward to seeing it fully integrated into the ETA rules.
There is still work to be done to incorporate integrity every VCM activities:
- All activities of VCM must have high integrity. All credit sourced and purchased must be of high quality. The use of carbon credits must complement – not replace – decarbonization. There can be no return to the ways of the past, where low-integrity approaches damaged VCM's reputation and ability to provide finance to emerging and developing economies.
- Throughout COP28, there has been resounding support for high-integrity VCMs and the expectation that there can be nothing less than high integrity in VCM operations. We cannot delay any longer, we must do everything possible to ensure that financial flows are increased to facilitate a rapid and equitable phase out of fossil fuels.
Mark Kenber, CEO, VCMI , comment:
“Despite many encouraging developments on carbon markets at COP28, the overall negotiations fall short of their goals. Achieving the Paris Goals requires mobilizing all capital flows. The lack of consensus on Article 6 makes this much more difficult. For the market to fully develop over the next two years as the United Nations and governments have called for, policymakers can rely on the foundational work of VCMI and IC-VCM to accelerate the agenda on transparency and integrity, developing a high-integrity VCM and an Article 6 market that provides finance to deliver ambitious global action.”