DECEMBER 2018

COP24
Summary Report

Climate Challenges
Market Solutions

www.ieta.org
IETA | COP24 Summar y Repor t

COP24:
Market mechanisms get left behind, but for a key
reference
More than two weeks of tough negotiations in the city of Katowice reached agreement on the bulk of
a plan to implement the Paris Agreement. It is being hailed as a major landmark for transparency and
reporting, but it failed to agree on the chapter governing Article 6 of the Paris Agreement. Despite
several days of talks at ministerial level, the impasse could not be broken, and Article 6 decisions were
set aside, to be revisited in 2019.

The only positive market provision in the Katowice Package is a basic reporting provision for market
transfers, found in the Transparency rules for Article 13 (paragraph 77). Even this section relies on the
more detailed guidance that is still incomplete.

COP President Michal Kurtyka is all smiles at the final plenary, but there wasn’t much joy for
markets in the decisions on the Paris Rulebook.

While COP23 last year benefited from Fiji’s Talanoa spirit of communication and open engagement,
COP24 presented a more sober face. The bright lights of the Christmas market in the main square
were a momentary exception to the rather gloomy surroundings.

The irony was not lost on many participants that the COP24 venue sat above an old coal mine. It was
hard to escape the taste of coal in the air around the city, where some buildings still burn coal for heat.
However, our hosts made every effort to welcome us; despite some shortcomings in logistics, the event
ran smoothly.

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The key outcomes from the two weeks

include:
• The Paris Agreement Rule Book, which elaborates rules governing the reporting of
emissions, regular stocktakes on progress in mitigation, adaptation, financial flows,
addressing loss and damage, and a commitment to boost the ambition of Nationally
Determined Contributions (NDCs).

• Formal acknowledgement of the Intergovernmental Panel on Climate Change (IPCC)’s

Special Report on Pathways to 1.5°C.

• Conclusion of the Talanoa Dialogue, the year-long process of sharing stories and experiences
that was designed to build trust and confidence in the multilateral approach and encourage
ambition.

• A proposal by the UN Secretary General Antonio Guterres to convene a Climate Summit in

September 2019.

• A mandate for the chair of the SBSTA to continue negotiations over the implementation of
Article 6 of the Paris Agreement.

• Agreement to meet in Chile for COP25, although the date and specific venue are still
uncertain.

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IETA | COP24 Summar y Repor t

Article 6: Falling at the last hurdle

IETA’s particular interest at COP24 was in the Transparency (Article 13).
negotiations on Article 6 of the Paris Agreement,
covering cooperative approaches (Art. 6.2), a new The main work on Article 6 remained in SBSTA.
market “mechanism” (Art. 6.4) and non-market Ireland’s Kelley Kizzier and Singapore’s Anshari
approaches (Art. 6.8). Rahman (replacing Hugh Sealy of the Maldives)
served as co-facilitators of Article 6. They hoped
The Article 6 negotiations began under the to issue a new iteration of the draft text by the first
Subsidiary Body for Scientific and Technological Friday (December 7). This deadline slipped, and it
Advice (SBSTA), chaired by Paul Watkinson of wasn’t until Saturday that a new version appeared.
France, on Sunday 2 December, as part of an
effort to give delegates as much time as possible Early differences of opinion quickly emerged on
to develop positions and start working toward issues including the origination of Internationally
agreement. Transferable Mitigation Outcomes (ITMOs) both
inside and outside the scope of NDCs; achieving
Week 1 Overall Global Mitigation of Emissions (OMGE)
through mandatory cancellation or discounting of
The first week of talks appeared to be businesslike, ITMOs; and whether a Share of Proceeds should
with texts being elaborated amid a positive apply to ITMO transfers under both Article 6.4 and
atmosphere. But as we moved into the weekend, it 6.2.
became clear that difficulties were mounting.
Saturday’s new iteration of the text was all in
The Ad-Hoc Working Group on the Paris square brackets, the UN technique for reflecting
Agreement (APA) was the main body charged issues that are still undecided.
with the elaboration of the Paris Rulebook. APA
was co-chaired by Jo Tyndall of New Zealand and Parties also highlighted a number of further sticking
Saudi Arabia’s Sarah Baashan. This body had points:
basic market references under consideration as
part of the sections on Mitigation (Article 4) and • The proposals on Overall Mitigation of Global

IETA and Environmental Defense Fund held a popular side event on how efficient, linked international markets could
lower the cost of mitigation by nearly $270 billion a year by 2030.

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At an EU-sponsored side event, Eric Theroux of Quebec outlined how carbon pricing can shift
from taxes to market mechanisms.

Emissions became a potential deal-breaker to some cut-off dates for credits and certain
many, as it would represent a tax on mitigation. project types should apply.
Extending the Share of Proceeds to Article 6.2
would have added yet another tax on transfers Efforts in SBSTA to bridge differences on Saturday
– which many also opposed as it went beyond got bogged down. The co-chairs’ goal was to get
the Paris deal. consensus on technical issues, so that the larger
political issues could be given to ministers to
• Parties struggled over whether to require decide.
corresponding adjustments if reductions are
made from sectors outside a country’s NDC. But with disagreements persisting on many
issues, the SBSTA session drew to a close with
• Equally, there was disagreement over most issues still open. The co-chairs managed to
whether ITMOs can be used for purposes produce a streamlined text that structured the open
other than meeting an NDC. This provision issues for decision. SBSTA then forwarded this
aimed to provide an implicit recognition that version to the Presidency.
programmes such as CORSIA could also have
access to ITMOs. Week 2

• The text showed competing options for On Monday December 10, the Presidency
the composition and membership of a proposed a new procedural approach of delegating
new supervisory body for the Article 6.4 specific topics to pairs of facilitating ministers.
mechanism, and a minority pushed for For Article 6, he assigned James Shaw, Minister
inserting a supervisory body to govern Article for Climate Change of New Zealand and Carolina
6.2 ITMO transfers as well – which ran counter Schmidt, Minister of the Environment of Chile to
to the Paris deal. facilitate an agreement.

• Finally, the Article 6.4 talks were also split over The ministers were tasked with clearing up the text
the transition of the CDM. Parties differed over so that Parties could reach agreement on technical
the eligibility criteria for CDM projects to qualify issues, and to forward the more political issues for
for the new mechanism. There were competing ministerial discussions later this week.
proposals over whether all CDM projects
should be automatically eligible, or whether This meant that Kelley and Anshari became

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IETA | COP24 Summar y Repor t

without any progress. At a stocktaking plenary held

on Thursday afternoon, facilitators and ministers
reported progress and convergence in finance,
transparency, mitigation, adaptation and the global
stocktake, but ominously there was no report from
the Article 6 work stream.

A further iteration of the Article 6.2 and 6.4

texts appeared on Thursday evening, with some
cosmetic changes to the wording on non-NDC
uses of ITMOs, but little else to encourage our
observers.

By Friday, it was becoming clear that the transition

of the CDM into the new mechanism, as well as
corresponding adjustments, had emerged as
potential obstacles to an agreement. Brazil, along
with a small group of other Parties, was said to
be unhappy with provisions that would require
a corresponding adjustment for first transfer of
Article 6.4 credits. Brazil also opposed the basic
language on reporting of ITMO transfers as part of
the transparency and accounting framework under
Article 13.

As the talks moved into overtime, it was beginning

to look as though Article 6 would not be able
to progress along with the rest of the Paris
Rulebook. With no progress on resolving the
impasse between Brazil (with some other Parties
IETA’s Katie Sullivan underlined the value of markets at supporting) and the rest, talk began to circulate of
a side event hosted by the Chinese delegation postponing a decision on Article 6 until next year.

As last-ditch efforts to reach a deal on Article

6 continued, plenaries were scheduled, then
delayed, until late on Saturday afternoon when a
“experts” tasked with helping the Ministers and the draft decision emerged that did indeed postpone a
COP Presidency. The same technical negotiators decision on Article 6 until 2019.
from week 1 continued their efforts during Monday
and Tuesday, aiming to narrow the range of issues The brief decision text also referenced, in a
for Ministers to resolve. They were given a deadline footnote, the Thursday iteration of the Article 6
of 1700 Tuesday to forward text to the Presidency. decision as the starting point for talks next year.

The new of draft decisions for all three elements of This appeared to be good enough for the Polish
Article 6 (6.2, 6.4, 6.8) still reflected differences of Presidency, which quickly convened a plenary at
opinion on a wide range of issues. The co- which a package of decisions was adopted by the
facilitators of the group said they would continue Conference of Parties.
work on baselines, corresponding adjustment,
OMGE and Article 6.8 governance, but that other Kyoto Protocol - CDM Guidance
areas would need to go to ministers for further
action. With the Conference focusing most attention on
the development of the Paris Rulebook, there was
Specifically, there was still disagreement on rules little time to spend on the existing mechanisms
for ITMOs being generated and tradable from of the Kyoto Protocol. At COP23 in Bonn, Parties
“inside/outside” NDCs, as well as guidance on approved a business plan for the CDM’s Executive
whether ITMOs could be used for purposes other Board through to 2019, which suggests that
than meeting an NDC. decisions on the “modalities and procedures” of the
CDM will also be dealt with at the next COP.
Throughout Wednesday and Thursday talks
proceeded at both technical and ministerial level At the end of the first week, the Conference also

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accepted the annual report of the CDM Executive determined contributions in accordance
Board, but took no further action regarding the with the guidance contained in annex II.
mechanism except for a direction to review a • Annex I, page 17, outlines information
cookstove methodology – and to provide a review to facilitate clarity, transparency and
on the state of the CDM’s finances. understanding of nationally determined
contributions.
In the case of the Joint Implementation, there was, • Annex II, page 20, refers to accounting
as of 16 December, no draft decision on its work for Parties’ nationally determined
uploaded on the UNFCCC website. contributions.
• Common time frames for nationally determined
IETA’s View on the Outcome contributions, page 25
• Parties shall apply common time frames
The outcome of the Katowice COP was generally to their nationally determined contributions
hailed as a success, with an almost-complete to be implemented from 2031 onward.
slate of decisions that set in motion the process
of writing detailed rules to operationalise the Paris Matters relating to Article 9 (Finance) of the
Agreement by 2020. Paris Agreement
• Identification of the information to be provided
IETA and other business groups have already by Parties in accordance with Article 9, page
taken pains to emphasise that the lack of 45.
agreement on Article 6 means that there is as yet • Developed country Parties shall biennially
no framework enabling action for the private sector. communicate indicative quantitative and
Investments in projects covered under the Article qualitative information related to Article 9.
6.4 mechanism require certainty and, so far, the • Annex, page 47, outlines the types of
rulebook doesn’t contain any. information to be provided by Parties in
accordance with Article 9, paragraph 5, of the
One bit of good news! Paris Agreement.

Negotiators did agree on important guidance on Matters relating to Article 13 (Transparency) of

how countries will report on use of ITMOs. It is the Paris Agreement
found in the section of the rulebook under Article • Parties shall submit their first biennial
13, covering the Transparency Framework, where transparency report and national inventory
it describes how Parties will account for their report, if submitted as a stand-alone report, in
cooperative approaches (see page 77 here). accordance with the modalities, procedures
and guidelines, at the latest by 31 December
But more is needed to provide a full framework that 2024.
describes how to reconcile transfers of mitigation • Annex, page 67, outlines modalities,
outcomes for different types of targets (single- procedures and guidelines for the transparency
year and multi-year), corresponding adjustments framework for action and support referred to in
within those mechanisms and systems to support Article 13 of the Paris Agreement.
cooperative approaches. The new 6.4 mechanism • Page 74 outlines the information necessary
provisions still need to be elaborated so that it can to track progress made in implementing and
become operational. achieving nationally determined contributions
under Article 4 of the Paris Agreement,
A quick guide to the broader rule book including a key area for market cooperation:
• Each Party that participates in cooperative
The decisions adopted in Katowice aim to breathe approaches that involve the use of
life into the Paris Agreement. The summary below internationally transferred mitigation
is intended to help you navigating the rule book outcomes towards an NDC under Article
(based on its latest version, here) and find the key 4, or authorizes the use of mitigation
outcomes. outcomes for international mitigation
purposes other than achievement of its
Matters relating to Article 4 (NDCs) of the Paris NDC shall also provide the following
Agreement information in the structured summary
• Further guidance in relation to the mitigation consistently with relevant decisions
section, page 14 adopted by the CMA on Article 6;
• Parties shall provide the information • (i) The annual level of anthropogenic
necessary for clarity, transparency and emissions by sources and removals by
understanding contained in annex I. sinks covered by the NDC on an annual
• Parties shall account for their nationally basis reported biennially;

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IETA | COP24 Summar y Repor t

• (ii) An emissions balance reflecting the for conducting the technical assessment
level of anthropogenic emissions by referred to in paragraph 3(b) below;
sources and removals by sinks covered • (b) Technical assessment, focusing on
by its NDC adjusted on the basis of taking stock of the implementation of the
corresponding adjustments undertaken Paris Agreement to assess collective
by effecting an addition for internationally progress towards achieving the purpose
transferred mitigation outcomes first- and long-term goals of the Paris
transferred/transferred and a subtraction Agreement, as well as opportunities for
for internationally transferred mitigation enhanced action and support to achieve
outcomes used/acquired, consistent with its purpose and goals;
decisions adopted by the CMA on Article • (c) Consideration of outputs, focusing on
6; discussing the implications of the findings
• (iii) Any other information consistent of the technical assessment with a view
with decisions adopted by the CMA on to achieving the outcome of the global
reporting under Article 6; stocktake of informing Parties in updating
• (iv) Information on how each cooperative and enhancing, in a nationally determined
approach promotes sustainable manner, their actions and support, in
development; and ensures environmental accordance with relevant provisions of the
integrity and transparency, including Paris Agreement, as well as in enhancing
in governance; and applies robust international cooperation for climate
accounting to ensure inter alia the action;
avoidance of double counting, consistent
with decisions adopted by the CMA on Matters relating to Article 15 (Compliance
Article 6. mechanism) of the Paris Agreement
• Page 92 elaborates the elements of the • On page 106, elaborates modalities and
technical expert review procedures for the effective operation of the
mechanism to facilitate implementation of and
Matters relating to Article 14 (Global Stocktake) promote compliance with the provisions of the
of the Paris Agreement Paris Agreement.
• Page 100, decides that the global stocktake will
consist of the following components: Other important developments at COP24
• (a) Information collection and preparation,
focusing on gathering, compiling and COP24 also saw new financial pledges to the
synthesizing information and preparing Green Climate Fund (GCF), to the Least Developed

Dirk Forrister, Alex Hanafi of EDF, New Zealand’s lead negotiator Kay Harrison,
Jonathan Shopley of Natural Capital Partners, Yue Huang of IATA and Lisa De
Marco of DeMarco Allan launching the Katowice Declaration at the UK Pavilion.

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Countries are encouraged to factor the outcomes

of the Dialogue into efforts to increase their
ambition and to update their NDCs, which detail
nations’ climate actions, in 2020.

On the sides of COP24

IETA hosted more than 35 side events at its

Business Hub during COP24, while IETA staff and
members participated in countless further events
across the COP village.

The highlight of the fortnight was IETA’s and

Environmental Defense Fund’s launch of
the Katowice Declaration on Sound Carbon
Accounting, an initiative that grouped business
Stefano De Clara, Kelley Kizzier for the EU delegation, groups, businesses and NGOs in a call for
Alex Hanafi and Nat Keohane of EDF, Steve Rose of negotiators to adopt robust carbon accounting
EPRI, Jonathan Grant from PwC and Dirk Forrister pre- rules to create a strong basis for cooperative
sented at our official side event. activities under the Paris Agreement.

Countries Fund, and an announcement that The Declaration was signed by more than 45
contributions to the Adaptation Fund have crossed entities, including the International Chamber
the $100 million threshold. of Commerce, which represents businesses in
more than 130 countries, with more than 1 billion
The Talanoa Dialogue, a year-long conversation on employees.
ambition in the Paris Agreement, ended at COP24.
The final element of the Dialogue, to which IETA IETA and EDF also co-hosted an official COP side
members contributed during the year, was the event at which Dirk presented early results from
inclusion of the IPCC Special Report. modelling carried out by the Joint Global Change
The high-level section of the COP issued the Research Institute at University of Maryland. The
Talanoa Call for Action, which calls upon all research shows that efficient, linked international
countries and stakeholders to act with urgency. markets under Article 6 can drive down the cost

IETA hosted an event on how international experiences with emissions trading could contribute to
China’s new nationwide carbon market. (L to R) Min Li (IETA), Professor Zhang Xiliang (Tsinghua
University), Liv Rathe (Hydro), Dirk Forrister, Federico De Credito (ACT), Kamesh Iyer (RWE), Xie Xi
(TNC) and Zhang Binliang (CNPC).

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IETA | COP24 Summar y Repor t

Panelists from our side-event on Canadian low-carbon corporate leadership and innovation: Beth
Hardy (International CCS Knowledge Centre), Dale Friesen (ATCO), Katie Sullivan, Ginny Flood
(Suncor) and Genevieve Brisson (Enerkem)

of abatement by as much as $270 billion a year by the Chinese pavilion. He spoke on international
2030. You can watch a recording of the event here. experiences of emissions trading systems
contributing to low carbon development in China,
IETA staff hosted and spoke at a number of and on ETS experiences in contributing to
sessions devoted to the Chinese emissions market. greenhouse gas reductions in industry.

We hosted a panel of seven guests from Chinese Katie Sullivan presented at an event hosted by
think-tanks and participants in emissions markets the Chinese Academy of Social Science, the
as Professor Zhang Xiliang of Tsinghua University China New Energy Chamber of Commerce and
spoke on the role of the Chinese national ETS in SinoCarbon Company on international market and
contributing to the achievement of China’s NDC. financial solutions for emissions reductions.

Speakers including Liv Rathe of Hydro shared Another side-event showcased industry low-
their views and experiences of different carbon carbon leadership and best practice across
markets with reference to China’s ETS and their Canada’s diverse energy sector. We heard from
suggestions and expectations for the low-carbon ATCO, Suncor, Enerkem and the International
and energy transition in China. CCS Knowledge Centre about Canada’s existing
innovative low-carbon networks, technologies and
Dirk also spoke at two side events hosted at partnerships that could be replicated and scaled

ICROA attracted a large audience to its fourth workshop on voluntary markets.

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 Climate Challenges Market Solutions

Jonathan Shopley of Natural Capital Partners spoke at ICROA’s workshop on the

voluntary market.

worldwide to enhance climate ambition. with Jane Hupe of ICAO, Yue Huang of IATA
and Katerina Kolaciova of Vertis Environmental
Katie also chaired a session featuring guests Finance.
from the International Carbon Action Partnership
(ICAP) and Quebec, to discuss linking emissions Of course, it wouldn’t be a COP without the
trading systems. California ARB chief Mary Nichols Carbon Pricing Champion Awards. IETA once
and Quebec environment minister MarieChantal again partnered with CMIA to present two awards
Chassé highlighted the experience of the WCI. this year, sponsored by ALLCOT and Climate
Resources Exchange.
ICROA also hosted its fourth workshop on
increased voluntary action under the Paris The first was to the Republic of Colombia,
Agreement. The event began with an update on represented by Ricardo Jose Lozano, Minister of
ICROA’s evolving thinking since the presentation Environment and Sustainable Development. The
of its Guidance Report on pathways to increased award recognised the leadership of the Colombian
voluntary action by non-state actors published government in the promotion of carbon pricing
shortly before COP23. and offsetting as instruments to address climate
change.
Jonathan Shopley of Natural Capital Partners and
Jeff Swartz of South Pole then highlighted the
recent evolution of ICROA’s position. Key to this
process is to ensure that non-state actors will be in
a position to continue to make strong claims after
2020.

And despite the reluctance of some Parties to

admit the topic of aviation emissions to this year’s
COP agenda, IETA’s very first event of the fortnight
was devoted to ICAO’s CORSIA mechanism.

We started our programme with an update on the

latest news on the sectoral market’s development,
before moving to a question-and-answer session

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IETA | COP24 Summar y Repor t

IETA and CMIA presented the first COP24 Carbon Pricing Champion Award to the Republic of Colom-
bia. (L to R) Dirk Forrister, Sebastian Carranza, Specialist, Ministry of Environment and Sustainable
Development of Colombia; Ricardo Jose Lozano, Minister of Environment and Sustainable Develop-
ment of Colombia; Margaret-Ann Splawn, Executive Director of CMIA; Alexis L. Leroy, CEO and Foun-
der of ALLCOT Group; Tommi Neuvonen, Managing Director, ALLCOT Group.

Our second award was to the secretariat

of Carbon Pricing Leadership Coalition,
represented by Angela Churie Kallhauge. This
award recognised the work of the secretariat in
supporting the jurisdictions that are committed to
putting a price on carbon.

Dirk presents the Carbon Pricing Champion Award to

Angela Churie Kallhauge of the CPLC Secretariat.

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Finally, we’d like to thank every one

of our speakers, and the partners
that made our participation and our
programme at COP24 possible:
Carbon Pricing Leadership Coalition
ICAO
IATA
Vertis Environmental Finance
European Roundtable on Climate Change and Sustainable Transition
Chevron
CCP
German Environment Ministry
IEA
EBRD
MUFG
GreenGo Web
Asian Development Bank
ALLCOT
Climate Resources Exchange
CMIA
Mars
International Carbon Action Partnership
Government of Quebec, Ministry of Environment, Climate and Sustainable Development
Mootral
Japan Foundation Center for Global Partnership
Asia Society Policy Institute
Suncor
ATCO
Shell
Global CCS Institute
IPIECA
Harvard Project on Climate Agreements
EPRI
GasNaturally
GORD

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Climate
Challenges.
Market
Solutions.

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