Negotiators will soon gather in Madrid at COP25 to finalise the Paris Rulebook in advance of the commencement of the Paris Agreement in 2020, and to put pressure on signatories to significantly increase the level of ambition in their commitments to reduce emissions.

The next UNFCCC conference (COP25) in Madrid from December 2-13 will be a critical conference with the Paris Agreement commencing next year, and all signatories required to review their current level of commitments to reduce emissions based on their current Nationally Determined Contribution or NDC. Australia in particular is under pressure to increase its current 2030 emissions reduction target of 26-28% below 2005 levels.

Here are some of the important things on the COP25 to-do list.

Finalising the Paris rulebook and establishing market-based mechanisms

Work on the Paris Agreement rulebook commenced soon after that agreement was signed in 2015, and to some commentators' surprise, considerable progress was made at COP24 (Katowice, Poland). Only one area of contention remains: agreement on the text to operationalise Article 6 of the Paris Agreement.

Article 6 recognises that countries may establish market-based mechanisms to enable emissions reductions to be achieved at lowest cost, while also supporting sustainable development. Article 6 outlines in broad terms two potential market mechanisms:

  • Article 6.2, which provides a framework for voluntary co-operative approaches between member countries, which involve internationally transferred mitigation outcomes or ITMOs; and
  • Article 6.4, which foreshadows a mechanism for sustainable development and mitigation.

Article 6.8 also envisages states co-operating to implement their NDCs via non-market mechanisms which may include the implementation of fiscal measures designed to abate emissions.

Article 6.2 is particularly important, providing parties with the ability to use emission reductions from other jurisdictions for the purposes of meeting their NDC. Purchasing extraterritorial emission reduction credits may be more cost-effective than implementing measures domestically to achieve the same net result globally. Moreover, the mechanism has the potential to encourage countries to pursue climate policies which reduce emissions allowing excess units to be traded. This will be particularly valuable as countries are required to revise their NDCs over time with more ambitious emission reduction targets.

At the Bonn Climate Change Conference in May 2019, the parties were able to secure a consensus on draft text to be further negotiated and, they hoped, agreed, at COP25. The price of that consensus was to allow parties to include various options, reflecting the preferred positions of those parties, resulting in an unwieldy and cumbersome text being produced. As a result, the resolution of many contentious issues has been deferred which may cause considerable strain during the negotiations at COP25 where the rules for Article 6 must be finalised.

The main challenges to the finalisation of Article 6 include:

  • the method of accounting to be adopted, which was not resolved at COP24. The transfer of emission units between countries requires a corresponding adjustment by the countries to prevent double counting of emission reductions. However, relative emissions targets, among other things, complicate the accounting interface and render emissions reductions in one jurisdiction as not necessarily being of equal value in another jurisdiction.
  • ensuring market transparency and environmental integrity is upheld; some parties support a centralised registry which would be responsible for the governance of the market mechanisms, while a majority of the parties would prefer to see collective cooperation supported by transparency provisions to avoid inflexible and bureaucratic processes such as arose with the Clean Development Mechanism under the Kyoto Protocol.

Raising ambitions for lowering emissions

Separate to the technical negotiations around the rules, there has been considerable international focus on increasing the ambition of each country to reduce emissions. In May this year, the Executive Secretary of UNFCCC, Patricia Espinosa, stated:

"Nations are still far from their goals, far from fulfilling the aims of the Paris Agreement and far from the deep transformation throughout society that we desperately need to address climate change.

We’ve already seen incredible action taking place in almost all sectors of the business community with respect to new investments in green technology, green transportation, green infrastructure and more. While that progress has been remarkable, it’s only a fraction of what’s needed."

The recent IPCC Special Report stated that to stabilize global warming at 1.5 degrees, global emissions must be cut in half by 2030, then net-zero emissions by 2050. Ms Espinosa observed that the NDCs, as they currently stand and assuming fully implemented, would see average temperatures increase by approximately 3 degrees, well above the goal of the Paris Agreement.

The UN Climate Action Summit in September 2019 went some way to drive action prior to COP25 by providing an opportunity for national political leaders to show new levels of commitment to boosting their climate action and enhancing their NDCs. Made famous by Greta Thunberg's rousing speech, the Summit was also remarkable in that leaders were only invited to address the Summit if their country announced a commitment to an increased target. Australia's Prime Minister did not attend the Summit. Nevertheless, more than 60 countries committed to a net zero-emissions target by 2050.

According to 2020 NDC Tracker, 110 countries have announced an intention to enhance their ambition in their NDC or update their NDC, or have in fact already submitted an updated NDC, although those countries only account for approximately 18% of global emissions. Greater levels of ambition from all countries, in particular the G20, will be required to meet the goal of the Paris Agreement to keep the increase in global temperatures well below 2 degrees, and pursue efforts to limit it to 1.5 degrees.

COP25 is also likely to renew focus on the inclusion of non-State actors in the mitigation effort. This will be essential to achieve the level of ambition required in the shortest feasible time. Building on the Marrakesh Partnership established in 2016 to strengthen collaboration between governments and cities, regions, business and investors to immediately lower emissions, COP25 will look to strengthen the commitment of non-State actors to climate action across all tiers of society and across all regions of the world.

It is hoped that the involvement of non-State actors may force governments to act, act more quickly or at the very least, advance efforts to reduce emissions in those countries. Financial institutions in particular will play a significant role through promoting the financing of green projects but also accelerating the trend of funds divesting their interests in fossil fuel and emission intensive assets.

Turning high ambitions into success

Despite the progress that has been made since 2015 to operationalise the Paris Agreement by next year, old arguments and enmities lurk just below the surface, such that the state of negotiations must always be regarded as fragile. It is likely that as much energy will be exerted preventing previously agreed positions being re-argued as will be in bringing negotiations to a successful conclusion. While in this respect COP25 will be no different to previous conferences, it has the added pressure of successfully concluding negotiations over the next two weeks in advance of the commencement of the Paris Agreement next year.

Brendan Bateman is attending COP25; this is the first of his reports on its progress.