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Bonn Climate Change Conference (SB 60): Insights and what to expect from COP29

June 21, 2024

Thursday, 13th of June, marked the end of the 60th Subsidiary Bodies (SB 60) session of the UNFCCC (United Nations Framework Convention on Climate Change), also known as the Bonn Climate Change Conference. The Subsidiary Bodies meet annually to progress the agreements made at the previous Conference of the Parties (COP) and lay the groundwork for the next one.

The agendas of the SBs and COPs are increasingly lengthy and filled with high-stakes issues.  Sylvera was on the ground to follow the negotiations and here are our key takeaways for the carbon market.

[To learn more about Subsidiary Bodies (SBs), read here.]

Overview of the agenda

This year, SB 60 focused on the New Collective Quantified Goal (NCQG) on climate finance, the results of the First Global Stocktake (GST), the Mitigation Work Program (MWP), and Article 6. It also addressed other important topics, including the Global Goal on Adaptation and the Just Transition Work Programme.

Advancements on the NCQG and the GST were seen as competing priorities in Bonn, both are driven by urgent timelines. The current climate finance goal, set in 2009, expires in 2025, making COP 29 the deadline to agree on the NCQG for climate finance. Simultaneously, the first GST, which assesses global progress towards the Paris Agreement goals, was finalized during COP 28, necessitating a decision on how its outcomes will influence the next round of Nationally Determined Contributions (NDCs), due in 2025. Unfortunately, neither issue saw significant progress, leaving much to be resolved at COP 29 in November. 

Similarly, discussions on the MWP, aimed at enhancing mitigation ambition and implementation, failed to reach a consensus on a way forward.

Some stated that the lack of advancements in these streams hindered progress in Article 6 and there is a long list of outstanding items to be discussed at COP 29. However, the constructive atmosphere in the negotiation rooms led to a cleaner and better-structured draft text and the agreement to host technical workshops to arrive more prepared for COP 29.

Key takeaways for the VCM

Emissions avoidance, registries, and authorization were the key topics in the Article 6 discussions. Other issues, such as Article 6.4 methodological matters, including the removal guidance, received little attention and remain a significant barrier to its operationalization. Companies' eagerness to participate in A6.4 has led to many being hopeful for an agreement at COP 29.

Avoidance and what it means

Due to the lack of alignment on the definition of “emission avoidance” in the context of the UNFCCC and the Paris Agreement and the confusion it brings to Article 6 negotiations, SB 60 decided to exclude this type of mitigation activity from Articles 6.2 and 6.4 and not reconsider its inclusion until 2028. 

VCM players expressed concern about whether REDD activities could be considered “emissions avoidance” and thus are at risk of not being included in Article 6 market mechanisms. However, the common understanding is that despite involving emission reductions from “avoided” deforestation, REDD activities do lead to emissions reductions and, along with removals, remain eligible under Article 6. 

Registries and their role

The debate around the functionalities of the potential international UN-run registry for Article 6.2 divided the room into those that support a centralized system and those that prefer a decentralized approach. 

Supporters of centralization — many developing countries — want a registry that serves all functions, including issuance. This will ensure that countries that do not have a national registry can still access the market by using the international one. 

Supporters of decentralization —  including the US —  want an international registry that tracks and registries transactions and that reserves the issuance function for national or third-party registries or the Article 6.4 mechanism registry. The interoperability of the Article 6.2 registry with these other registries was also discussed.

Strong positions on this topic block agreement and hinder Article 6.2 operationalization for those depending on an international registry to be created. Despite uncertainties around registries under Article 6.2, the development of the Article 6.4 Mechanism registry is going ahead. Authorization and the consequences of revocation

Under Article 6 market mechanisms, host countries need to indicate which purposes they authorize Internationally Transferred Mitigation Outcomes (ITMOs) to be used for. While the Paris Agreement mandates authorization for ITMOs to be used toward NDCs and CORSIA targets, authorization is not required when they are used toward voluntary commitments. One of the elements that creates disagreement is whether that authorization can be revoked, when, and under what circumstances. 

The extent to which countries can amend authorization worries carbon project developers, intermediaries, and buyers interested in authorized credits. In the event of revocation, a decision needs to be taken about who would cover the credits lost. Carbon insurance providers are already developing and offering products to cover revocation risk.

The road to COP 29

The next big UNFCCC conference will be COP 29 in Baku, Azerbaijan, between 11th and 22nd November. In the run-up, several UNFCCC processes will occur in parallel, and the COP 28 and incoming COP 29 presidencies are working with the SBs to ensure “a common vision towards COP 29”. 

To further advance on Articles 6.2 and 6.4’s technical issues before COP 29, delegates agreed to organize workshops. Aligning on some of the technical issues discussed above ahead of COP 29 would be key to facilitating the complex and more political discussions to be held in Baku.

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About the author
Jurisdictional Policy Lead

Carmen Alvarez Campo is a climate policy and carbon markets expert with a focus on international policy and jurisdictional approaches. Carmen has advise on the design and implementation of climate and carbon pricing policies at the national and international levels. Also, she has experience helping private sector organizations assess the transition risks and opportunities associated with carbon market and climate policy developments. At Sylvera, Carmen focuses on Article 6 and jurisdictional REDD+ approaches and helps the public and private sectors navigate these spaces from a buyer, investor and seller perspective.