In this first episode of Carbon Removal Newsroom, Alexsandra and Aldyen discuss what happened at the United Nations COP24 in Katowice, Poland in December 2018, and what it means for market-based mechanisms for trading carbon dioxide certificates.
Full Transcript
Ross Kenyon: Hello and welcome to the Carbon Removal Newsroom. I am Ross Kenyon. I am lead strategist at NORI. I am also co-host of the Reversing Climate Change Podcast. We did a podcast survey recently. We asked people what they liked, what they didn’t like about the Reversing Climate Change Podcast, and we found out that while the interviews on that show are often evergreen, they’re about ideas, they’re less timely and topical, and people wanted more regular updates on what’s happening in the world of carbon removal. So that’s what we’re doing here. I’m bringing together people to talk about carbon removal exclusively in a newsworthy So today with me, I have from Nori, Alexsandra Guerra.
She is Director of Strategic Planning at Nori and Aldyen Donnelly, Director of Carbon Economics. I want to do this with more rapidity than we’re going to start with, but I thought it would be good to start with some background on COP24, what it is and how it relates to carbon removal.
Alexsandra Guerra: Cool. So I’ll kick it off.
Unknown speaker: Go ahead.
Alexsandra Guerra: Yes. You know, in preparing for this, I tried really, really hard to make sure that I don’t say any acronyms, but you’re going to have to call me out.
Ross Kenyon: I’ll watch, but I’ll govern with a light hand.
Alexsandra Guerra: Okay, cool. So COP24, what is it and what was the point? So COP stands for Convening of the Conference of the Parties. Aldyen just told me this and I messed it up already. Conference of the Parties. And COP24 was in Katowice, Poland in November. So essentially in Paris countries agreed and the U. S. at the time had agreed to do what they could to limit the rise of global temperatures to two degrees Celsius. Of course, there’s been a recent IPCC report in September 2018 that said maybe 1. 5 is too much and It is.
So, but I digress a little bit. So, with keeping in mind that countries are now coming to the table and discussing, okay, how are we going to do this? How are we all going to agree on what the rules are regarding our contributions in emissions to climate change? A couple things happened. I’ll do a quick high level. It was definitely a balance between international guidance and national discretion. So everybody had to come to an agreement, but also have flexibility. And this led to a new decision, which was to move away from the bifurcation of the reporting process, meaning instead of having developed countries follow a certain set of rules when it comes to emissions reporting and developing countries apply to a different set and including financing of projects that And it was decided that there would be one set of rules that all countries would report to or agree to.
And then they had to self-identify and say, okay, well, I need flexibility because we don’t have the resources to do XYZ commitments of the agreement. And they would have to say why they need it and how long. The US decided that everybody should say how long and it should be a limit. But We’ll get into that. Anyways, including that, there was several things that had to be agreed upon, including reporting standards, transparency, accounting for accuracy and completeness on the NDCs, which is the naturally determined contribution of each country, which says essentially this is how much we’re going to emit.
And then last but not least, a market mechanism for carbon trading. Before I get into that, because I really want to get into that with Aldyen, note that the Paris rulebook as it stands today is quasi-legally binding and not legally binding. So there’s 260 shalls. Which are legally binding. And then 110 shoulds. Thank you, Carbon Brief, for that stat. I totally looked at your site. And so there’s still room to improve upon what has already been decided. And there’s just a couple of things that haven’t been decided, including Article 6, which is the method by which we create a market mechanism for carbon trading.
And Aldyen, I’m really curious to, or I’ve heard it actually, I just would love for you to share with some of our listeners your insight to this because a lot of people have been saying on the Twitterverse and in articles and blogs, reviewing COP24, saying that Brazil is to blame and that they want their cake and to eat it too.
Aldyen Donnelly: I might make enemies here, but I’m sort of on Brazil’s side. So you already mentioned NDC, Nationally Determined Contributions. Under the Paris Agreement, most developed nations called Annex One nations have committed to NDCs, which are Essentially, set aside the question of legally binding or not, absolute nationwide emission limits for 2030 and years beyond that. Under the Paris Agreement, developing nations or emerging economies, annexed to nations, did not have the same pressure on them to commit to an NDC. And the developing nations or emerging economies are permitted to But not their whole economy if they choose to.
Before the accounting discussion came up, Brazil was one of the only emerging economies that committed to a very aggressive economy. And quite comprehensive NDC. So if you change the accounting rules, the implications of their commitment as a developing economy were fundamentally changed. So they’re saying, wait, I made this commitment on a certain set of rules. You can’t just unilaterally turn around and change the rules on me. And I, as you well know, have been Arguing that emission allowance and offset credit and CER trades have not been adequately or properly accounted for.
I’ve been arguing that since 2002. I’m very, very glad that the accounting question is now on the table and the parties are committed to address it. But I also think that Brazil is justified in saying, I made a very aggressive commitment for a developed nation under one set of rules and... You can’t just change the rules on me. So I don’t consider them the bad guy that maybe others do.
Alexsandra Guerra: Right. So we’re essentially talking to the question of double counting. And you said you’ve been talking about this for a while and you’re really happy that it was brought up and a main point at COP24. And Brazil pretty much is saying, okay... We have all these offsets that we’re supplying and we want them to count. And everybody else is saying, oh no, they don’t count because they’ll be double counted because they’re within your NDC. Yeah.
Aldyen Donnelly: So basically they’re, quite frankly, this doesn’t sound all that right to me anyway. They’re basically saying that when it comes to the portion of your inventory that is included in or captured by an NDC, Which is most, but not necessarily all of the inventory for all the developed nations and Brazil. That if you want to sell real interest in minus one ton and emission reduction from your inventory, when you export real interest in minus one, you have to add a plus one to your inventory. So there’s a balancing entry. Am I so happy about that?
Yes, for a number of reasons. Because... Until we actually add a balancing entry to national inventories, then every offset credit allowance that’s traded out there is double credited. The minus one stays in the national inventory of origin and a minus one goes to the importing nation’s inventory. So yes, we should be shifting to that proper accounting procedure on the one hand. On the other hand, if you’re an emerging economy, maybe your view is Was that in the past when we allowed essentially that double crediting that was an indirect form of financing support from the developed world to the developing world that was important to you.
So if you’re going to actually shift the right accounting procedure I think it’s also right to recognize that you are removing what was an indirect financing mechanism. And I don’t think anybody in the developing world is a bad guy for saying we need to talk about this and sort of come to terms with that. So I’m on their side. I’m also on their side because I’m very much of the view that when we get it right and the accounting right, this is great for carbon removal. Because if you’re a nation and for the first time developed or developing, you’re saying to yourself, gee, what are the conditions under which I’m actually willing to approve the export of real interest in a minus one?
When the implication is it makes it harder for me to achieve my target because I’ve got to add a plus one to my inventory. When you think through all of your opportunities to manage emissions and remove carbon from the atmosphere, you’re probably going to be way more inclined to allow the export of a minus one that reflects one ton removed from the atmosphere and stored in the soil because there’s so much productive and local economic value In doing that, it’ll be worth it to raise international financing by exporting those credits, those certificates.
Whereas avoided emissions, other emission reduction claims, when you actually are sitting there at the government level saying, gee, is it really worth it to add a plus one to my inventory if I approve the export of this certificate? Often the answer to that question is going to be no. When we get proper accounting in place.
Alexsandra Guerra: Which goes to one of the main goals of the Paris Agreement, which is overall mitigation and global emissions, OMGE. Oh my gosh. And the whole point of that is to say that carbon trading should yield a net benefit, not just zero-sum game of, okay, we didn’t do any harm. And when I read this, I thought, okay, well, Carbon removal for those reasons that you said there are so many co-benefits to most of these projects. And it seems like for the majority of the conversations regarding Paris Agreement and Article 6, a lot of it is focused on reductions and avoidances.
While carbon removal is mentioned in the Paris Agreement and is talked about, it doesn’t seem like there’s so much focus there. Why do you think that is?
Aldyen Donnelly: Again, I’ll make more enemies. Most people who are experts will tell you the problem is it’s just way too hard to estimate, prove, and document. One ton of CO2 is removed from the atmosphere and the recovered carbon is being stored for at least a predictable period in a terrestrial reserve in the soil or the root system or biomass or the built environment. And so people kind of get scared of carbon removal because they say it’s so hard to measure. My response is, compared to what? I mean, we live in a world where most of the European governments and some American governments, state of California, have said to refinery operators, here, I’ll give you allowances equal to 110% of your maximum capacity to discharge CO2 to the atmosphere so you can sell extra allowances on the marketplace.
Now, obviously it’s easier to quantify an allowance that has no underlying greenhouse gas reduction value. If we’re actually serious about making sure every certificate that’s traded internationally represents one ton CO2 equivalent removed from the atmosphere, Or the retention of fossil fuels, the release of which would create one more ton of CO2 equivalent heat-trapping gas in the atmosphere. Then when you think about being serious about really measuring either removal or retention, carbon removal is easy to measure. It just feels hard to measure because we’re actually not measuring the other things. You know, compared to what?
Ross Kenyon: Alexsandra, do you want the last word?
Unknown speaker: Feel put on the spot to give the last word.
Alexsandra Guerra: I think that makes a lot of sense. And based on what we’re seeing now, right now is the time for us and not just us at Nori, but all of our wonderful listeners and followers. Thank you for your support. Right now is the time to get involved in these conversations because COP25 will happen at the end of this year. And again, they will be deciding on what goes in and how do we do this carbon market and trading. And if we want... The transparent, accurate, science-backed accounting of carbon removal included.
Aldyen Donnelly: We got to get in the conversation now. Only two ways to reduce concentrations of heat-trapping gases in the atmosphere. Remove or retain. And that’s it. That’s it, folks.
Ross Kenyon: Well, thanks for checking out Carbon Removal Newsroom. We will be putting these out whenever there is a story with a good carbon removal angle that we feel obliged to comment upon. Thank you.
