COP29 and News Roundup from around the VCM

Authors: Fundi Maphanga , Micaela Passetti

In this issue of our policy newsletter, we begin with highlighting two product updates this week, followed by covering key updates around Article 6 negotiations, industry initiatives as well as national carbon market regulatory updates that you may have missed.

Product updates this week:

• AlliedOffsets LoA Risk Scoring Dashboard goes live to clients

AlliedOffsets launched a new assessment tool which evaluates the risk of revocation of authorized internationally transferred mitigation outcomes (ITMOs). Corresponding Adjustment (CA) Risk grades factor in LoA feature adequacy, registry steps to mitigate double-claiming risk, country readiness to support Article 6 transactions and the impact of insurance on revocation risks which surround project activities.

• CORSIA FAQ page now accessible via the AlliedOffsets Learning Portal

Article 6 Updates

Article 6.4 (The Paris Agreement Crediting Mechanism)

• The CMA formally acknowledged the standards approved by the Supervisory Body of the Mechanism (SBM) on Day 1 of COP29.These standards focus on methodologies and activities for greenhouse gas removals, setting a framework for certifying carbon credits. Practical elements for the mechanism are expected to be finalized post-COP29, with the first credits anticipated by 2025 - expected to come from CDM transitioning projects.
• The Article 6.4 mechanism registry and participating Party registries will be connected the international registry - allowing for data transparency around the tracking of holding, and transaction activity of authorized emission reductions (A6.4ERs).

Global distribution of CDM projects which have requested transition to the Paris Agreement Crediting Mechanism (PACM)

Article 6.2

• The final text agreements of the Article 6.2 documentation are still being amended at the time of writing. The latest draft text includes details on three types of authorization: for cooperative approach, for ITMOs and for participating entities. Inconsistencies in the text?
• Definitions around “change”, including revocation of authorizations are yet to be clarified in the final text body. Summary includes insights from Beatriz Granziera

Article 6.8

• Parties adopt a decision on work programme under framework for non-market approaches referring to Article 6.8 of the Paris Agreement. A6.8 enables Parties to implement national climate change plans, including mitigation and adaptation strategies. (Source: Azertac)

Private sector initiatives:

The World Bank Group and MIGA announce Letter of Authorization (LoA) templates, to help strengthen the definitions of legal rights to carbon credits and improve the insurability of investments.

Letter of Authorizations are intended to be used with reporting schedules that may be specified by Host Parties, with the aim to maximize investment and value while committing to accurate tracking of greenhouse gas mitigation actions. Countries may choose the scope of authorization (subject to corresponding adjustments and a Letter of Authorization) or outside the scope of authorization (ideally subject to a Letter of Acknowledgement in order to increase certainty and corresponding investment value). This common template is intended to simplify the process for authorization, reduce transaction costs, and allow flexibility for bilateral arrangements. Click here for the MIGA LoA Template. (Source: Carbon Herald).

MIGA LoA Template document (subject to revision)

• IETA, A6IP launch Business Pulse Survey

Indicates that 83% of respondents would be willing to pay higher or much higher than average market rates for correspondingly adjusted ITMOs as well as non-correspondingly adjusted Mitigation Contribution Units (MCUs). Full report can be found here.

Carbon Market Updates

Regional Carbon Market Updates

EU

• The European Council gives final approval to carbon removals framework regulation. This move establishes the first EU-level certification framework for permanent carbon removals, carbon farming, and carbon storage in products. In four years (2028), the Commission will establish an EU-wide registry to ensure transparency for certified removal units. (Source: Council of the European Union).

USA

• Two senators introduce a bipartisan bill to establish new CDR tech neutral tax credits to bolster US CDR supply. The new tax credit (worth $250 per metric ton of CO2 removed/$110 for point source CDR), and cannot be used in conjunction with 45Q. Summary includes insights from @Sebastian Manhart. (Source: US Senate).

ASEAN

• Five major carbon market associations representing Malaysia, Indonesia, Singapore, Thailand and ASEAN sign an agreement to collaborate on developing an ASEAN Carbon Framework (ACCF). (Source: SSFA).

National Carbon Market Updates

Argentina

• A carbon markets bill has been introduced, aiming to revitalize the national carbon registry. The bill will proceed in the national legislature and the Chamber of Deputies, and is expected by year-end. It will also look to establish a regulatory body to oversee Article 6 compliance. (Source: Local media).

Brazil

• Brazil's senate approved the carbon market bill has cleared the Senate and awaits presidential approval. The legislation (Projeto de Lei N° 2148/2015) paves the way for a cap-and-trade emissions trading system (SBCE) , targeting emitters of over 20 million tonnes annually and setting up mechanisms for monitoring, reporting, and verification (MRV). (Source: National Congress Portal)

Pakistan

• Pakistan announces the passing of carbon market regulations at COP29 in Baku. The Carbon Market Policy aims to establish a regulatory framework for governing both voluntary and compliance carbon market activities in Pakistan. The country plans to launch its national registry by Q1 2025. (Source: MOCC, Carbon Pulse).

Panama

• Panama issues a temporary freeze and audit of forestry carbon projects. As a precautionary measure, they all existing projects are to be evaluated, validated and registered - coming after a freeze on forest use permits. (Source: Carbon Pulse).

Peru

• Peru passed regulations to launch and operationalise its national registry (RENAMI). The t Supreme Decree N° 010-2024-MINAM approves the Provisions for the Operation of the National Registry of Mitigation Measures (RENAMI), and provides a legal framework for carbon markets under cooperative approaches of Article 6 of the Paris Agreement, the voluntary carbon market, as well as for the registration of mitigation measures of the Nationally Determined Contribution (NDC). VCM projects however, are not required to register. (Source: Quantum Commodity Intelligence, Cinthya Arhuata).

UK

• The UK announces six principles for high integrity voluntary carbon and nature market projects. Particular emphasis was placed on additionality, alignment with high integrity standards including the ICVCM’s Core Carbon Principles, disclosure of credit use in reporting aligned with the VCMI’s Claims Code of Practice, alignment with long-term corporate net zero targets and a call for international collaboration in scaling carbon market growth. (Source: GOV.UK).