WHAT THE VCM NEEDS FROM COP28

With COP28 only a few days away, there will be a spotlight on the Voluntary Carbon Market (VCM) and carbon credits. This year’s COP is well-positioned to promote the use of carbon credits with help from governments, the private sector, and regulatory organizations. Here’s three key places for development that could boost the VCM: ?

At COP27, negotiators made headway in three key areas on Article 6: reporting, review and infrastructure. At COP28, negotiators will be looking to further progress these three areas as well as the development of the project methodologies under Article 6.4 so countries can use the centralized trading mechanism established under Article 6. Getting the details of Article 6 right are crucial to ensuring it functions as a tool for greater ambition.

At COP28, positive signals from governments can help encourage the global use of carbon credits to fund climate action. Global leaders should embrace the VCM and continue to develop their own national carbon regulations that promote trading. ?

Lastly, investment announcements at COP28 for critical projects that fight climate change, preserve ecosystems and biodiversity, and support local communities would be a positive outcome for the VCM.

We need to leave COP28 with positive momentum to help the VCM thrive in the new year, because our world can’t reach net-zero without it. ?

PROJECT SPOTLIGHT: The Cerrado Biome

The Cerrado Biome project is located in the second largest biome in Brazil, which is home to a number of threatened species including jaguars, macaws, maned wolves and giant armadillos. The Cerrado Biome is also a valuable carbon sink and a precious resource for South America. However, since 1985, this area has faced enormous adversity and lost nearly 50% of its native vegetation due to commercial agriculture.?

To help address this concerning trend, Carbon Streaming provided stream financing to the Cerrado Biome project, which aims to protect the biome through conservation and economic programs. For example, the project offers landholders with surplus native vegetation the opportunity to receive sustainable revenue from the generation of carbon credits as an alternative to commercial agriculture. This provides an economic benefit to for landholders, but also local communities, as a portion of the revenue from the sale of carbon credits are re-invested locally in environmental education and development of professional skills, such as monitoring activities, fire brigade and agroforestry systems.??

The Cerrado Biome project also helps to meet nine UN Sustainable Developments Goals (SDGs), including ones such as no poverty (SDG 1), quality education (SDG 4), decent work and economic growth (SDG 8), climate action (SDG 13) and life on land (SDG 15).??

You can learn more about the Cerrado Biome project here. You can support the Cerrado Biome project by purchasing carbon credits generated from the project here.?

WHAT IS ARTICLE 6?

Article 6, a section of the Paris Agreement established during COP21 in 2015, outlines three cooperative approaches (Article 6.2, Article 6.4, and Article 6.8) for countries to work together in realizing their emission reduction targets, known as Nationally Determined Contributions.

Article 6.2: Article 6.2 allows countries to trade emission reductions and removals, referred to as Internationally Transferred Mitigation Outcomes (ITMOs), with one another through bilateral or multilateral agreements.?

Article 6.4: Article 6.4 establishes a centralized trading mechanism designed to contribute to greenhouse gas mitigation and sustainable development. This year’s discussions will revolve around the proposed framework for international carbon trading under Article 6.4. The mechanism requires endorsement from member countries at COP28 in order to become fully operational.

Article 6.8: Article 6.8 recognizes non-market approaches to promote mitigation and adaptation. It introduces cooperation through finance, technology transfer, and capacity building, where no trading of emission reductions is involved.

The framework and rules established under Article 6 will help establish how carbon is traded globally across borders. As a result, what is agreed at COP28 in relation to Article 6 will have an impact on the VCM and how it is used to encourage private sector funding of climate mitigation.

IN CASE YOU MISSED IT

Last week, the annual Emissions Gap Report by the UN Environment Programme (UNEP) issued a stark warning: the world is on a trajectory towards a temperature rise above pre-industrial levels between 2.5 and 2.9°C unless nations surpass their current Paris Agreement commitments.

Greenhouse gas emissions in 2030 were projected to increase by 16% based on policies in place at the time of signing the Paris Agreement. Today, the projected increase is 3% so there has been some progress. However, to align with the 2°C and 1.5°C pathways, a 28% and 42% reduction in emissions compared to current policy scenarios, respectively, is imperative.

With COP28 approaching, the report underscores the urgent need for nations to accelerate low-carbon development, urging those with greater capacity and responsibility for emissions to take ambitious actions and assist developing nations.

This report acts as a crucial guide for policymakers, emphasizing the necessity for unprecedented collaboration and action to meet emissions targets and avert the impending climate crisis.

Read more here.

A NOTE FROM OUR CEO

In a few short days, all eyes will be on Dubai for COP28 and the first Global Stocktake. Since the Paris Agreement of 2015, much progress has been made — thousands of companies have pledged major emissions reductions, renewable energy is cheaper than fossil fuels in some areas, and public support for climate action is greater than ever before.??

Yet, one of the crucial areas where we are still falling short is climate finance. At COP15 in 2009, developed countries pledged US$100 billion per year by 2020 to help developing countries reduce their greenhouse gas emissions and adapt to the effects of a warming climate. While a recent study shows that the target has likely been reached (though two years later than 2020), a UNEP report earlier this month indicated that developing countries need US$215 billion to US$387 billion per year in adaption funding alone — meaning we need to go bigger and bolder in our financing goals over the coming decade.

At Carbon Streaming, we're proud to play a role in the VCM to help close this financing gap and we urge global leaders to prioritize bold climate finance at COP28.

Thanks for reading,

Justin Cochrane

Founder, President & CEO

Forward-Looking Information: Some content in the newsletter may contain forward-looking information. Forward-looking information address future events and conditions which involve inherent risks and uncertainties. Actual results could differ materially from those expressed or implied by them. For further information about the risks, uncertainties and assumptions related to such forward looking information we refer you to our?legal notice.