Article 6 and Voluntary Credits – Risk or Opportunity?
The Paris Agreement (PA) was effectively finalised when Article 6 was approved at COP26 in Glasgow. However, to understand the implications Voluntary Carbon Market participants must understand the entire Agreement, not just one part of it. In plain terms, this PA gives every Nation the obligations to meet their emission reduction targets in a Nationally Determined Contribution (NDC) to REDUCING CO2e emissions in their country. To achieve these targeted reductions, they must state their Baseline (year or volume) and what % of reductions THEY will do, in what time, and what sectors or methods they will focus on or deploy to achieve that target. Every 5 years they are expected to increase the reduction target and Article 6 is the carbon trading part of the entire agreement. Every Nation is expected to implement laws and regulations to enforce reductions, and to support and motivate positive action – mainly in projects. There is a ‘Stick and Carrot’ approach – the Stick being regulations and things like the EU Border Carbon Tax, and the Carrot being Carbon Markets trading via Carbon Allowances and/or Offsets (a direct impact on their NDC ) and International Transferable Mitigation Outcomes (ITMOs) where Developed nations can buy these toward their NDC and fund projects in Developing or Small Island Nations.
What the PA does is gives the right for every Nation to ‘own and control’ all the emissions reductions for projects in their country – and given they have the obligation to report both the emissions and the reductions, this is likely to happen progressively around the world and has already started in some countries. It is for this very reason that the CTX parent company GEM designed and developed its National Carbon Meta-Registry technology (NCMR), which can keep electronic records of all projects, their Carbon Credits (or allowances, RECs etc) and provide approval for ITMOs and record their sale/transfer out (or into) another National NDC. Being linked electronically to CTX would allow international commercial buyers to purchase ITMOs in support of their National NDC – so an American company could by African ITMOs online 24/7/365 and get an offset for them and their country at the same time.
The key difference between GEMs NCMR is the Accounts, Fees and Data is all under the complete control of the Nation (or its appointed Registry operator). It seems highly unlikely that any Nation would want such critical Data to be in the ‘hands’ of foreign operators, especially ones that are in the business of monetising data. Will Nations that pass domestic legislation be willing or able to deal with credits being issued in multiple Registries around the world? It seems implausible – Nigeria’s Climate Change Act 2021 says they must establish their own registry and EVERY Government department, and most businesses will have to report to the Climate Change Secretariat – we can’t see them allowing that data to be controlled in New York or anywhere other than Nigeria.
What is the Risk to the VCM? Firstly, in our opinion it’s unlikely any nation would invalidate already issued credits under CDM, Gold Standard, Verra VCS or other recognised international credit standard who FULLY operate their own registry (unless it’s owned by the wrong party). At least two US based standards would stumble on this low hurdle alone in our view.
GEM has already entered discussions with Gold Standard, BioCarbon and ICR about them doing ‘Secondary Approval’ of credits in the GEM NCMR in Nations that agree and follow the correct procedures – so we could potentially see (for example) a Gold Standard ITMO in the Nigerian National Carbon Registry listed and sold on CTX (which they already do for GS CERs issued by the CDM Registry).
The greatest risk then for the VCM could be in forwards or futures contracts – because they are dependent on future issuance of credits from projects that could be already operating but be required to transition credit issuance to the future National Registry, as has happened in Indonesia.
So, this is not a debate over ‘avoidance vs removals’ because the PA allows /endorses both – it is about jurisdictional control of emissions reductions and the beneficial ownership of credits from projects operating in the Sovereign nation that signed the Paris Agreement – the first Global Legally binding contract of any kind covering over 200 nations. CTX has always supported the projects directly where possible, and now GEM has led the way with a world first registry to deliver under the Paris Agreement.
For information about GEMs National Carbon Meta-Registry technology or licensing email info@gemglobal.com Conferences Kick off with in person events around the world
Conferences Kick off with in person events around the world
In May members of the Carbon Trade Exchange team attended 2 events simultaneously.
First was 4 days at the Massive EBACE 2022 event in Geneva was attended by CEO Wayne Sharpe plus Business Development / Aviation specialist Anastasija Popova and Global Head of Sales Mano Lavan. Invited by our Global Partners the International Business Aviation Council (IBAC) the global body representing 16 Industry associations and over 20,000 Operators, Brokers, Airports and suppliers to the Regulators like the UN and Nations. CTX has an exclusive partnership with IBAC using the IBAC-ex brand to supply offsets directly form the CTX Exchange platform with access to a unique Free Carbon Calculator designed for the operators by industry experts. Over 8,000 people attended (50 Aircraft on display) and Wayne spoke on an IBAC led panel titled Offset 101 – A Basic Guide to Offsetting – and CTX became the talk of the event where Sustainability and offsetting were a key focus. The CTX stand was popular as were the team, and a vast array of new buy side clients are expected to result in the coming weeks and months.
Simultaneously CTX attend the European Climate Summit in Barcelona where the Carbon Market Industry professionals met for the first time in over 2 years. A smaller stand there was led by Valentina Kasyanenko – Global Head of Trading & Client Services and Jennifer Shung – Head of Project & Credit Procurement. The CTX stand was co-sponsored by our newer Registry /Credit Standards partners BioCarbon Registry represented by Carolina Martinez – Biodiversity & NBS Solutions Officer and International Carbon Registry. CTX personally reconnected with many clients – project developers and brokers and of course our Partners at Gold Standard and the Verra VCS teams amongst many others.
This exhausting schedule and substantial expense are to keep building all facets of our Global exchange in terms or buyers, sellers, and strategic solutions for all CTX clients.
Global? Easy to Say – but Check this Out!
Our trading team are regularly arranging listing of credits for our regular large-scale buyers who have prefunded their accounts – so the credits are listed and sold in minutes (even less sometimes). This is part of the reason for the decision to display the last 3 trades in the index – yes, it’s still linked to the search functionality. But at the time of writing, here is a list of the countries we have credits listed for sale from.
Two for 1 deal on Registry and Exchange Accounts
Fees and charges are always part of any decision to use certain Registries or Credit Standards. I have watched with amazement one new standard with fees to make a blind man weep, over and above mind-numbing issuance fees. Transfer and retirement fees payable before those actions occur have no place in this market in our view, and all the Registries or credit standards we trade on CTX have no such fees.
But just to sweeten it a bit more no buyer NEEDS a Registry account to trade all or any of the CTX listed credits – we will do all the back and work for you. Within reason at no extra cost. In addition, if you do want to have your own Registry account in BioCarbon or ICR Registry it will be half the cost- and new members to CTX who have a Registry account already in either one, will also only pay half the normal membership fee. Ask one of our friendly & excitable Business Development Team or email sales@ctxglobal.com for more information on the discount codes.
National Parks Rescue – Boots on the Ground
In June National Parks Rescue founder Mark Hiley met with our CEO Wayne Sharpe in London, reigniting a friendship of over 20 years. Listening to Mark talk with deep passion about saving Wildlife was beyond inspiring, and it was the first time they have had met in person in over 15 years.
The CTX donation on your behalf of £10,000 (ZAR200,000) is the beginning our support that will last for our lifetimes as they expand this project across Wildlife Reserves across Africa and nobody is more committed than Mark and his amazing team.
We Have Moved – Expansion Continues (Members Update)
Due to CTX’s continued expansion and the amazing support of our many global members, our Australian based Team (CTX and GEM) has moved to larger premises. Surfers Paradise may sound like only a holiday destination, but do not be fooled, the building is the premier business location in Southern Queensland. Normally this would only effect those who chose to visit us (and you’re welcome to do so at any time), but in this case – for the purposes of sending or receiving funds, your bank may require our updated address.
Please ensure you pass on /update our new address details below for future bank transfers:
Global Environmental Markets
Level 4, 50 Cavill Ave, Surfers Paradise, QLD 4217 Australia
For inbound Transfers to the CTX Escrow accounts, the bank account details remain unchanged. Today CTX members received the updated User Guide with our new address details enclosed.
Projects of the Month
BioCarbon (ex CDM project):
Project for Forestry Restoration in Productive and Biological Corridors in the Eastern Plains of Columbia,
ID BCR-CO-261-14-001
The Project for Forestry Restoration in Productive and Biological Corridors in the Eastern Plains of Colombia has as its objective to employ the international carbon market as a key incentive for investments in new commercial forest plantations and restoration of natural forests in the remote High Orinoco region of Colombia. The project is based on changing the use of land from extensive cattle ranching to sustainable forest production systems, restoring natural forest cover, and creating a landscape of biological and productive corridors that produce financial, social and environmental services for the region.
The project was previously issued under CDM and has now reissued their credits in the BioCarbon registry, making them transferrable and clearly outlining the project’s SDGs and charismatic nature.
CTX UN CER:
Gansu Zhuoni Niuzi 30MW Hydropower Project, ID 2012
This project is located at branch of Tao River in Zhuoni County of Gannan Zang Autonomy in Gansu Province. The project is a run-of-river type hydropower project with a 30MW total installed capacity, generating approximately135GWh annually among which 115.43GWh will be delivered to the Northwest China Grid (NWPG) through Gansu Grid. Electricity generated by the proposed project will displace part of the electricity generated by the Northwest China Grid which is dominated by coal-fired power plants, and thus 66,703 tons of CO2emission reductions can be achieved through the project annually and total CO2emission reductions in the second crediting period are estimated to be 466,921tons.
Buy credits
CTX Members – if you have any questions, please email operations@ctxglobal.com.
Thank you all for your contributions to help save the planet for our future generations.
