The Paris Agreement – Death by a Thousand Cuts

The Paris Agreement  – death by a thousand cuts.

Are media and vested interests killing the worlds most important global agreement?

In recent months there has been immense coverage over the implication that a Host Nation might withdraw a Letter of Authorisation (“LoA”) under Article 6 of the Paris Agreement – so the ‘claim has been made that a Corresponding Adjustment (“CA”) is not guaranteed. The basis of this seems to have originated in advisors and various bodies who generate profits from the ‘concerns’ solutions, like Insurance companies or lawyers. Now it seems negative media has caused some buyers to hesitate in our ITMO Auction;

My views on this invented risk are quite firm and outlined here.   

1.     The concept of LoA withdrawal actually defies Logic; and

2.     Lacks any practical reality; or

3.     Has no legal basis.

1.      In the Voluntary Carbon Market there is rarely ANY financial benefit to the nation in which a project operates. Under the Paris Agreement the Host Nations is attributed the rights to the emission reductions in its jurisdiction – i.e. every project. Under Article 6 the host nations are entitled to receive part of the proceeds of the Sale of ITMOs – either in fixed fees or percentage of the proceeds (or credits) – while the project developers incur most or all of the costs of project development and the Carbon credit origination. Of course, if they have their own centralised registry this is easier to monitor, but if they use one of the international (Voluntary) Registries like Gold Standard they know what credits are issued and by using technology like the CTX Auction they can see the results and what their share is when it completes.

So, this ludicrous proposition of LoA withdrawal suggests that a least developed nation would ‘cut off its nose to spite its face’- that some future government would decide to stop taking international funds on a recurring annual basis, for a carbon ‘asset’ that cost that nation little or nothing to produce? Even in the ridiculous prospect of trying to Nationalise the projects in future, they still need to sell the Credits to finance them. Whilst that could apply to forestry, in the case of a physical delivery product like this (Cookstoves) the entire program would collapse – removing all benefits to millions of people in their nation. The entire concept of SDG’s is at the nation and human level, so it is impossible to comprehend the logic. 

2.     On a practical sense once Credits are issued under an LoA and sold, the rights cannot be retracted retrospectively – because they have already delegated the rights to the Emissions Reductions. These would still always be a voluntary credit applicable as an offset.

Extract from the LoA (reconfirmed by Malawi Government)

 – full text at the end of this article   

“We hereby declare that Malawi will not use the project’s emission reductions authorised as ITMOs to implement and achieve its NDC and that Malawi will account for the project’s emission reductions and removals in accordance with relevant decisions made under the Paris Agreement. Malawi will prepare all the necessary reports to facilitate the issuance and transfer of the ITMOs through the Gold Standard registry.”

3.     The Paris Agreement is a legally binding international treaty on climate change signed by 196 parties (over 200 Countries) which makes the underdeveloped, developing and small island the beneficiaries of payment from the developed nations for reductions they are unable to make, to help solve global warming. So now invisible men- parties who would benefit from fees for legal advice or insurance costs, propose that the beneficiaries of that Global Contract will withdraw from it? Or DEFAULT on their accounting commitment – to honour a correspond adjustment – so they would stop getting the annual money flow and their nations do not get the benefits?

     Extract from the LoA (reconfirmed by Malawi Government)

“Malawi is a Party to the Paris Agreement and is in compliance with its goals and obligations; As such, the Country intends to participate in the cooperative approaches under Article 6 of the Paris Agreement for implementation of Nationally Determined Contributions (NDCs) 1o allow for higher ambition in Mitigation and Adaptation actions, promote sustainable development as well as safeguard environmental integrity. Malawi acknowledges that the Gold Standard Biomass Energy Conservation Programme (GS11677), as described in the attached Project Design Document (PDD) contributes to the above and enhances carbon emissions reduction and removals in Malawi. Gold Standard intends to issue carbon credits for these emission reductions or removals”

The CTX ITMO Auction Project is for issued credits in a dual certified ‘Program of Activities’ scheduled to run until 2042. It has seven SDG’s and provides direct in-home health benefits to millions of people in Malawi, on top of the increased socio-economic activity, and of course emissions reductions.

It deserves unilateral support, not vague assertions to ‘risks’ that were invented behind desks in Europe, UK or America, by people who benefit from solving the risk they invented.

Article 6 Accounting – it should be rather simple:  

This was presented by World Bank and IETA at a UNFCCC event in Singapore in 2020:

“The first approach is illustrated in Figure 1 below. Under this approach, country A adds the transferred mitigation outcomes to its reported GHG emissions, whereas country B subtracts them. Country A reduces its emissions by 50 Mt CO2 e, enabling it to transfer 30 Mt CO2 e to the acquiring country; it adjusts its reported emissions by adding the amount transferred, resulting in an adjusted emissions level of 80 Mt CO2 e, which equals its emissions target. Country B reduces its emissions only by 10 Mt CO2 e and achieves the remainder of the required emission reduction by using the ITMOs from country A; it adjusts its reported emissions by subtracting the ITMOs transferred, resulting in an adjusted emissions level of 80 Mt CO2 e, which equals its emissions target. In sum, both countries still emit 150 Mt CO2e; double claiming is avoided “