The Paris Agreement – Death by a Thousand Cuts

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

“The second approach is illustrated in Figure 2. The figure starts on the left-hand side from the emissions budget that corresponds to the mitigation target. Under this approach, country A adjusts its emission target by subtracting the amount of mitigation outcomes transferred from its emission budget, resulting in a downward adjustment from 80 to 50 Mt CO2 e. Country B adds the transferred mitigation outcomes to its emissions target, resulting in an upward adjustment from 70 to 100 Mt CO2e.”

Source: Robust Accounting of International Transfers under Article 6 of the Paris Agreement

Summary: The real question is WHY are Developed Nations not taking action?

 

So many ‘advisors’ and intermediaries in the mix and the World Bank CATS reporting system trying to convert itself from its original remit as a reporting and tracking system to a ‘Transactional Registry’ (using ERPA/MOPA ‘contracts).   

Developed Nations should be encouraging their major trading houses to harvest this rare crop or buying themselves.

I was at COP21 and Carbon Trade eXchange (CTX) was a major sponsor of the IETA Business Hub when the Paris Agreement was signed – in 2015 !

Now almost a decade later – I have to wonder, have the Mainstream & Industry media and middlemen created so much FEAR that Nations who should be buying ITMOs will avoid action? Is the Paris Agreement dead in the Water?

We think not – surely 80,000 people didn’t attend COP28 to see this agreement fail

This Auction might be the crossroads.

Wayne Sharpe

CEO & Founder GEM /CTX Group

               

          ·       The Text of the Letter of Letter of Authorisation (LoA)

LETTER OF AUTHORIZATION FOR GOLD STANDARD BIOMASS ENERGY FOR CONSERVATION PROGRAMME (GSl 1677)

 

The Ministry of Natural Resources and Climate Change of the Republic of Malawi is the Government entity responsible for climate change. As the Designated National Authority for carbon trading, the Ministry oversees the countrys participation in Article 6.2 cooperative approaches under the Paris Agreement and the relevant decisions adopted pursuant to the United Nations Framework Convention on Climate Change (UNFCCC), particularly Decision 2/CMA3.

Malawi is a Party to the Paris Agreement and is in compliance with its goals and obligations; As such, 1he 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.

In this regard, Hestian Innovations Limited is recognized as the authorized Mitigation Activity Participant for the Gold Standard Biomass Energy for Conservation Programme (hereinafter referred to as the Mitigation Activity) as it has:

i.         Satisfied all the preconditions for authorizing mitigation outcomes for international transfers and their subsequent uses as set out in the Republic of Malawi Article 6.2 Framework; and,

ii.         Considered the technical recommendations from the Republic of Malawi’s Mitigation Expert Working Group (MEWG) as the Article 6. Technical Advisory Unit on the proposed Mitigation Activity.

The Ministry of Natural Resources and Climate Change therefore, provides the following Authorization Statement to Hestian Innovations Limited based on the following:

I.         Verified Emission Reductions (YERs) or removals that are generated by implementing GS11677 were issued as credits by Gold Standard to be used as Internationally Transferable Mitigation Outcomes under Article 6.2 of the Paris Agreement;

II.         The authorization use of ITMOs is limited to emission reductions or removals that occur in the period from P’ January 2021 to 3Js1 December 2030: and

Ill.  The project emission reduction or removals generated in each calendar year will be issued at an agreed amount of the ITMOs using I million tCO2eas the minimum and that 10% of the ITMOs is reserved for the republic of Malawi

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.

We hereby also declare that Malawi will report on the authorisation in a transparent manner in its Biennial Transparency Report submitted under Article 13 of the Paris Agreement, and any relevant reports under Article 6 of the Paris Agreement and, where different, the first transfer of the projects emission reductions or removals Internationally Transferred Mitigation Outcomes.

This Letter of Authorization does NOT imply or provide a commitment from the Republic of Malawi to support or fund the authorized Mitigation Activity in the event that, any legal or environmental requirements for the construction and operation of the Mitigation Activity from the involved Parties, are not fulfilled and the Mitigation Activity, therefore, is unable to proceed.

I look forward to your cooperation to comply with the issues outlined in the letter.

Yours sincerely, signed

SECRETARY OF NATURAL RESOURCES AND CLIMATE CHANGE

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