Harvard Project on Climate Agreements Hosts COP25 Panel on Realizing the Potential of Article 6

A highly engaged and well-informed audience filled the Pavilion of the International Emissions Trading Association (IETA) at the 25th United Nations Climate Change Conference (COP25) on Wednesday (Dec. 11) in Madrid to hear from an expert panel about the current state of negotiations on linkage, international cooperation, and the Paris Agreement. The discussion, “Realizing the Potential of Article 6,” was hosted by the Harvard Project on Climate Agreements (HPCA) and moderated by HPCA Director Professor Robert Stavins.

Stavins delivered opening remarks, framing the challenge faced by negotiators as they seek to construct rules to encourage and enable even more ambitious greenhouse-gas emission (GHG) reductions by the participating parties to the Paris Agreement.

“One answer to the question of how to encourage greater ambition is linkage of regional, national, and sub-national policies; and by linkage, I mean connections among policies in different countries that allow emission reductions efforts to be shared, redistributed across systems, because that could lead to very significant cost savings,” Stavins explained.

Stavins outlined the importance of Article 6.2 of the Paris Agreement to foster direct cooperation between parties, and trading among companies, with accurate accounting under the Paris Agreement.

“Article 6.2 is the obvious home for such accounting, so the negotiators here [in Madrid] have the opportunity to define clear and consistent guidance for accounting of emissions transfers between countries under bilateral linkage arrangements outside of Paris, and to account for them under the Paris Agreement via Article 6,” he stated. “This kind of accounting could be helpful for encouraging the linkage to take place.”

Kelley Kizzier, Associate Vice President for International Climate for the Environmental Defense Fund, and a former United Nations Framework Convention on Climate Change (UNFCCC) co-chair for the negotiations under Article 6, agreed with Stavins on the importance of Article 6, and expressed her urgency that the Ministers make progress this week, lest the opportunity slip away.

“This is really the time for that agreement to be made, and if it can’t be made here, I think that what needs to happen is parties that are using carbon markets need to come together and agree on a stringent and robust set of standards for that international cooperation and continue on, because markets are part of the ambition story, and we know that the current NDCs [Nationally Determined Contributions] simply aren’t good enough,” she said. “We need more ambition, and I think without international cooperation we lose a big opportunity to increase that ambition.”

Fellow panelist Andrei Marcu, Senior Fellow with the European Roundtable on Climate and Sustainable Transition, acknowledged that the negotiations around Article 6.2 in particular are getting “very complicated,” because the signatories to the Paris Agreement are split into two distinct camps — the fast developing countries and the rest — yet he expressed guarded optimism about the end result in Madrid.

“I’m extremely hopeful…because the history of the UN negotiations is we’ve never shot blanks twice in a row. We may have failed once, but we always succeeded the second time,” he remarked. “I don’t see how we can leave here and impress on the national community that we failed again, and we have to explain to the people and our friends and our children that we failed again. I think that would be difficult, so I hope we will succeed.”

A slightly different perspective was expressed by Harvard Kennedy School Professor Joseph Aldy, who served as a special advisor on climate policy during the Obama Administration. Aldy warned of the dangers of being prescriptive in Article 6, thereby stifling innovative efforts to reduce emissions.

“I do have a concern that as we argue over the rules of what Article 6 might look like that it might have a chilling effect on the extent to which countries thrive to become creative and engage and cooperate with each other,” he said. “Given the scope of the problem of climate change, I think we need to start doing everything possible to drive more ambition. Some of this means…making investments on riskier technologies. Some of this means taking active risks on policy design if it has the potential to significantly increase the environmental payoffs.”

The panel also took a number of interesting questions from audience members, including one about what could happen if countries cannot come to agreement on Article 6 this week. The panelists seemed to share the common sentiment that countries would find ways to link their policies and continue efforts beyond Madrid to share responsibility among themselves, thereby reducing costs.