Blogs, Events & News Insights from the field COP26 Reflections: What does this mean for Plan Vivo? Spotlight: COP26, Glasgow Reflecting on COP26 last month, Brian Oronoz - our Carbon Markets Consultant - summarises the key outcomes and takeaways, and discusses what this means for Plan Vivo… COP26 was not everything we hoped for, but it was not a failure There are great Conferences of the Parties (COP), and there are ‘regular ones’ based on the achievements and agreements made. COP26 will probably not go down in history as a great one in this sense - certainly compared to Paris - but it was for sure important, relevant, and will be influential for the years to come. Expectations were high, and while senior officials representing 197 countries were taking part in the negotiations, thousands of people were marching on Glasgow’s streets to make sure their voices were heard. The final outcome of COP26, the 'Glasgow Climate Pact', set the pathway for the mitigation, adaptation, green finance, and the recently included ‘loss and damage’ agendas. A balance of the good, the bad and the ‘pending issues’ on each topic is necessary. However, we would also like to focus upon how the agreements reached at COP26 - and how Plan Vivo’s views for the future - align with the achievement of our global climate goals. The good The science-based goal of keeping global average temperature below +1.5°C above pre-industrial levels is still alive, and that in itself is something good. In addition, the Pact presents for the first time an agreement on ‘phasing-down’ unabated coal power and ‘inefficient’ fossil fuel subsidies. Other major outcomes came from the announcements such as the Global Methane Pledge to reduce emissions coming from methane; the Declaration of Forests and Land Use to tackle deforestation, commitments from the International Aviation Climate Ambition Coalition and also for the mobilisation of finance, including efforts to reduce the gap between mitigation and adaptation through the Adaptation Fund. Some last-minute relief was achieved as the Rulebook for the implementation of the Paris Agreement was finally agreed, including Article 6 (6.2, 6.4, and 6.8) for market and non-market based mechanisms. This article is central to help countries reach their Nationally Determined Contributions (NDCs) mitigation targets, and ultimately to increase ambition plans towards the 1.5°C target. The bad and ugly Among the criticism of COP26 was, what many perceived as a lack of ambition from the Parties and the last-minute changes on the Pact, specifically by modifying its wording from ‘phasing-out’ to ‘phasing-down’ the fossil fuel subsidies, even when countries and coalitions had agreed to transition completely away from coal earlier in the negotiations. Other critiques came from what was said to be a lack of inclusive and participatory processes during the agreements, with the Global North still dictating the rules by which all, including the Least Developed Countries (LDCs), indigenous communities, and those more affected by climate change, will have to play. Finally, other concerns have been raised regarding loopholes or grey areas in the rules for Article 6, which could lead to significant, although unlikely, risks for its environmental integrity, more specifically on double claiming and double counting, and the CORSIA scheme for international aviation. Long-awaited rules and arrangements for Article 6 are finally out there, but there is still a lot to be understood and discussed. How will the rules of Article 6 affect the Voluntary Carbon Market? The long-awaited rules for Article 6 regarding the international transfer of ‘’mitigation outcomes’’ (principally carbon credits), clear transition arrangements from the Clean Development Mechanism into a new scheme, and non-market approaches, are finally out there. However, there is still a lot to be understood and discussed with regards to some of the elements they contain and what this practically means for the voluntary carbon market (VCM). Let’s start with the basics. The VCM, as its name suggests, is voluntary and hence, is neither mandated nor responds to any international instrument for compliance. The VCM fills a gap where there is a lack of carbon pricing policies, in turn creating a space for innovation, delivering environmental benefits, and offering opportunities to project developers. In this sense, the rules for Article 6 are not meant to regulate the VCM per se, but instead, to inform regarding the interoperability between the VCM and the compliance market. For this to happen, an ‘authorization’ from the participating Party should exist in relation to the use of the carbon credits coming from the VCM, referred to as ‘other purposes’ under Art. 6.2. Then, a ‘corresponding adjustment’ (CA) must be applied to these credits, and finally they shall be accounted for and communicated in the biennial transparency report (BTR) of the country. It was precisely these CAs that generated much discussion. Before securing a last-minute agreement, some voices even argued that ‘no rules [were] better than bad rules’, and that CA's should be applied de facto to all VCM transactions, in the fear that credits not having a CA could lead to decreased ambition by either host or beneficiary countries and less overall mitigation. At Plan Vivo we strongly believe that both ensuring the environmental integrity of these mechanisms and increasing countries’ climate ambition, are of paramount importance. However, we also recognise that many countries, and especially developing countries (where many of our projects are located), will not have the capacity to integrate CAs for several years at least. They require, as we have seen, legal authorization at a national level, and linkage to national accounting registries (if they exist). Both processes can entail a huge amount of time and resources. The implementation of CAs is, to a great extent, based on the assumption that this infrastructure already exists in host countries, that there are no impediments to securing timely and transparent authorisations, and that countries’ policies and legislation are fully aligned and willing to act towards achieving its NDCs. Aren’t these some of the reasons why voluntary markets are required in the first place? Other voices have stated that there is even a risk that requiring national-level adjustments for voluntary transactions might discourage much-needed mitigation action, restricting much needed voluntary investment in mitigation projects - the opposite of what we are trying to achieve. In addition, there is a risk that developing countries being requested to apply CAs on their voluntary transactions will look at this measure as discriminatory towards them (for not having the necessary infrastructure to do it) and counterproductive (as they cannot benefit from the claim of the reduction or removal, as they would be able to under the VCM). The new beneficiaries would now be, in most cases, developed nations. Lastly, this perspective assumes that countries are the only actors in the carbon markets, downplaying the importance of social stakeholders, private sector actors, and additional benefits within those countries. At Plan Vivo we understand that a deeper understanding of these topics is needed among all carbon market participants in order to understand where the application of CAs will bring a net benefit. The debate must not be oversimplified, as it is of course key for environmental integrity, but we believe the exact nature of any claims (i.e. Net Zero, carbon positive, carbon neutral etc.) should neither shadow nor hinder the action to boost the much-needed climate finance for VCM projects, acknowledging that ITMOs are not the only international carbon assets. During COP26 the Plan Vivo team attended a notable event hosted by Minga Indigena. The panel discussion gave the floor to key indigenous representatives. For us, a main takeaway from COP26 is the need to make the VCM a more inclusive and accessible space, with the focus on co-benefits and strengthening resilience. Working towards a growing, inclusive future in the VCM Plan Vivo understands and embraces all the efforts made by the different stakeholders involved in COP26, the negotiators, the civil society, and the private sector. We will continue to help scale the VCM through certified projects (aligned with national and international guidelines and best practice), recognising the pioneering role of early Plan Vivo projects dating back to 1994. Our certified projects represent high-quality, reliable environmental benefits and co-benefits, and offer sustainable livelihoods to communities whose local environments have often been degraded and affected by climate change. What we saw and heard at COP26 from leaders, negotiators, youth delegates and indigenous communities, represents an opportunity for us. An opportunity to make these co-benefits more visible in how they align with many of the core topics touched upon during COP26. This includes biodiversity, forest conservation and land use, and of course the inclusion and empowerment of indigenous and smallholder communities in decision making processes; this has been at the core of our work from the very beginning - more than 25 years ago. The recently updated Plan Vivo Standard is proof of our commitment to align with the rapidly evolving world of carbon markets. It seeks to incorporate lessons learned from our own experiences working with communities, to strengthen socio-economic aspects of the standard, and to provide our projects and the carbon credits derived from them with further standardisation and transparency. Key takeaways Plan Vivo is glad that the Paris Agreement commitments and the 1.5°C goal are still alive and directing much of the international climate efforts. However, we acknowledge that under the current trends we are still heading towards between 2.4° and 2.7°C above pre-industrial levels, way beyond the 1.5°C target. Therefore, increased ambition should not only be pledged but transformed into action. We were glad to hear that the Rulebook for the implementation of the Paris Agreement, and specifically for Article 6, was finally agreed. Nevertheless, there is much work to be done prior to COP27 in Egypt, including the capacity building on accounting frameworks and CAs, so that everyone understands their role within, and to ensure net benefits for all, especially for those most affected by the impacts of climate change and where climate finance is mostly needed. Finally, we believe that the focus should not be to look at the VCM or any climate-related voluntary efforts as risks leading towards decreased ambition and mitigation, but rather to consider them as part of the much-needed mechanisms and actions that are independent of, but complementary to, government pledges, tackling our shared climate responsibilities. Plan Vivo will continue to work towards this goal under the inclusive, unique cooperative approach for which we are recognised.