ASSIGNMENT

THE CARBON MARKETS CONUNDRUM AT COP26

What is COP (Conference of the Parties)

The Conference of Parties (COP) is the apex decision-making body of

the United Nations Climate Change Framework Convention (UNFCCC).
The UNFCCC was formed in 1994 to stabilize the greenhouse gas
emissions and to protect the earth from the threat of climate change.
The COP is the supreme decision-making body of the Convention. All States
that are Parties to the Convention are represented at the COP, at which they
review the implementation of the Convention and any other legal instruments
that the COP adopts and take decisions necessary to promote the effective
implementation of the Convention, including institutional and administrative
arrangements.

COP26

The 26th session of the Conference of the Parties (COP 26) to the
UNFCCC was originally scheduled to take place from 9-19 November
2020, in Glasgow, UK. On 28 May 2020, the COP Bureau decided that it
would take place from 1-12 November 2021, in Glasgow, UK. The
meeting will now open on 31 October 2021

THE CARBON MARKETS CONUNDRUM AT COP26

What is the issue?
The conclusion of Article 6 of Paris agreement has remained unresolved since
the accord was signed and it will be one of the most technical and highly
contentious issues at the upcoming UNFCCC COP26.

What is Article 6 of Paris agreement?

Article 6 of the Paris Agreement would be the king to be checkmated and
captured for concluding the Paris Agreement Work Programme (PAWP) at the
26th Conference of the Parties (COP26).
Article 6 of the Paris Agreement introduces provisions for using international
carbon markets to facilitate fulfilment of Nationally Determined Contributions
(NDCs) by countries.
Developing countries, particularly India, China and Brazil, gained significantly
from the carbon market under the Clean Development Mechanism (CDM) of
the Kyoto Protocol. India registered 1,703 projects under the CDM which is the
second highest in the world.
Certified Emission Reductions (CERs) issued for these projects are around 255
million. U.S.$2.55 billion in the country.
logically, India has a lot to gain from a thriving carbon market. 
Developing countries are faced with a dilemma of either selling their carbon
credits in return for lucrative foreign investment flows or use these credits
to achieve their own mitigation targets.

What does the Kyoto protocol say on emission reduction?

The Kyoto Protocol aims to limit or reduce the greenhouse gas emissions by
three market-based mechanisms – emissions trading, clean development
mechanism and joint implementation . Emissions trading – An advanced
country “A” can acquire emission units from an advanced country “B” for
meeting a part of their emission reduction target.

What are the issues that require attention in the upcoming COP26?
Projects under CDM have gone through due diligence and credits have
been issued under UNFCCC oversight. Therefore, due credit should be
ensured for these projects to keep the trust of private investors in
UNFCCC commitments. If the decision regarding the transition of CDM is
not favourable ,it could lead to a loss of billions of dollars worth of
potential revenue to India alone.
At the present stage, India need not undertake the economy-wide
emission reduction targets. Thus, all mitigation efforts of India will not
fall under the purview of its NDC.  India can sell emission reductions that
lie outside its NDC. Robust accounting will ensure that there will be no
double-counting of emission reduction. Thus, the argument of
developed countries that it will discourage raising ambition levels is
flawed, as India will only sell additional efforts.
Adaptation Fund remains severely underfunded compared to financing
for mitigation activities. It is necessary for adaptation for developing
countries.
Thus, Climate discussions should ensure equitable sharing of carbon and
developmental space. Climate justice demands that developing countries
get access to their fair share of global carbon space.