ANALYSIS: Lack of NDCs at mid-year UN talks jeopardises 'Article 6 honeymoon'

Quantum Commodity Intelligence - Mid-year UN climate talks wrapped up on June 26  in Bonn with mounting unease over the absence of fresh national climate pledges, a delay which could undermine the fragile consensus seen over the past nine months on UN carbon markets, observers said.

UN climate negotiations gathered between June 10-26 for their usual 10-day 'intersessional' talks in the city in Western Germany, the regular location to discuss global climate action matters on an expert level at mid-way points between political level year-end COPs.

The meeting, also know as 'SB62', was the first session since last November when governments at COP29 in Baku completed nine-years of tedious talks about the rulebook for UN-backed carbon markets governed by the Paris Agreement's Article 6.

Deadline

While the launch of the centralised Article 6.4 and the decentralised Article 6.2 mechanisms in the Azerbaijani capital boosted private-sector confidence in the viability of international carbon trade, the failure of major emitters to step forward with updated pledges risks stalling broader climate cooperation.

"The honeymoon period for Article 6 rules can be jeopardised," Axel Michaelowa, co-founder of Switzerland-based climate consultancy Perspectives told Quantum.

He said that the UN's extended end-of-September deadline for governments to submit so-called Nationally Determined Contributions (NDCs) for the period up to 2035 is fast approaching, yet few big emitters have sent their submissions.

The EU, China, India, Russia and more than 100 other countries have all yet to outline their decarbonisation plans for the next 10 years, aligned to the Paris Agreement's ratchet mechanism cycle requiring them to update their plans every five years.

"Frustration over the missing NDCs have created a bad mood and this could spill over to the SBM meetings," Michaelowa said referring to the administrator of the centralised mechanism, the Article 6.4 Supervisory Body (SBM).

Since last September, the SBM has been surprisingly effective in setting stringent rules; the question is whether this momentum can be sustained for its remaining two meetings this year, he added.

The next SBM meetings will be held in August and October when the Body is expected to further develop and revise methodologies, tools and guidance, accredit designated operational entities and develop and Article 6.4 registry.

During Bonn talks only Belize, Norway and Zambia submitted NDCs.

Among the missing NDCs, the most important is the EU's which has over the past more than 20 years been portraying itself as a climate leader, Marta Torres, director of the climate programme at French NGO IDDRI said.

Waiting

China and many other developing countries were waiting for what the EU was willing to put on the table first and then they will submit their NDC, she said.

The European Commission revealed a much-awaited proposal for its 2040 climate target on July 2 and derived from that it should formulate a 2035 NDC to submit in September.

"Most NDCs are expected to be submitted at the UNGA meeting," Torres said referring to the General Assembly meeting of the UN which will take place between September 9-23 in New York City.

The NDCs will then be assessed by the UN and put together in a 'synthesis report', before negotiators at COP30 in Belém, Brazil in November are expected deliver a response to these reports, UN Framework Convention on Climate Change Executive Secretary Simon Stiell told a press briefing on June 26.

"I'm not going to sugar coat it — we have a lot more to do before we meet again in Belém," he stressed. 

This year's Bonn meeting was the first UN climate session since Donald Trump moved to the White House in January and among his first decisions was the US' latest exit from the Paris Agreement.

The withdrawal of the world's second largest CO2 emitter will take effect only a year after the announcement, but the US delegation did not attend the Bonn talks.

Absence

IDDRI's Torres said that the absence of the US has certainly been a setback for global climate talks, but she experienced also a relief among many delegations.

"Many countries feel that over the past years they had to bend over backwards to accommodate the wishes of the US causing a lot of frustrations, and now they no longer have their presence," she pointed out.

A US-based attendee from a carbon removal firm, who wished to remain anonymous, told Quantum that he came to Bonn to attempt to lobby for post-US exit rules that would allow international carbon trade of UN-backed credits.

"The US withdrawal means that no Corresponding Adjustments can be made for credits sourced from projects on US soil, but we wish to find a solution where it can be done," the source said.

He referred to the administrative move of adjusting emission balances of countries when the transfer of a UN-backed credit is completed, a move which is a requirement should the credits be used under the Corsia aviation carbon offsetting scheme.

A country outside the Paris Agreement without an NDC cannot make adjustments in its emission balances, according to current UN reporting rules.

This year's Bonn conference was the first UN session for a long time where Article 6 texts have been absent from the agenda, as negotiators in Baku agreed the most important rules and finetuning of further rules have been deferred to the SBM.

Yet, Article 6 featured high on the agenda of side events and drew many participants from carbon markets including carbon removal companies, carbon insurance firms and NGOs opposing carbon trade.