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Nations can team up to accelerate decarbonization & build resilience
Article 6 of the Paris Agreement calls on nations to work together to make it harder to pollute for profit. “Non-market approaches” could transform finance and trade, and reduce poverty and hunger.
Article 6 of the Paris Agreement calls on nations to work together to make it harder to pollute for profit. The aim is to enhance and accelerate “overall mitigation of global emissions”. In other words, international cooperation should lead to a faster pace of global decarbonization. Paragraph 8 of Article 6 (“Article 6.8”) focuses on “non-market approaches”: those cooperative strategies that enhance and accelerate overall decarbonization, but don’t involve emissions trading.
Under Article 6.8, nearly 200 nations recognized:
“the importance of integrated, holistic and balanced non-market approaches … to assist in the implementation of their nationally determined contributions, in the context of sustainable development and poverty eradication…”
“Nationally determined contributions” are national commitments to eliminate global heating emissions. Non-market approaches (NMAs) are meant to not only reduce emissions, but also support “adaptation, finance, technology transfer and capacity-building”. NMAs should also:
“promote mitigation and adaptation ambition”;
“enhance public and private sector participation”;
and “enable … coordination across instruments”.
In our brief to the SBSTA 56 round of UNFCCC negotiations, we offer a provisional list of specific tools and strategies we see being available to policy-makers would include, but not be limited to:
Standards and regulations – Financial regulations, trade-related conditionalities, and border adjustments and related negotiations, that allow nations to cooperate to secure a faster pace of decarbonization;
Climate income policies, which create an economically efficient, fast-moving decarbonization pathway, and foster green recovery by setting strong, steadily rising carbon prices, with revenues returned to households and communities, to ensure price pressures fall on polluters;
Carbon-related border adjustments – Domestic and cooperative mechanisms that support carbon border adjustments, to ensure climate leaders don’t lose trade to pollution offshoring;
‘Floor price’ measures – Diplomatic, fiscal, and policy action toward an effective international “floor price” for carbon pollution;
Accounting and avoidance – Regulatory measures that mandate accounting, disclosure, and avoidance of carbon-related liabilities;
Nature finance – Enabling policies that create conditions for climate-smart, nature-positive financial instruments, and other forms of green finance;
Fiscal rescue funding – Linking Special Drawing Rights (SDR) to Paris Agreement action and funding, given the urgency of scaling up mainstream finance for climate mitigation, adaptation, and resilience, from the public, private, and multilateral sectors;
‘Labeling’ and tracking – Labeling, accounting, data-sharing, impact tracking, and transparency practices that expand opportunity for mainstreaming of climate-smart finance;
Food systems innovation measures, supported by policies, financial instruments, consumer health and safety regulations, and the linking of multifocal science insights to impact investment strategies by public, private, and multilateral institutions.
Data integration – Policies, institutional arrangements, and business model innovation incentives that support integration of Earth science data platforms into financial decision-making information flows;
Transition assistance – Direct and indirect incentives and blended financing strategies that support accelerated transition of emissions-dependent local and regional economies to climate-smart low-emissions standards and practices;
Multilateral coherence – Action by existing international institutions to become engines for climate action incentives and enforcement, connecting climate action aims, impacts, and metrics, to their respective decision-making, financing, and multilateral policy intervention capabilities.
Each of these 12 points is in itself a suite of strategies, policies, and instruments that can enhance overall mitigation of global emissions, foster sustainable development, and improve verifiability and accountability in carbon pricing, green labeling, and sustainable finance. We offer these areas of action as a menu of options that can be selectively applied, depending on needs, aims, and capacities.
This was the substance of our intervention in the In-session workshop on non-market approaches, convened during the SBSTA 56 negotiations, on Tuesday, June 7, in Bonn, Germany. We concluded by adding that we believe stakeholders should be included in the design and implementation of NMAs—at local, national, and supranational levels—so we have eyes on the ground, more sustainable locally rooted activities, and a way of understanding and assessing performance.
Our call for stakeholder engagement was not alone. Throughout the day, negotiators and observers described the healthy and ambition-raising effect of involving communities in climate crisis response planning and solutions design. Whether for mandates and regulations, incentives, development grants, or investments in climate-smart enterprise, we heard that involvement of local communities will accelerate and enhance implementation of NDCs, while providing enhanced capability, better development outcomes, and greater transparency.
Some of the perspectives we heard included:
Active and robust engagement of observers, stakeholders, and non-governmental experts is critical for improving NMA design and implementation;
NMAs need to integrate across mitigation, adaptation, finance, technology, nature, capacity building;
NMAs—by virtue of being cooperative climate crisis response measures other than emissions trading—reach beyond UNFCCC, beyond governemnt, out to business and community;
Non-state actors are critical to full implementation of the already agreed NMAs agenda, and to ensure diverse and persistent innovation.
Some countries will establish or join markets for emissions trading, while also enacting carbon taxes, financial regulations, clean energy standards, green bond initiatives, border adjustments, cooperative accelerated depreciation agreements, and other non-market approaches. Others will be more selective, and will depend more heavily on one or a smaller number of these tools.
Because today is World Ocean Day, we would like to highlight the role of marine ecosystems in the overall landscape of non-market approaches and related policies and practices. Blue carbon and nature-based coastal adaptation solutions were cited in multiple interventions in yesterday’s Article 6.8 workshop, in part because they hold real potential for integrating across mitigation, adaptation, resilience, and restoration.
There are two specific framing notes regarding the connection between ocean ecosystems and non-market approaches:
First, it is important to distinguish between nature-positive finance and the commodification of nature. While some would like to create tools for tradable conservation commodities, nature finance (or nature-positive finance) as laid out above is focused on rewarding good stewardship practices, payments for ecosystem services, and finance that helps instead of harming nature.
Second, marine ecosystems and blue carbon are not only relevant to investments in the ocean itself. Upstream actions that reduce threats to marine ecosystems also create conditions for a healthier ocean and more robust ocean-based climate regulation.
We also want to emphasize that some non-market climate interventions are specifically attuned to reducing risk of food system failure and for bolstering sustainable food security, including better outcomes for the health of people and ecosystems. This includes tools, policies, and strategies, that ensure climate-smart, nature-positive production practices become mainstream, which again provides downstream benefits to marine ecosystems and overall climate resilience.
Local experience is highly relevant to the design of non-market policy, finance, and practice interventions, and can lead to more diverse and extensive landscape of action. Consider the importance of stakeholder engagement and capacity building for vulnerable communities not eligible for conventional financial support, but which might see benefits from capital flows realigned to support climate goals.
It is now far more likely than at any time in history that Special Drawing Rights (funds set aside for fiscal rescue, currently valued at $650 billion) can be used to condition or catalyze policy and investment for emissions reductions. 196 nations signed up to this in the Glasgow Pact, agreed at the COP26 UN Climate Change negotiations in November 2021. These kind of clear climate signals need to start becoming mainstream, factoring into overall economic development and fiscal planning.
An inescapable question, however, keeps emerging: How should such support for national governments translate to experience of climate crisis response at the human scale? Ensuring integrity should also mean securing the real-world future of people who will live with the decisions made by national institutions.
CCI has begun to look at this “capital to communities” question—getting resources to people who need them, and who can activate locally led climate-resilient development that will be more durable. The critical detail is that community inclusion in the deployment of climate-related finance—whether for mitigation, adaptation and resilience, or to address loss and damage—should expand, not reduce, the overall flow of finance to climate-resilient development.
CCI is also working to trace specific elements of climate income systems—policies that put a price on pollution, return revenues to households, while supporting border adjustments and climate-smart trade cooperation. Climate income systems ensure resources reach community-level economies and can moderate the impact of inflationary pressures and shock events.
UNITED NATIONS CLIMATE CHANGE
CITIZENS’ CLIMATE INTERNATIONAL
CCI submission to SBSTA 56 on non-market approaches (includes, and expands on, provisional list above)