Climate 411

Article 6 moves to implementation, at COP28 and beyond

By Pedro Martins Barata / Published: November 20, 2023

This blog was authored by Pedro Martins Barata, AVP for Carbon Markets and Private Sector Decarbonization at the Environmental Defense Fund.

Since the Glasgow COP two years ago, there have been growing expectations to transform the market-based cooperation approaches outlined in Article 6 of the Paris Agreement into practical, effective actions for reducing global emissions. Article 6 is not just another clause in an international treaty; it serves as a practical framework for cooperative climate action that has the potential to unlock higher ambition for reducing carbon emissions and adaptation actions. As COP28 unfolds, it is set to complete the development stage of these mechanisms, paving the way for tangible, impactful action in the near future. 

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Also posted in Forest protection / Comments are closed

The Regional Greenhouse Gas Initiative is at a critical juncture. Here are 3 ways it can put states on the path to meet our climate goals

By Peter Della-Rocca / Published: November 20, 2023

Since the Regional Greenhouse Gas Initiative (RGGI) began well over a decade ago, this group of Eastern states has successfully slashed climate pollution from power plants in half, generated substantial health benefits and raised $3 billion in proceeds that have been invested back into states.

Now this program, which puts a declining cap on power sector pollution, is at a crucial juncture that will determine its impact this decade.

Since February of 2021, RGGI Inc, the organization that oversees RGGI has been conducting its third program review — a process meant to assess RGGI’s successes, impacts and potential design changes. Given the opportunities offered by major investments in the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law (BIL), along with the fast-approaching 2030 deadline for the U.S. to reduce emissions by at least 50%, the stakes for the current program review are high.

EDF submitted public comment on the review, urging RGGI Inc to take several key steps as it plans the trajectory of RGGI through 2030 and beyond. First, RGGI Inc should align the program’s emissions cap with national and state climate commitments. Second, RGGI should include an interim target of at least 80% emissions reductions by 2030 to ensure that states take near-term action that lines up with where the power sector needs to be to achieve climate targets. Third, RGGI Inc should create a pathway to cover imported electricity as a means to mitigate emissions leakage (a situation where emissions from non-RGGI states may increase).

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Also posted in Cities and states, Greenhouse Gas Emissions / Comments are closed

As Washington state considers linking carbon market with California-Quebec, this cost-containment tool ensures that its program continues to run smoothly

By Caroline Jones / Published: November 15, 2023

Fall foliage over a Washington lake

Today, the Washington State Department of Ecology (Ecology) released the results from Washington’s second Allowance Price Containment Reserve (APCR) auction, held on November 8th. At this auction, all 5 million available APCR allowances were sold at the Tier 1 price of $51.90. This auction, along with three previous sold-out cap-and-invest auctions, continues to show strong demand for allowances in Washington’s cap-and-invest program and illustrates the important role of the APCR in providing predictability and stability in allowance prices.

APCRs: A Recap

An APCR is a price containment mechanism that was designed into Washington’s cap-and-invest program as a way to keep allowance prices stable and predictable. It functions similar to a soft price ceiling by ensuring that, if a certain price is reached in a quarterly auction, a separate number of allowances set aside for this purpose become available at a separate APCR auction. Importantly, these allowances are set aside ahead of time and are still part of the overall allowance budget set by Ecology to keep Washington on track to meet its climate targets. By making these allowances available at a transparent and predetermined point, an APCR auction helps to stabilize prices in the market overall.

Want more information about how Washington’s APCR works? Check out our blog from earlier this summer explaining this key program feature.

APCR auction results

At last week’s auction, participating entities submitted bids for APCR allowances at the Tier 1 price of $51.90. All allowances were offered at the Tier 1 price, with none available at the Tier 2 price of $66.68.

Here are the results, released today:

  • Tier Price 1: 5,000,000 allowances sold at a price of $51.90 per allowance.

In this auction, Ecology offered all APCR allowances at the Tier 1 price, rather than dividing them between Tier 1 and Tier 2 prices. There were also more allowances available at this APCR auction than at August’s APCR auction, with 5 million made available this month compared with just over 1 million in August. Ecology determined that this is an important strategy for increasing market stability by putting downward pressure on compliance costs early in the program, while many covered entities are still developing their strategies for compliance and decarbonization.

What these results mean

This was Washington’s second APCR auction and its implementation shows just how important this feature is as a price-stabilizer. In the first year of this program, covered entities are still in the early stages of figuring out and implementing their plans to reduce their emissions. As these early auctions play out, businesses are inclined to out-bid each other for allowances sooner rather than later — with the expectation that allowances will get more expensive over time. This drives strong demand in these early auctions, illustrating the utility of a cost containment mechanism like the APCR. As covered entities reduce their emissions, they’ll need fewer allowances to cover their pollution — which will lower demand and keep prices low in turn.

An APCR might not be triggered at every quarterly auction, but it was designed into the program from the beginning to keep it functioning smoothly. In doing so, Ecology created a more stable and durable program while utilizing allowances that are still part of the planned allowance budget.

Cutting costs through linkage

Earlier this month, Ecology announced its decision to pursue market linkage with the joint California-Quebec carbon market. This is great news for long-term cost containment and stabilization for Washington and, if also pursued by California and Quebec, could bring about significant advantages for all participating markets. A broader, linked market could drive deeper and faster cuts in climate pollution, lower the cost of compliance for Washington companies and support a more stable, predictable market overall. Ecology’s decision is the start of a process in Washington and we’ll be watching for further developments in the Evergreen State as well as in California and Quebec.

Also posted in California, Cities and states, Economics, Energy, Greenhouse Gas Emissions, Policy / Comments are closed

A decade in, California’s cap-and-trade has slashed climate pollution and generated investments — where does it go from here?

By Caroline Jones / Published: November 15, 2023

Sunset on the Mohave Desert

This year, California marked the 10th anniversary of its landmark cap-and-trade program, and the Golden State has good reason to celebrate: California saw reduced year-on-year emissions from nearly every sector covered by the program. On top of delivering on critical emissions reductions, cap-and-trade has generated revenue resulting in $9.3 billion implemented through California Climate Investments programs that contribute to emission reductions, support climate equity and improve public health outcomes. And yet, there’s still much more work to be done to ensure that this program delivers reductions at the scale and speed required to avert the worst impacts of climate change while meaningfully supporting overburdened communities.

With a rulemaking in progress to make further necessary improvements to cap-and-trade, here’s what you need to know about what’s coming up through the end of the year and what to pay attention to in the new year.

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Also posted in California, Cities and states, Energy, Greenhouse Gas Emissions, Policy / Authors: / Comments are closed

New carbon credit integrity guidelines could boost buyer confidence in agriculture

By Amy Hughes / Published: October 26, 2023

Voluntary carbon markets are a source of much-needed finance to help the agriculture sector realize its potential for climate mitigation. Still, carbon credit buyers face challenges in differentiating carbon credits that represent real and verifiable climate impact, based on the latest science and best practices in a crowded marketplace. It takes due diligence to get this right, and changes are underway to make the process easier.  

New guidance on high-integrity carbon credits from an independent governance body has important implications for all credit categories, including those generated by the agricultural sector.   Read More »

Also posted in Agriculture / Comments are closed

Latin America’s Climate Challenge, and Opportunity

By Juan Pablo Hoffmaister / Published: October 24, 2023

This blog is co-authored by Sergio Sánchez, Senior Policy Director of Global Clean Air; Edgar Godoy, Associate Vice President of Jurisdictional Partnerships; Santiago Garcia, Indigenous Peoples and Local Communities Relationships Manager; and Erica Cunningham, AVP of Latin American Fisheries and Oceans.

Scene from the Latin America and the Caribbean Climate Week 2023 opening ceremony. UNclimatechange via Flickr.

This week leaders and climate stakeholders from throughout Latin America are meeting in Panama to discuss climate action, and the strategies and finance needed to climate-proof the continent. It’s not an easy task in a region facing multiple challenges, from political instability to insecurity to stunted economic growth in many countries.

Climate change is already making life even more challenging for many vulnerable people in Latin American and Caribbean. Communities throughout the region are grappling with sea-level rise and extreme weather events that occur more frequently. The largely man-made destruction of natural resources, like the Amazon rainforest, will intensify the impacts of climate change, and the impact of climate change is creating further pressure in the ecosystems and their degradation. Yet enforcement of conservation efforts alone is not enough for a problem that is economic in nature.

Mitigation and adaptation strategies will look different from country to country in this highly diverse and mega biodiverse continent. However, they all share some common threads: the need for climate finance, capacity building, and technology transfer, among others.

The opportunity for climate action

A successful climate strategy for Latin America will also solve other problems. Efforts to conserve the region’s rich natural ecosystems must happen alongside efforts to safeguard vulnerable communities against climate impacts. At Latin America and the Caribbean Climate Week, the region’s leaders and climate stakeholders will have the opportunity to collaborate and advance discussions on climate policies that address multiple issues for both mitigation and adaptation. Climate financing, both from rich countries and the private sector, will need to be scaled up for solutions to work.

EDF’s delegation at Climate Week will engage and collaborate with the region’s climate leaders from government, civil society, Indigenous and local communities and other stakeholders, on critical topics including clean air, forest conservation, food security, and resilient oceans and coastal communities.

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Also posted in Extreme Weather, Greenhouse Gas Emissions, Indigenous People, International, REDD+, United Nations / Comments are closed