ICC Secretary General John WH Denton AO has called on climate ministers to finally reach a strong and workable settlement to operationalize Article 6 of the Paris climate accord on international carbon markets, before the COP26 discussions next month.

A crucial component of the Paris Agreement, Article 6 has the potential to dramatically increase climate ambition and action, and reduce costs, through increased private sector engagement and finance, technology and expertise to catalyze climate action.

Although countries moved closer to agreement on the majority of the Paris Agreement rules during negotiations in 2018 and 2019, there are no “rules” for Article 6 to date.

In an open letter to climate ministers ahead of the latest round of negotiations, Mr Denton said: “Agreeing on a strong and workable set of rules to operationalize Article 6 of the agreement is, of course, a top priority for the private sector across our network, both for environmental reasons and economic”.

Writing on behalf of the global business community and as Trade Focal Point of the United Nations Framework Convention on Climate Change, Mr. Denton highlights the negative impact of fragmented national carbon pricing regimes on operations and commercial risks, especially those of small businesses. – and highlights the concern that current national climate policies are insufficient to limit the global temperature increase to 1.5 degrees Celsius by 2050. Calling for cooperative approaches to rapidly accelerate the pace of decarbonization of the global economy, Mr. Denton said:

“As you may know, recent independent research has shown that implementing Article 6 has the potential to more than halve the total cost of implementing national climate commitments, a total of $250 billion a year in 2030. from the coronavirus pandemic, we believe this is too big a dividend for any government to leave on the table in Glasgow next month.

Mr Denton also noted the imperative to establish a coherent multilateral approach to carbon pricing which he said, from a real economy perspective, is key to avoiding unintended consequences of unilateral climate policy measures – that could significantly hamper a post-pandemic recovery by triggering climate-related trade frictions.

Formal negotiations on this crucial issue will resume at upcoming sessions in Glasgow in November – originally scheduled for 2020 – where countries will aim for a successful agreement. While the finalization of the Article 6 rules is still pending, governments and other organizations have already committed approximately US$345 million to develop and implement Article 6 pilots in different jurisdictions.

Ahead of the COP 26 negotiations, ICC released a briefing note explaining Article 6 and its importance to global trade, along with a six-point business case.

Read John Denton’s open letter to climate ministers

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