In November, the COP27 climate conference will be held in Egypt. Climate finance will be in focus, as part of which work on the implementation of the new market mechanisms for carbon market under Article 6 of the Paris Agreement is expected to progress. Last year’s conference in Glasgow saw a significant step forward, with an agreement reached on a common framework for these mechanisms. With over 20 years of experience in climate finance and carbon markets based on the Kyoto Protocol, the Nordic countries have an excellent opportunity to lead the way in the practical application of the new mechanisms through pilot projects with partner countries.
To highlight the opportunities offered by the Glasgow agreement and accelerate concrete climate actions through the new market mechanisms, Nefco and Gaia Consulting organised a joint seminar on 12 October in Helsinki. The seminar brought together leading experts in the field and presented examples of various bilateral pilot projects that are already underway.
The speakers first and foremost stressed the importance of reducing one’s own emissions – but this is not sufficient (enough on its own). Cooperation in carbon markets under the Paris Agreement provides the opportunity to support projects in countries where there is significant potential to reduce greenhouse gas emissions. Such cooperation can benefit both participating countries and the private sector.
“In the Nordic countries, we have plenty of climate-friendly products and services that could be used elsewhere in the world to keep the 1.5-degree target alive/ would also be useful elsewhere in getting us towards the 1.5 degree path.,” said Pekka Haavisto, Minister for Foreign Affairs of Finland, in his opening speech.
“Finland continues to support international cooperation to promote robust carbon pricing policies and carbon markets that enhance transformative change, ambition, promote sustainable development and foster private sector participation and innovation. ”Cooperation offers much greater potential for achieving positive results than action by individual nations alone. International cooperation is not just about establishing a buy-sell market for carbon credits, it is also about raising (levels of) ambition, i.e. aiming to reduce emissions beyond baseline requirements. This leads to innovation, knowledge transfer and cost-efficiency.
There is still much work to be done to get all the details in place, such as setting robust rules and establishing common registers. The role of pilot projects in signposting and as demonstration platforms is therefore essential. To kick-start concrete actions, it is important that countries, the private sector and international actors engage in testing different solutions. Cooperation is the key to successful climate action.
“Article 6 is a tool for cooperation – it’s the best way to achieve the goals of the Paris Agreement,” said Dirk Forrister of the International Emissions Trading Association (IETA). “We’ve seen costs halved through collaborative projects, which means we can double ambition at no extra cost. All countries benefit economically from cooperation.”
In addition to Haavisto and Forrister, the seminar featured speakers Hanna-Mari Ahonen from the Perspectives Climate Group, Mischa Classen from the KliK Foundation, Sandra Lindström from the Swedish Energy Agency, Hugh Salway from the Gold Standard Foundation, Tuomo Kalliokoski from the Ministry of Environment, Bernt Nordman from WWF Finland and Kati Kulovesi from the University of Eastern Finland, as well as Trond Moe and Ash Sharma from Nefco and Pasi Rinne from Gaia Consulting.
Watch the video recording of the event.