Digest of the June Bonn Talks

After two weeks of discussions, parties’ negotiators have adopted draft texts that were awaited with high expectations. What did we get out of SB60 at Bonn this year?

Draft negotiating text or wish list? 

The texts provide an overwhelming view of all options on the table, and in that they resemble rather wish lists from negotiators than outcomes of two weeks of negotiations in “constructive spirit” as many attested.

Zooming in, however, it appears that the flurry of options indeed reflects a deep political divide between the camps for centralisation and regulation at the one hand side, and the other in favour for a decentralised and autonomous governance set up. Being selective in considering the option brackets one can almost read two completely different texts: one emphasizing integrity, review and accountability, while the other focuses action over ambition. 

While the room struggled to strike a balance, the African Group might receive a key role going forward. With the current sourcing experience many of these countries understand the importance of national arrangements, and are yet aware of the need for a solid mechanism with centralised support, where needed (e.g., the international registry). This group appears well placed to balance views and options with their grounding in real world regulatory practice. In the end, CMA 6 will require political engagement and even more political decisions.  

“Party” or “Parties”?

Unilateral transactions under Article 6 still look into uncertain future. While some understand unilateral authorisations as the basis to OIMP use under CORSIA or the VCM, those in favour of more control and centralisation would like to see the units to land and be recorded in another Party’s registry. Such architecture, however, would push the corresponding adjustment, triggered by the first transfer, to the time of the use of the ITMO in the acquiring Party’s registry. This creates a too long a gap to be palatable for commercial considerations, specifically in secondary markets. It also goes against the flexibility of CMA.3 decision that locates first transfer, as determined by the Party, at the authorization, the issuance or the use / cancellation of mitigation outcome.

While options presented in the text do not restrict cooperative approaches to Parties, one option requires linkage to a Party’s NDC, thus limiting the authorisation options. Furthermore, some text uses the wording “Parties”, with the plural form implying bilateral transactions and excluding unilateral actions. A concerned host country, however, could reduce the commercial risk by introducing its national reconciliation procedure and a respective OIMP buffer. 

Besides issuance of unilateral authorisation letters, several Parties have been issuing authorisations at the activity level, before verification and authorisation of ITMOs. Over-regulating the nature of authorisation and cooperative approaches in the CMA language might go against the practices of the forerunner parties and cause frictions.

Pushback on REDD+ 

The decision to continue consideration of the emission avoidance matter in 2028, is a strong pushback on REDD+, noting that in absence of further guidance it is not included in the A6.2 guidance and A6.4 RMPs. Although this move addresses the fear of credits flooding from Article 5.2 to Article 6, it does not resolve the elephant in the room, i.e., addressing the perceived issue of permanence and leakage with nature-based solutions.