Negotiators Edge Closer to Deal on Carbon-Trading: COP26 Update

(Bloomberg) -- COP26 talks are now in the final stretch, with negotiators haggling over money, coal, and carbon-trading.

The main issues now are how rich countries will help poor countries withstand the worst effects of climate change; and how robust rules on international carbon-offset trading will be. COP President Alok Sharma had aimed to “consign coal to history,” a goal that looks increasingly out of reach.

As talks run into overtime, a deal gets trickier. Some top officials from smaller countries are leaving already, and others are packing up their delegations. This year the pandemic makes logistics even harder as delegates have to take tests or plan quarantine for their return home. Sharma is pushing for a deal by the end of the day.

Key developments:

Read More: COP Aims to End Coal, But the World Is Still Addicted

Gaps Are Closing in Talks on Carbon Trading (8:45 a.m.)

Envoys moved closer to a deal on launching a global carbon market market, according to a new draft. 

The document outlines solutions to some of the biggest sticking points, including the accounting rules. Here, negotiators backed provisions endorsed by Brazil, Japan and the U.S., which environmental activists say creates the risk of lax accounting -- or greenwashing.

Negotiators kept a rule that 5% of revenues from offset trading under the new UN-supervised program would have to be channeled to developing countries to help them adapt to climate change. And to ensure that the market accelerates pollution cuts, 2% of newly issued offsets would have to be canceled.

There’s also a draft compromise on the use of old Kyoto Protocol-era offsets. The unused so-called Certified Emission Reductions would only be authorized for use to meet nations’ first climate plans under the Paris Agreement. To qualify, the offsets would have to come from projects registered no earlier than 2013.

New Steps on Carbon Trading (8:10 a.m.)

Negotiators are making progress on creating rules for international carbon markets. A new draft proposal published on Saturday moves ahead on the thorny issue of how to use cash generated from bilateral emission trades. 

Instead of channeling a fixed share of revenues to developing countries, a demand voiced by African nations and other developing countries, now they are “strongly encouraged to commit” to contributing funding for adaptation, particularly through the Adaptation Fund.

EU, Italy Seek Band-aid on Finance (9 p.m.)

The European Union and Italy are rushing to draft a last-minute climate finance proposal that would help rich countries make good on failed funding promises -- and perhaps rescue COP26 negotiations.

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