Singapore's role in the long road to sealing a deal on carbon markets at COP26

SINGAPORE – Getting countries to overcome domestic constraints to cut their carbon footprint is a task already fraught with challenges. Convincing nations to cooperate for this purpose is much more difficult.

Since 2018, the almost 200 countries that are party to the Paris Agreement have failed to reach a consensus on how such a cooperative framework for reducing emissions should look.

The climate pact sets out aims such as limiting global heating to well under 2 deg C – preferably 1.5 deg C – above pre-industrial levels to avert harsher climate impact.

Countries have acknowledged since the pact was adopted in 2015 that some degree of cooperation is needed to achieve this. The world has already warmed by about 1.1 deg C since pre-industrial times.

But nations have not been able to find common ground on how this cooperation can be brought about.

So when a deal on this issue was finally struck at COP26, the United Nations climate summit held in the Scottish city of Glasgow earlier this month, the Singapore negotiators instrumental in brokering the deal heaved a sigh of relief.

One of them, Mr Muslim Anshari Rahman, 38, a principal consultant at the National Climate Change Secretariat (NCCS), said he even shed some tears when the gavel came down on the decision that paved the way for the setting up of international carbon markets.

The decision essentially allows countries to trade emissions reductions among themselves and enables private entities to invest in projects and sell the credits.

It also opens up other ways a country can assist others in emissions reductions but without any trading. This could include, for instance, development aid for the setting up of a wind farm in a developing country.

All these mean that countries no longer need to rely solely on what they can do to cut emissions within their borders to meet their climate targets. They can also tap opportunities elsewhere, such as buying carbon credits from emissions reduction projects in other countries, to reduce their carbon footprint.

This outcome was four years in the making.

Guidelines that help translate other aspects of the Paris Agreement from aims to action were agreed on at COP24 in Poland in 2018. The framework governing carbon markets was the sole missing piece of the Paris Rulebook.

The UN agreement operates on consensus, which means that every single party must approve the outcome before it can be passed.

Said Mr Benedict Chia, 45, NCCS director for strategic issues who was involved in the negotiations: “Without Article 6, reaching the Paris temperature goals is going to be a lot more challenging and, ultimately, the world is going to be worse off. Singapore, as a small, low-lying island state, will then face a greater existential challenge.”

Moreover, as Singapore is a small country that lacks space for solar panels and access to other forms of renewable energy, international carbon markets will offer it another route to reduce its emissions, even as it prioritises domestic efforts to do so, he added.

International carbon markets will offer Singapore another route to reduce its emissions, even as it prioritises domestic efforts to do so. ST PHOTO: JASON QUAH

The two negotiators were speaking to The Straits Times last week at The Treasury, where NCCS is located, on Singapore’s role in brokering a deal on Article 6 of the Paris Agreement.

This part of the agreement had outlined in broad strokes the vision of a global trade in emissions reductions centred on carbon markets.

Consensus on how to operationalise this could not be reached at COP24 or at COP25 in Spain. Last year’s conference was postponed to earlier this month, owing to the Covid-19 pandemic.

Ahead of COP26, British president of the conference Alok Sharma invited Singapore’s Minister for Sustainability and the Environment Grace Fu to co-facilitate ministerial consultations on the issue.

Ms Fu said of this role at COP26: “I was told that when I accepted the role of co-facilitating Article 6, there were other ministers who offered their condolences.”

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Crunch time was in Glasgow, but the work on brokering the final deal required months of preparation by the negotiators involved, including those from Britain, Singapore and Norway, which was co-facilitator with Singapore.

They had to hear the concerns of all parties and identify possible solutions that would ensure the deal was palatable to all.

This meant numerous virtual meetings straddling various time zones some five months before COP26 kicked off on Oct 31, an in-person meeting in London in late July, another in Milan in end-September and then long nights – sometimes made easier over food and drink with their counterparts from other countries – during the conference itself.

“Negotiators are very adaptable,” said Mr Anshari of the nights spent in the meeting rooms at the conference venue.

“During some late-night sessions, different types of snacks appear,” he added.

There were chocolate corn chips from Norway and biscuits from Japan. What did Singapore negotiators bring to the table? “7D mangoes,” he said, referring to packets of the dried fruit.

WhatsApp diplomacy was also crucial. Negotiators spanning various ministries and agencies in Singapore, from NCCS to the ministries of Sustainability and the Environment and Trade and Industry, were in multiple chat groups on the messaging platform.

This helped them coordinate effectively with negotiators from other countries, and enabled them to make quick clarifications on positions.

Understanding where each country stood on the various issues was key to helping them craft a text that all parties could agree to.

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This is because while countries have their own national perspectives and “red lines” for various issues, their decision on whether to approve the final document – which Article 6 rules are just part of – often hinges on their evaluation of the entire package deal.

This means that nations may be willing to compromise on some areas if they benefit in others.

In one chat group, members of the Singapore governmental delegation gave one another updates on whatever was going on in the various negotiating rooms, such as on climate financing and transparency reporting.

In another, Singapore stayed updated on the positions put forward by the Alliance of Small Island States – a negotiating bloc of 39 small island and low-lying coastal developing states – that the Republic is part of.

There were also private bilateral discussions and meetings, where other countries shared their views or suggestions on how to improve the text with the Singapore and Norwegian ministerial co-facilitators.

“There are often details shared at these meetings that you don’t hear in the larger discussions,” said Mr Chia, citing how nations would rather keep their cards close to their chest at these international negotiations.

“It all boils down to trust,” Mr Anshari said, and ensuring that Singapore is consistent in what it says in private meetings and larger plenaries.

The Republic has a reputation for being an honest broker, said the two men, who have themselves been asked to co-facilitate technical discussions at past UN meetings.

How international carbon markets work is simple, in theory: A carbon credit generated in one place is used to offset the emissions generated somewhere else.

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But there are political and technical complications. A key one is what constitutes a carbon credit.

At COP26, one sticking point was whether legacy offsets generated under the Kyoto Protocol – the world’s climate pact before Paris – could be considered carbon credits under the new scheme.

Some countries objected to this because there were concerns about the quality of those credits, and how allowing this would prevent new emissions reductions projects from being set up, among others.

Yet, other countries – such as Brazil, China and India, which host many Kyoto-era carbon credit projects – were keen to have some credits carried over to the new scheme.

Mr Chia said there were trade-offs that political office-holders had to consider. He explained: “On the one hand, countries need to provide investment returns to those who have already put money into these projects. On the other hand, there is the concern over environmental integrity. They both move in different directions.”

In the end, countries agreed that credits generated under the Kyoto Protocol can be ported over to the new scheme if these credits had been registered from 2013.

Another sticking point was on whether a levy should be imposed on each trade made under Article 6, with funds going to a pot that will help developing countries cope with climate impacts.

A 2 per cent levy had been imposed under the Kyoto Protocol, with the money going to the UN-administered Adaptation Fund.

Most countries agreed that this should continue under the new scheme, but the point of contention was how broadly it should apply. Developing countries were insistent that it should apply to a broader swathe of trades made under Article 6, whereas developed nations disagreed.

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Countries eventually agreed that a 5 per cent levy will be made mandatory for trades made under some parts of Article 6, but will be voluntary in others.

COP26 helped to lay a framework for international cooperation that can be built upon at subsequent meetings, and Singapore had played an important role in its architecture.

But just like a new block of flats, the furnishings of each unit – equivalent in the framework to the setting up of a registry or accounting system to track the use of credits – still need to be further developed.

Said Mr Chia: “We have a framework, we have a system of doing it, but to actually buy credits and to use them as part of countries’ emissions inventories… There are few more pieces to be put in place.”

Rome, after all, was not built in a day.

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