Saudi Arabia, Australia and Brazil are blocking rules which will govern carbon markets at the Cop25 climate talks, Greens MEP Bas Eickhout told EURACTIV.
“On Article 6, we are going to decide on how the rules is going to be for all those countries attempting to exchange CO2-allowances. You have to avoid double counting, and you must have decent rules. Otherwise, you are really likely to undermine the Paris Agreement,” Eickhout said, talking about the article of the Paris Agreement that covers market mechanisms for cutting carbon.
“And unfortunately, there are several players who would like to do so. Australia, Saudi Arabia, Brazil, they're clearly not fighting for environmental integrity in the rules. And when you don't have that in position, that you can do a lot of harms,” he warned.
Article 6 from the Paris Agreement contains three separate mechanisms for “voluntary cooperation” towards climate goals: two according to markets and a third according to “non-market approaches”.
The text outlines requirements for those participating but leaves the facts – the Article 6 “rulebook” – undecided. That is what has been negotiated in Madrid. Little-known and highly technical so far, Article 6 is turning to become a real “make or break” from the Paris Agreement.
Meanwhile, the financial world is slowing turning its back on non-renewable fuels, with investors and corporations getting vocal at Cop25, calling on governments to boost their climate ambition and set in position low-carbon economy pathways.
In a sign of the times, the long awaited initial public offering (IPO) valuation of Saudi's state-owned oil giant Aramco came in below expectations, also it didn't appeal to international investors: international roadshows were cancelled as was the potential of international listing, and the offering reduced from 5% to 1.5%.
Aramco is listing its shares on Wednesday on the Saudi exchange after completing the biggest IPO on record. But it fails to deliver of the $2 trillion valuation long sought by Crown Prince Mohammed bin Salman.
Aramco priced its IPO at 32 riyals (7.71 euros) per share, the top of its indicative range. The state-owned firm is the world's largest oil producer, pumping 10% from the world's supply, and also the most profitable company with its half-year net gain rising 12% to 42.35 billion euros.
On sleep issues from the gas and oil conversation, Spanish Repsol committed to changing its business model by adopting a target of net-zero CO2 emissions by 2050, moving that highlights an increasing rift between firms that are integrating climate-related financial risks and impacts into their business strategy and those that aren't.
“What this IPO shows would be that the market is increasingly realising that fossil fuels are less and less of the safe bet. That old concept that non-renewable fuels really are a safe investment, that sort of philosophy is fundamentally changing. That's the lesson from this IPO,” Bas Eickhout said.
The Dutch lawmaker said the private sector is evolving however it needs to change much faster. “Climate cannot wait,” he explained.
“This listing continues to be a huge purchase of non-renewable fuels which is not Paris aligned. It shows that regulations are needed,” the MEP added.
Eickhout added that in Madrid the international community can also be carefully looking at what Europe does on sustainable finance.
“On financing, Europe has become really at the forefront of changes. The two decisions it made recently, around the EIB and the taxonomy, shows that Europe is evolving its regulation,” he said, underlining that this will clearly have a significant impact on other countries in the world.
The EU adopted a guide book on sustainable investments on Thursday last week. This represents the very first detailed taxonomy of the items counts as a sustainable activity, or “green” product.
The initiative continues to be described by experts as “a clear signal” that “sustainable investment should become the new mainstream”. While highly technical, it is really an important step forward to shaping investor decision-making and aligning investments with the Paris Agreement.
“This is fundamental since it is giving the very first time ever towards the financial market a clear description of what we mean with sustainability. Sustainable development has been around since 1987 [note: once the Brundtland report was published] but in the financial world, it's never been identified. That's a huge step we're doing,” Eickhout said.
The Dutch lawmaker also underlined the EIB, which is making efforts being the first climate bank, would be the first financial institution to apply the taxonomy.
“Everything is related, Article 6 of the Paris Agreement, the EU taxonomy, the EIB turning into a climate bank. You are able to say we're connecting the dots here,” he said.
