Date 15th November 2021

COP26: GLASGOW CLIMATE SUMMIT BRIEF SUMMARY

In approving the Glasgow Package, world leaders have formally approved rules for implementing
Article 6 of the Paris Climate Agreement.

The decisions made at the COP26, provide the tools needed for a robust, transparent and
accountable carbon market, allowing governments to trade emissions reductions to provide
flexibility in how they meet their national climate goals.

“Article 6 covers the ways countries can work together to generate deeper emission reductions
and produce more ambitious national climate action plans, called “Nationally Determined
Contributions” (NDCs) to the Paris Agreement. It includes cross-border compliance carbon
markets, described as “ITMOs” (Internationally-Transferred Mitigation Outcomes).”

The decision eliminates double counting for compliance markets and establishes a strong
framework to ensure appropriate accounting for voluntary carbon markets that also supports
emissions reductions in countries hosting carbon market activities.

Corresponding Adjustments
✓ The final Article 6 rules allow a country hosting an emissions reduction project to decide if the
reductions will be counted towards its own target or sold elsewhere for other purposes, and
the country must notify a UN supervisory board accordingly.
✓ Article 6.2 covers rules for bilateral and multilateral transfers between countries.
✓ The Article 6.4 text states that voluntary emissions reductions may only be used towards a country's
Nationally Determined Contribution if they are authorized by the UN, and the host country must apply
a corresponding adjustment for any units sold abroad. This measure avoids one emissions
reduction being counted by two countries.
✓ The guidance for Article 6 sets up a new structure for carbon markets to work in the service of the
Paris Agreement goals. New registrations and issuances post 2020 shall be allowed only under the
new mechanism.
✓ The decisions provide clear accounting guidance for emissions trades between countries and launch
a new crediting mechanism that will give market access to all countries interested in attracting green
investment through the global carbon market.
CDM Carryover1
✓ The final text states that only CDM credits registered after 1st Jan 2013 may be used for
national targets under the Paris system.
✓ "The carryover of credits left over from the Clean Development Mechanism is restricted to
some 120 million mt and their use is restricted to the first cycle of national commitments.
✓ CORSIA-eligible carbon credit (CEC) prices have increased by 944% this year and were
assessed at $8.35/mt CO2e at the close 12th Nov 2021, according to S&P Global Platts
assessments, compared with 80 cents/mt when the assessment was launched on 4th Jan
2021.
✓ Meanwhile, nature-based credit (CNC) prices have increased by 181% this year and were
pegged at $13.05/mt CO2e at the close 12th Nov 2021, according to Platts assessments,
compared with $4.65/mt when they were launched on 14th June 2021.

Share of Proceeds2
✓ The final Article 6 text also included agreement on the so-called Share of Proceeds -- a fixed tariff on
emissions trading that aims to generate funding for climate adaptation in developing countries.
✓ Negotiators agreed this will be set at 5% of all emissions reductions created under Article 6.4 of
the Paris Agreement, levied at the point of issuance. In the current CDM phase it is at 2%.
✓ Instead, countries using Article 6.2 are encouraged to contribute to the Adaptation Fund, thus for
voluntary mechanisms SOP deduction is not mandatory.
✓ In the lead-up to COP26, carbon markets surged in many jurisdictions, as businesses contemplated
the enhanced ambitions of many countries," IETA said.
✓ This included growth in every carbon market in 2021, with a near doubling of voluntary market
transactions and the launch of China's national ETS. Markets in Europe, California, Quebec, New
Zealand, Australia and RGGI have seen record prices in the past month.

✓ Countries need to accelerate the phase-out of coal, curb deforestation, speed up the switch
to greener economies and to secure global net zero3.

1
https://www.spglobal.com/platts/en/market-insights/latest-news/energy-transition/111421-cop26-nations-strike-deal-on-
international-carbon-markets-at-glasgow-summit
2
Refer footnote 1
3
https://news.un.org/en/story/2021/10/1104142
SHARING - THE COP 26 FEW KEY POINTS:

1. COP 26 health program - Countries committing to sustainable and climate resilient health
system

The commitment was made part of CoP26 Health Programme, which is supported by the UK
government as the Presidency of COP26, WHO, Health Care Without Harm (HCWH) and the
UNFCCC Climate Champions. The programme comprises 47 countries — including
Bangladesh, Bhutan, Pakistan and Sri Lanka. At least 42 have also committed to transform
their health systems to make them more sustainable and low-carbon; 12 said they will reach
Net Zero carbon emissions on or before 20504.

2. 2022 Plan for Zero Emissions Vehicle (ZEV)

A rapid global transition to zero emission vehicles (ZEV) is vital to meet the goals of the Paris
Agreement. Road transport accounts for over 10% of global greenhouse gas emissions, and
the total emissions are rising faster than any other sector. We need to dramatically increase
the pace of the global transition to meet our Paris Agreement goals, and to keep the limit of
1.5 degrees warming in reach. This will also offer huge opportunities for jobs and growth,
cleaner air, improved public health, and could furthermore boost energy security and help
balance electricity grids as we make the transition to clean power5.

3. International aviation climate ambition coalition

Acknowledging that the International Civil Aviation Organization (ICAO) is the appropriate
forum in which to address emissions from international aviation through in-sector and out-of-
sector measures to implement short-, medium- and long-term goals, including the
development of a global sustainability framework to support the deployment of sustainable
aviation fuel (SAF) and the Carbon Offsetting and Reduction Scheme for International Aviation
(CORSIA)6

4
https://www.downtoearth.org.in/news/climate-change/cop26-47-countries-commit-to-make-climate-resilient-health-systems-80112
5
https://ukcop26.org/zero-emission-vehicles-transition-council-2022-action-plan/
6
https://ukcop26.org/cop-26-declaration-international-aviation-climate-ambition-coalition/
4. Transition to 100% zero emissions cars and vans
At COP26 in Glasgow, 23 country governments; 10 governments in emerging markets and
developing economies; 40 cities, states and regional governments; 11 automakers; 27 fleet
owners and operators or shared mobility platforms; 13 investors with significant shareholdings
in automotive manufacturers; 2 financial instituions; and 17 other organizations signed a
declaration committing to working together towards all sales of new cars and vans being zero
emissions globally by 2040, and by no later than 2035 in leading markets7.

5. Green shipping corridor - Zero emissions maritime routes between ports

A coalition of 19 countries including Britain and the United States on Wednesday agreed to
create zero emissions shipping trade routes between ports to speed up the de-carbonisation
of the global maritime industry. The signatory countries involved in the ‘Clydebank
Declaration’, which was launched at the COP26 climate summit in Glasgow, agreed to support
the establishment of at least six green corridors by 2050. Other signatory countries are
Australia, Belgium, Canada, Chile, Costa Rica, Denmark, Fiji, Finland, France, Germany,
Republic of Ireland, Japan, Marshall Islands, Netherlands, New Zealand, Norway and
Sweden8.

6. 4 new mission - Urban Transition Mission, CDR Mission, Net Zero industries mission and Bio
refineries Mission
The new Missions will build upon the existing three announced in June earlier this year, on
power systems, hydrogen and shipping. Announced by Ministers from the US, India, Saudi
Arabia, Canada, Australia, Austria, the Netherlands and European Commissions, they will aim
to facilitate urban transitions, eliminate emissions from industry, enable carbon dioxide (CO2)
removal, and produce renewable fuels, chemicals, and materials9.

7. Annual global check point progress in 2022- Check points to review progress and
commitments by respective countries

7
https://www.greencarcongress.com/2021/11/20211111-cop26zevs.html
8
https://timesofindia.indiatimes.com/world/europe/countries-at-cop26-launch-plan-for-net-zero-shipping-
lanes/articleshow/87631345.cms
9
https://www.gasworld.com/cop26-witnesses-four-ground-breaking-missions-to-accelerate-decarbonisation/2022144.article
 The Breakthrough Agenda launched at the World Leaders Summit commits countries to work
together to make clean technologies and sustainable solutions the most affordable, accessible
and attractive option in each emitting sector globally before 203010.

8. The Global action agenda for innovation in agriculture - Increased in agricultural research
and innovation investment, demand driven solution, showcase successful business model
etc
The Global Action Agenda on Transforming Agricultural Innovation is the outcome of
the Transforming Agriculture Innovation Systems for People, Nature and
Climate. The Global Action Agenda has secured more than 160 allies as diverse as the
World Bank, WWF, World Food Programme, UN Foundation, Columbia Climate School,
Bayer, Rainforest Alliance, World Economic Forum, Asian Development Bank, European
Bank for Reconstruction and Development, CDC Group, Rabobank and the Environmental
Defence Fund. It is supported by Indonesia, Madagascar, Morocco, Nigeria, Guinea,
Lesotho, Vietnam and the UK and relevant government ministries or national agriculture
research institutes of Australia, Uganda, Laos, India, Philippines, Ethiopia, Ghana, Tanzania
and Malaysia11.

9. Coal to clean power transition - Reduction in use of carbon emitting power sources
UK COP26 Climate Presidency announced Global Coal to Clean Power Transition Statement. It is a
major political non-binding statement where countries are invited to make their commitments on how
to phase out coal-based energy use both at home and abroad and promote clean energy use12.

10. One sun one world one grid - Green grid initiative to meet the need of power demand across
the globe
Speaking at the session on ‘Accelerating Clean Technology Innovation and Deployment’ at
COP26 in Glasgow, the Indian Prime Minister said the creative initiative of ‘One Sun One
World One Grid’ will not only reduce the carbon footprint and cost of energy, but also open a
new avenue of cooperation between different regions and countries. PM Modi and his UK
counterpart Boris Johnson today launched the high-level coalition for clean energy, the Green

10
https://ukcop26.org/breakthrough-agenda-launching-an-annual-global-checkpoint-process-in-2022/
11
https://ukcop26.org/the-global-action-agenda-for-innovation-in-agriculture/
12
https://www.thedailystar.net/business/economy/news/coal-clean-power-transition-how-countries-responded-cop26-2224556
 Grids Initiative-One Sun One World One Grid that aims to generate a solar grid connecting
countries in different parts of the world13.

11. Global forest finance pledge - financing protection and sustainable management of forests
In Glasgow at COP26, an announcement was made by the body to collectively provide US$12
billion for forest-related climate finance between 2021-2025. This will incentivise results and
support action in Official Development Assistance (ODA) eligible forest countries where
increased ambition and concrete steps are shown towards ending deforestation by no later
than 203014.

12. GCC/GES added as new mechanisms

GCC and GEC were introduced as new mechanisms.
GCC - https://www.globalcarboncouncil.com/about-gcc/global-carbon-council/
GEC - https://gecorganics.com/carbon-credits

13. Several world leaders sign the ’Glasgow Leaders Declaration on Forest and Land Use’, agreeing a
deal to ‘end deforestation’.
14. There is a new International Sustainability Standards Board (ISSB) created by IFRS Foundation,
which will develop a comprehensive global baseline for sustainability disclosures.
15. 110 countries, representing 85% of the world's forests, have committed to stopping and reversing
deforestation by 2030.
16. 12 countries including Britain have pledged to provide 8.75 billion pounds ($12 billion) between 2021
and 2025 to help developing countries.
17. 5.3 billion pounds would be provided by 30+ private sector investors. Also, the investors pledged to
stop investing in activities linked to deforestation by 2025.
18. Five countries, including the Britain and United States, and a group pledged to provide $1.7 billion in
financing to support indigenous people's conservation of forests.
19. Parties underlined the importance of agreement on common timeframes for NDCs and robust
transparency rules for reporting.
20. Over 100 countries signed ’Global Methane Pledge representing 70% of the global economy.

13
https://www.tribuneindia.com/news/nation/cop26-pm-modi-bats-for-one-sun-one-world-one-grid-as-solution-to-fossil-fuel-crisis-
333403
14
https://ukcop26.org/the-global-forest-finance-pledge/
21. The International Energy Agency (IEA) revealed that pledges made during the event could see
warming limited to 1.8°C above pre-industrial levels by 2100.

GLASGOW COP26 CLIMATE SUMMIT: INDIA’s Pledge

22. By 2030, non-fossil energy will be 500GW.

23. By 2030, 50% of the energy requirement by renewable sources.
24. By 2030, 1 billion Ton reduction of carbon footprint.
25. By 2030, carbon intensity of GDP will be less than 45%.
26. By 2070, India will be net zero in emissions.
27. India sign up to a ‘Sustainable Agriculture Policy Action Agenda’ for the ‘Transition to Sustainable
Agriculture and Global Action Agenda for Innovation in Agriculture' in COP26.

THE WORLD IN GLASGOW COP26 CLIMATE SUMMIT:

28. US, UK, Japan, and European Union went for a net zero goal by 2050.
29. China, Saudi Arabia and Russia have set targets of 2060 for net zero.
30. 40+ countries pledged for phasing out coal power by 2040, excluding sign ups from the US, China,
India & Australia.
31. The UK is launching an international plan to deliver clean and affordable technology globally by 2030,
backed up by over 40 world leaders (US, India, the EU and China).
32. The EU and US launched the Global Methane Pledge, an initiative to cut methane emission levels
by 30% by 2030.
33. Switzerland emphasized for clear rules on corresponding adjustments for environmental integrity. On
corresponding adjustments, IETA anticipate that the COP will decide on a transitional implementation
over a period of some years.
34. In favour of LDCs Bhutan said, “We are still hearing arguments against a Share of Proceeds for the
Adaptation Fund, which threatens the balance between adaptation and mitigation.”

GLASGOW COP26 CLIMATE SUMMIT: FUNDS

35. A new $8.5bn partnership between the US, the UK, Germany and the EU to help South Africa finance
a faster transition from coal.
36. African countries committed to establishing a green economy by spending at least $6bn from their
tax revenues.
37. UK Chancellor Rishi Sunak announced that the UK will be the first ever net zero aligned financial
Centre.
38. The Glasgow Financial Alliance for Net Zero (GFANZ) has grown to 450 firm participants with over
$130 trillion in assets. It will be co-chaired by Mark Carney, UN Special Envoy on Finance, and
Michael Bloomberg.

--------------

As we understand, the Immediate Implications for the Carbon Mechanisms/projects are

as follows;

• A new mechanism under Article 6.4 to be implemented on similar lines of CDM. The
ongoing projects under provisional approval in CDM, shall be part of the new mechanism
• Similarly new registrations/issuances post 2020 shall be under the new mechanisms.
• Current CDM projects to be transitioned to the new mechanism
• CERs can be used to fulfill NDCs, thus has the potential to see huge demands in future
as trading of credits will be allowed globally and not only for Annex 1 or Developed
countries.
• Host country approvals are must for all projects either in new mechanism or any of the
voluntary mechanism.
• Corresponding Adjustments to be applicable on all voluntary projects
(VCS/GS/GCC/GEC/GES etc.) if the credits are to be accounted in the NDCs of the
countries.
• In case a company wants to be carbon neutral on a voluntary basis: Corresponding
Adjustments may not be required.
• CORSIA Credits: Corresponding Adjustments might be applicable in future date.
• Timeline for establishing the new mechanism: Not any particular deadline
• Bilateral Agreements: Allowed as part of Article 6.2
• Upcoming and under implementation projects can be registered in the new mechanism.
• Prior notification to CDM board is encouraged for all new projects.
• CDM verification for all CP 2 CERs is encouraged at the earliest, as there would be a
cutoff date for use of this credits
• RCP for projects need to be strictly adhere to the timelines.
 Let us know in case any further queries or clarifications; the contact details are as follows;

Validation/Verification,
Trading Related Queries For Partnerships on long Validation/Verification, RCP,
RCP, Prior
and Global Business term project basis and Prior Consideration for Projects
Consideration or Indian
development other opportunities located other than Asia
Projects.

Jimmy Sah D.K. Balian Sumeet Singhvi George Potter

Chief Operating Officer Global Head – Trading Chief Executive Officer Head of Sales

[email protected] [email protected] [email protected] [email protected]

+91 9644130430 +44 7825094785 +91 9004748222 +44 (0)7493 328660