
![](/blog/article-6/article-6.jpg 'Photo credits: UNFCCC')

COP26 ended on Saturday, a day after its official close with a last-minute scramble to get a deal over the line. After a hectic two weeks, with pledges and commitments from every country and sector being announced, we narrow in on Article 6.

What is it, what happened at COP, what has been agreed and what does it mean for the carbon market and your business? Read on to find out...

### **6 years in the making**

After 6 years of discussion, **200 countries have finally agreed on the Paris Agreement Article 6 framework which was set to operationalize the functioning of international and voluntary carbon markets**.

The framework under Article 6 will be comprised of two main parts: a centralised system open to the public and private sectors (Article 6.4), and a separate bilateral system that will allow countries to trade credits that they can use to help meet their decarbonisation targets (Article 6.2).

### **Double counting**

As governments and companies seek to reach net zero, double counting has emerged as a key issue in the operationalisation of international and voluntary carbon markets - particularly across the "government CO2 market" and "voluntary carbon market".

Coming out of COP26, governments have agreed on measures to ensure that emissions reductions involving trading credits under Article 6 are not counted twice. In order to prevent this, when one country purchases credit from another country, the seller would need to make a corresponding adjustment to its emissions inventory to reflect that its mitigation activity has been internally transferred to the buyer country, and that claim can count towards its climate pledges or Nationally Determined Contributions (NDCs). Switzerland is an example of a country which has been active in CO2 bilateral pilots with developing countries ahead of the Article 6 finalisation. For example, in a recent Swiss-Peru deal, Switzerland purchased carbon credits (or also referred to as Internationally Transferred Mitigation Outcomes (ITMOs)) from Peru and added them to its inventory whilst Peru correspondingly adjusted those credits from its national inventory. Going forward, any bilateral or multilateral agreements between two countries will  be governed under Article 6.2 and subject to corresponding adjustments.

![](/blog/article-6/ITMO.jpg 'Source: Ecosystem Marketplace')

When it comes to the voluntary carbon markets, a private company is buying offsets to create a product that it can market as “climate neutral” voluntarily rather than to meet any legal requirement. It is the buying of offsets from a private company in one country to create a climate-neutral product that will be sold in another country. Crucially, however, the emission reductions will be credited to the GHG inventory of the country where the reductions take place. The corporate here is, in a sense helping another country reduce its GHG emissions and it should communicate that is contributing to the country's mitigation initiatives. In the absence of a corresponding adjustment, it can not claim this project as an offsetting project for its climate-neutral product and services under Article 6.4.

### **Zombie credits**

One of the major concerns going into COP was the transfer of millions of old 'zombie' credits to be allowed into the new system under Article 6.4. Many of these credits, created out of the Kyoto Protocol are considered to be poor quality with dubious claims to actually having any real and verified climate impact.

Negotiators had to strike a compromise with old credit heavy countries of Brazil, India, and China to transfer pre-2013 Clean Development Mechanism (CDM) credits developed under the Kyoto Protocol, into a new international market which is estimated as an estimated 300 million credits (according to industry watchdog Carbon Market watch). **Countries and corporates will be able to use any credits in the new market to claim against their own national climate pledges to cut emissions**.

Following the agreement however, a group of nations, including European countries, has vowed to take a stronger line on carbon credits than those agreed at the Glasgow COP26 UN climate talks, pledging not to use pre-2020 CDM credits and to apply corresponding adjustments to voluntary market units. These nations have committed to the San Jose Principles, suggesting that pre-2020 CDM credits do not deliver the clarity, robustness, and integrity needed to guide international market-based approaches towards the goals of the Paris Agreement.

This shows a positive trend which many more countries are likely to follow which goes above and beyond what was agreed at Glasgow.

### ** Paying for it**

As part of the Glasgow COP26 negotiations, developing countries have been focused on ensuring the costs of their mitigation activities could be covered by resources coming from the developed markets.

**The new rules for Article 6.4 will introduce a 5% transaction fee on traded credits which will be used to finance the 'Adaptation Fund' to help developing countries adapt to climate change and also pay for the administrative expenses of running the market**.

Another 2% of the credits will automatically be cancelled in order to facilitate an overall reduction in emissions, rather than the units simply balancing out emissions. Neither this mandatory cancellation, nor the mandatory 5 per cent levy, will apply to credits in the bilateral system under Article 6.2. Instead, countries doing bilateral or multilateral trades will be 'strongly encouraged to contribute resources' whether through financing the Adaption Fund or voluntarily retiring credits.

### ** Over but not out**

The first step in agreeing on a functioning international carbon market has been established. Rejoice! However, this market, national carbon accounting and inventory frameworks still need to be established and there are no clear ideas about how this will be done and what standards of reporting it would adhere to...yet.

This is a complex issue that not all companies, certifiers and carbon credit brokers understand. There is a danger it could lead to false offsets or carbon neutrality claims that do nothing to help combat climate change and create a real impact on our atmosphere. Companies will have to pay special attention to this when deciding which offsets to purchase and the claims they are then able to make.

**Abatable helps you navigate the complexities of voluntary carbon markets and achieve credible net-zero goals**. If you need help demystifying this space or have some questions you would like to ask us then feel free to get in touch at [hello@abatable.com](mailto:hello@abatable.com).

Until next time.


What is it, what happened at COP, what has been agreed and what does it mean for the carbon market and your business? Read on to find out...

Post-COP26: What is Article 6 and how does it affect you?


![](/blog/announcing-our-3m-seed-round/team.jpg 'Abatable team: Valerio (Left), Maria (Center), and Eduard (Right)')

We are excited to announce that we have raised $3 million from [Global Founders Capital](https://www.globalfounderscapital.com/), [Blue Bear Capital](https://bluebearcap.com/), [Keiki Capital](https://www.keikicapital.com/), [AlumniVentures](https://www.avgfunds.com/) and a number of incredible angel investors to supercharge the next phase of growth for Abatable after spending the summer in great company with the S21 batch of [YCombinator](http://ycombinator.com).

Thanks to the support of our investors, we are in a perfect position to deliver on our mission to help connect companies with high quality carbon projects. The funding will allow us to continue building our platform, expand our team across functions, reach and partner with more carbon project developers and onboard an increasing number of companies with net zero goals.

## Our journey so far

We started Abatable to help companies offset their hard-to-abate emissions to achieve their science-based targets for net zero, while supporting the development of new offsetting projects through solutions for carbon project developers (we actually wrote a [full post on why we started Abatable](https://www.abatable.com/blog/why-we-started-abatable)).

We have since met with corporates who want to be part of the solution to climate change but don't have the tools and resources to understand how they can be most effective and best aligned with scientific guidance. We have met with project developers who need better access to project financing and long-term carbon procurement commitments to scale their pipeline of projects to cope with fast-growing demand for carbon credits. We have met with investors who are keen to dedicate capital to solving climate change but lack the know-how to evaluate potential investment opportunities and how to mitigate some of the risks.

Our platform plays a central role between corporates, project developers and investors. It allows project developers to secure reliable long-term financing to confidently start new projects and grow existing ones. It allows investors to channel their funds into credible projects. It allows companies to run a smooth carbon procurement process with a focus on high quality carbon offsets that meet their impact goals and constraints.

## What comes next

As COP26 unfolds, we see an increasing number of net zero commitments announced which will continue growing the demand for carbon offsets exponentially, and we are already seeing the effect of increasing carbon prices. High quality, science-aligned carbon offsets are scarce in supply and more needs to be done to effectively channel capital into new project development.

Our funding round allows us to continue building our platform, specifically focussing on the long-term carbon procurement needs of our customers. As carbon prices continue to increase and the supply of carbon credits remains constrained, more companies will be looking ahead several years like [Microsoft](https://blogs.microsoft.com/blog/2021/01/28/one-year-later-the-path-to-carbon-negative-a-progress-report-on-our-climate-moonshot/) and [Stripe](https://stripe.com/blog/first-negative-emissions-purchases) have already done.

We will also be expanding our team to support our next phase of growth. We have already welcomed two new hires, with two more joining us in the coming months, but still have a few roles open for candidates ([shameless hiring plug](https://www.notion.so/Careers-at-Abatable-ccbf068202b34284b7e893590ebdb8ca)).

---

We are excited to embark on the next phase of growth for Abatable and we want to thank our investors and early customers for their vote of confidence in us. If you're interested in partnering or working with us, drop us a line at [hello@abatable.com](mailto:hello@abatable.com).


Were excited to announce that we have raised $3 million from Global Founders Capital, Blue Bear Capital, Keiki Capital, AlumniVentures and a number of incredible angel investors to supercharge the next phase of growth for Abatable...

Announcing our $3M Seed Round


![](/blog/all-you-need-to-know-from-cop26-week-1/ukcop26.jpeg 'Photo credits: UNFCCC')

Hello! Welcome to Week 2 of COP26 where negotiations are getting serious and all is to play for before the close of the conference on Friday. With so much still to discuss around Article 6 after stalling of talks on Saturday, will ministers get the job done or will we be left in the lurch? Read on to hear a summary of key events so far and what to look out for this week.

Who are you in the room...optimist or skeptic?

### **For the optimists in the room...**

- **Net Zero Pledges:** A new IEA report suggests that the world is on now track to limit warming to 1.8C this century as a result of updated national pledges and joint commitments made in and around COP26's climate summit. Despite a renewed level of optimism, India committed to net zero by 2070 with China, Nigeria and Russia aiming for 2060, ten to twenty years later than what is needed to reach net zero to stay within the 1.5C Paris Agreement climate change goal post. Global net-zero pledges from countries now [cover](https://email.mg2.substack.com/c/eJwlkEtuwzAMRE8TLQ39LS-06KbXMPShE6G25Eh0Cvf0VWKAIAEOhoPH4BDupZ52Lw3Ju8147mAz_LYVEKGSo0GdU7SKToYZw0m0MjKjDEltXirA5tJqsR5A9sOvKThMJb8dQnIhycMKrxenRkoX4bnScQnTQjWfhDQiBC2vXHfEBDmAhRfUs2Qgq30g7u0mvm78u9cf1ILVhR-oQwYkyXLKGWPUMKYmRQc-eMnVZGDpyWFkUQ8usCeqg98k3e58aIdv2C8MoWykWkxbF5x36PwKn2VnmPvcjpzwnCG_hXjh4fWlD_B8hwy1fy_ODi3TQouRj5NQkl04nV-KkY1MM9JTY-mubMOatm5CCI9X-AeCAX-9) 88% of emissions.
- **Deforestation**: COP26's first major deal was signed which saw 100 countries committing to reverse or end deforestation by 2030, with $19.2bn of public and private funds dedicated for the goal. Countries who have signed the pledge - including Canada, Brazil, Russia, China, Indonesia, the Democratic Republic of the Congo, the US and the UK [(the full list is here)](https://ukcop26.org/glasgow-leaders-declaration-on-forests-and-land-use/) - cover around 85% of the world's forests. This goes beyond the 2014 New York declaration with $1bn for indigenous communities.
- **Methane:** World leaders have signed up to the Global Methane Pledge to cut global methane emissions by 30% by 2030 (compared to 2020 levels). The Pledge is an initiative led by the US and the EU and more than 100 countries have now committed. Methane is a greenhouse gas that has a climate change impact many times stronger than CO₂ (over 80 times more powerful than carbon dioxide as a warming gas over a twenty-year timeframe) and reduction of methane emissions are widely regarded as the most effective strategy to keep the 1.5C climate goal within reach. More than half of global methane emissions arise from human activities and 95% of these emissions come from three sectors: agriculture, fossil fuels and waste. Success will rely on sharp actions tackling major sources of methane with a focus on ending routine gas flaring at oil production sites, recovery and use of escaping gas, and reducing leaks from long-distance pipelines. The European Bank for Reconstruction and Development, the European Investment Bank, and the Green Climate Fund have committed to support the Pledge through both technical assistance and project finance.
- **Agriculture + Land Use:** An initiative led by the UK government saw 45 governments pledge urgent action and investment to protect nature and shift to more sustainable ways of farming. 95 high profile companies from a range of sectors commit to being ‘Nature Positive’, agreeing to work towards halting and reversing the decline of nature by 2030. The UK is aiming to engage 75% of farmers in low carbon practices by 2030.

### **For the skeptics in the room...**

- **Coal:** More than 40 countries agreed to phase out coal-fired power plants. Canada, South Korea, Ukraine, Indonesia and Vietnam said they would quit this dirtiest form of fossil fuels between 2030 and 2040. The timeline for delivery here is vague and US, China and India were all missing from these non-binding commitments. Coal-fired power currently produces around [37%](https://www.iea.org/reports/key-world-energy-statistics-2021/transformation#electricity-generation) of the world's electricity and it is still one of the cheapest sources of energy for developing countries. A transition away from coal in the next 19-29 years to reach net-zero would require vast financing.
- **Article 6:** Final negotiation text was due on Saturday. But trying to find a middle ground between the ambitious EU, finance and adaptation demanding Africa and trading hungry rich nations still remains a challenge. Although ministers were involved earlier in July and August to discuss Article 6, it still looks likely talks will be extended beyond the close of COP 26 to next week. Drafts of negotiating documents have still technical points outstanding around articles 6.2, which covers internationally-transferred mitigation outcomes (ITMOs), article 6.4, which covers the creation of a centralised hub, and article 6.8, which covers non-market mechanisms. The main areas of disagreement which will be discussed further this week are the role of corresponding adjustments under both Articles 6.2 and 6.4, the fate of old Kyoto offsets under Article 6.4, and the shares of proceeds from a centralised market developed under Article 6.4, as well as the governance structure for that entity.
- **Carney’s Voluntary Carbon Markets Taskforce:** An event to promote carbon offsetting at COP26 was hit by multiple protests. Greenpeace International Executive Director Jennifer Morgan stood holding placards reading: 'Your Taskforce Is A Scam' whilst Greta Thunberg walked out of the event saying "This is greenwashing". Greta later tweeted "This Taskforce, and other schemes like it, are scams that could trash the goal of limiting global temperature rise to 1.5°C.” The stance against offsets was to be expected from environmental activists, but the seniority and reach of Morgan and Thunberg should not be underestimated. To what extent this may influence corporate demand is still to be seen as prices and volumes of voluntary credits continue to soar.

### **What's happening this week?**

Focussed on adaptation, the second week of negotiations will focus on some of the hardest elements, including issues around:

- Regulations on how countries measure and report on their emissions and climate actions
- Whether, and how, carbon trading can play a role in how countries meet their commitments, under Article 6 of the Paris agreement
- How countries can be helped to adapt to the impacts of the climate crisis, and how they can receive financial help for any impacts too great to be adapted to – known as loss and damage
- Common timeframes for emission reduction commitments, how to enable enhanced adaptation action and averting, minimising and addressing loss and damage
- Rules for the transparent reporting of action and support
- Means of implementation, including the initiation of deliberations on a new goal for global climate finance after 2025
- Responding to the latest science and the ambition of current emission reduction targets

Who will win, the optimist or the skeptic? Stay tuned for more updates at the end of this week as we review the highs and lows from COP26, Article 6 updates and where this leaves us moving forward.


Hello! Welcome to Week 2 of COP26 where negotiations are getting serious and all is to play for before the close of the conference on Friday. With so much still to discuss around Article 6 after stalling of talks on Saturday, will ministers...

All you need to know from COP26 Week 1


![](/blog/five-themes-to-watch-out-for-in-cop-26/header.jpg 'Photo credits: UNFCCC')

The **_COP 26_** **UN Climate Change Conference, hosted in Glasgow starts today.** The conference will see nearly 200 countries discussing urgent actions needed to cut CO2 emissions in alignment with Paris Agreement. According to the latest [scientific guidance](https://www.ipcc.ch/sr15/chapter/spm/), emissions will need to be reduced by 45% by 2030, compared with 2010 levels, and from there to net zero emissions by 2050, if the world is to have a likely chance of avoiding dangerous climate change consequences.

Our take on the key five themes to watch out for during the next two weeks:

- **Key regulatory points around Paris Agreement Article 6 and the future of carbon markets:** To meet the Paris Agreement goals set during COP21, countries will have to cooperate across borders and private investments. Article 6 stands for the implementation of reliable international carbon markets and its operationalization is one of the main gaps in the Paris Agreement rulebook. While Parties have made progress in the various negotiation rounds, several issues remain to be finalized. Primarily, the notion of ‘corresponding adjustments’ that are to be made to prevent double-counting in carbon markets accounting systems, and how the Clean Development Mechanism (CDM) will be treated within Article 6. Finalizing this could stimulate the transfer of emissions reductions amongst countries and will facilitate nations to achieve their Nationally Determined Contributions (NDCs) by driving down the costs for climate action.
- **Private sector's guidance on voluntary carbon markets and pricing:** The growth of the voluntary carbon market is a consequence of the need for the private sector to find solutions to meet their emissions targets in the short term. We expect more guidance coming out for corporates on the principles of high integrity, transparent voluntary carbon credits, and some standardization around key trading products, which could drive future pricing signals in this market. Recent news include CBL's announcement to launch a new voluntary carbon market benchmark contract, **[CCP-GEO contract](https://cblmarkets.us8.list-manage.com/track/click?u=f62b4c13a662aacfcce27abaf&id=1c6d6c65de&e=289517ee89),** aligned with the Core Carbon Principles outlined by the Taskforce for Scaling Voluntary Carbon Markets.
- **More net zero pledges:** We expect more corporates and governments to come out with more ambitious "net zero" pledges related to important emission reduction actions in line with the 1.5°C target. Based on the latest scientific guidance, we expect some announcements to be anticipated from 2050 to 2030, or announced with no specific timelines in mind as a result of the uncertainty of climate outcomes. We could expect more public or private sector announcements related to phasing out fossil fuels and coal, cutting methane emissions, moving towards zero deforestation and biodiversity targets.
- **Regulation around climate-related disclosures:** Governments could mandate new carbon footprint disclosures on products/services and set the standards in a globally coordinated fashion, empowering consumers to choose low carbon goods and manage their carbon budgets. Recent news include the UK government mandating the largest companies and financial institutions to disclose climate-related financial information on a mandatory basis from 2022 – in line with recommendations from the Task Force on Climate-Related Financial Disclosures (TFCFD).
- **Large climate finance investment announcements:** Developed countries promised at COP16 to scale climate support payments to the developing world to $100 billion by 2020, but actions have felt short. As part of the GFANZ (Glasgow Financial Alliance for net zero) global coalition of financial institutions, led by Mark Carney, we have seen roughly $90 trillion of assets committed to net zero within the last year. We expect more announcements from public and private parties in nature-based solutions, as well as we could see new targets being established on investments in green infrastructure and biodiversity.

Stay tuned for more COP26 relevant content over the next two weeks.

We will be in Glasgow around COP26, so feel free to reach out if you happen to be attending in person and would want to meet someone from our team.


The COP 26 UN Climate Change Conference, hosted in Glasgow starts today. The conference will see nearly 200 countries discussing urgent actions needed to cut CO2 emissions in alignment with Paris Agreement...

Five themes to watch out for in COP 26


![](/blog/why-we-started-abatable/abatable-founders-landscape.jpg 'Abatable Co-founders: Valerio (Left) and Maria (Right)')

The [IPCC’s latest report (AR6)](https://www.ipcc.ch/assessment-report/ar6/) says that we have a carbon budget of 400 giga tonnes of CO2 (GtCO2) for a likely chance (67% chance) to stay within the +1.5 C degree celsius threshold (since pre-industrial levels). This is the carbon budget we have at our disposal before climate change could become irreversible. Considering we emit 40 GtCO2 globally per year, we have roughly 10 years left before we exhaust the budget. We have even less if we take into account small, but potent non-CO2 emissions like methane.

Will we be able to reduce global CO2 emissions significantly before 2030? Unlikely. The question then becomes: is taking CO2 out of the atmosphere the only solution left? The answer is complex.

- Yes, we need to accelerate efforts to remove carbon dioxide and develop permanent or semi-permanent carbon storage solutions. There are two ways to do that: 1) through nature-based sequestration (i.e. planting new trees) and 2) through technology-based sequestration (i.e. direct air capture).
- But, it is not the *only* solution. We need to preserve thriving and existing carbon sinks close to the [Earth’s tipping points](https://www.carbonbrief.org/explainer-nine-tipping-points-that-could-be-triggered-by-climate-change) (e.g. Amazon rain forest). If those suffer from severe deforestation or degradation, they will likely emit more carbon dioxide than they are now storing and absorbing, with potential to erode the carbon budget even quicker.

Who is going to finance the scale-up of carbon removal to the level needed to even make a dent on the world’s emissions? The answer remains unclear. So far, these industries have been dependent on public funding and corporate donations, which arguably are not sustainable to bring these solutions at the scale needed. There is no commercial model for forest conservation without pricing negative externalities from the loss of carbon and biodiversity. Lastly, carbon removal technologies have so far been too experimental and unproven to attract large amounts of capital investments. In fact, carbon capture and storage (CCS) plants over the past decade have received less than 1% of the investments in renewable power.

Will this change? Potentially, but it might take a few years for large funds to move. In the meantime, time is ticking…

Voluntary net zero corporate commitments can play a critical role in financing carbon removal and avoidance solutions. We know that roughly 25% of global emissions are hard to abate and companies need offsetting to achieve their net zero goals.

Offsets are a powerful instrument. Offsets are contracts representing a unit of emission removed or avoided (measured in tonnes of CO2 equivalents). If used at scale they can encourage the development of new afforestation and reforestation projects, help support important forestry restoration and conservation efforts developed by NGOs and on-the-ground carbon development teams. Corporates offsetting budgets can also support research and development of new innovative carbon removal technologies, which are much needed in the absence of sufficient private capital.

Voluntary net zero corporate commitments can play a critical role, but recent news highlighted the reputational risk of getting carbon procurement wrong for corporates, especially as a lot of them continue to buy widely available [avoidance credits](https://www.theguardian.com/environment/2021/may/04/carbon-offsets-used-by-major-airlines-based-on-flawed-system-warn-experts) with methodologically [dubious impact](https://www.bloomberg.com/features/2020-nature-conservancy-carbon-offsets-trees/).

This is why we started Abatable. We want to help companies offset their hard-to-abate emissions through diversified portfolios of high-quality carbon offsets with a focus on carbon removal, leveraging a proprietary framework to evaluate and score carbon project developers and their underlying pipeline of offsets. At Abatable, we also want to support the development of new offsetting projects by providing financing solutions to carbon project developers, who have the expertise but lack the capital to be developing new carbon offsetting projects.

If you're interested in joining us on our mission to help scale carbon removal solutions, get in touch with us.


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