Transparency at COP27: follow these five processes    

COP27 is around the corner. What to expect for transparency negotiations? At first glance, it may seem like intensive transparency negotiations are now a thing of the past. The rules for the Enhanced Transparency Framework of the Paris Agreement are described by the Modalities, procedures and guidelines from Katowice and the reporting guidance from Glasgow. What is left for transparency at COP27? This blogpost highlights that transparency’s tentacles penetrate various domains of the UNFCCC. We highlight five processes to follow to understand how transparency’s role in climate governance evolves. 

1.    Voluntary review of adaptation and loss & damage information

Glasgow marked the end of six years of tedious negotiations to hammer out the detailed transparency rules under the Paris Agreement. Or, so it seemed. In Bonn last June, negotiations re-opened on the question of whether information related to adaptation and loss and damage could undergo technical review on a voluntary basis.

Under current rules, there is no technical review of information on adaptation and loss and damage as reported by countries. Yet, adaptation and loss and damage are important topics for developing countries.

Developing countries argue they should have the opportunity to ask for voluntary review of this information. The quality of reporting on adaptation and loss and damage is far behind mitigation. Undergoing technical review may improve reporting capacity.

Developed countries are less keen to have adaptation and loss and damage undergo review. They fear the international community will spread its resources thin if too many types of information have to be reviewed. Thus, developed countries defend, the focus should be on emissions and mitigation.

In Bonn, it became clear that the idea of a voluntary review option was politically palatable. However, the devil is in the detail- this one a detail with implications for review of loss and damage information.

Under the Paris Agreement adaptation and loss and damage are treated as two separate items, each with its own article. However, under the transparency rules, loss and damage is a subsection under the category ‘adaptation and climate impacts’.

The discussion in Bonn centered around whether countries should be allowed to only submit one subsection (i.e. loss and damage) for review, if they wish so. Developed countries were against. This matter remains bracketed in the text going into COP27 (See draft text para 3: “decides that the Party undergoing the review referred to in paragraph 1 above may elect all information or specific topics within the information reported”).

Another discussion in Bonn centered around whether the review team should include loss and damage experts. And whether the training programme for reviewers should have a separate module on loss and damage. But these suggestions did not make it to the draft text coming out of SB56 in Bonn.

 “AOSIS members wanted an option for loss and damage experts to review the voluntary information that we report. This proved too much to ask.”

– AOSIS closing statement submission at SB56 in Bonn

At COP27, negotiators will finalize the decision text on this matter. This discussion illustrates the political nature of transparency negotiations. Moreover, it shows how contentious issues (e.g, how much attention for loss and damage) get hammered out in operational detail in the transparency negotiations.

2.    Confidentiality and reporting on the use of market mechanisms

Under the umbrella of Article 6 (market mechanism) negotiations, Parties will discuss the details of reporting on the use of market mechanisms.

As highlighted by a carbonmarketwatch.org article the question for COP27 is: “will countries agree to full transparency on carbon credit trades under Article 6.2?”

Article 6.2 allows for countries to bilaterally or multilaterally trade emission reduction credits. Countries have to report on these trades and this information then undergoes review which is in turn made public.

However, the current rules have a provision where countries can mark certain information ‘confidential’. At COP27 Parties will debate this confidentiality provision. Carbon brief did an analysis of country positions for COP27. Like Minded Developing Countries want all information to be treated as confidential by default. The EU, Small Island Developing States, and Least Developed Countries oppose such blanket confidentiality.

3.    Unresolved: outstanding matters under the Pre-Paris transparency regime

COP27 will also feature agenda items on pre-Paris transparency arrangements. Two sub-agenda items are of particular interest.

First, Parties will consider ‘compilation and synthesis’ reports that capture the performance of developed (annex I) countries (agenda item SBI 3b). Under the convention, developed countries have to submit Biennial Reports on progress towards mitigation pledges and climate finance. The UNFCCC secretariat then drafts a ‘compilation and synthesis’ report that shows overall progress of annex one countries on mitigation and climate finance.

Upon publication of these reports, Parties are to ‘consider’ its content. This is a sticky point. Parties did not manage to agree on their consideration of the ‘compilation and synthesis’ reports from 2016, 2018, and the recently updated report from 2020.

An example, of information in this report includes aggregated figures of time-series of annex-1 Party emissions and climate finance.

It remains to be seen if Parties can conclude their consideration of these reports at COP27.

The other outstanding item also involved ‘consideration’ of reports (agenda item SBI 4a). This time reports submitted by developing countries (non-annex 1). Back in 2006, some Parties argued that under Article 10.2 of the Convention the SBI is to consider National Communications by non-Annex 1 countries (developing countries). This agenda item has since been held in abeyance. At COP27 Parties are invited to provide guidance on how these reports may be considered.

These ‘considerations’ are moments where reporting meets the political process.  Reporting is one thing, but to act on the findings of the reports- or to agree on the content in the reports- is another.

4.    A triangle? Transparency, finance and loss & damage

Perhaps one of the most prominent and contentious expectations for COP27 is to move forward on finance for loss and damage. The G77/China submitted a new agenda item on this matter for COP27 titled “Matters relating to funding arrangements for addressing loss and damage”.

While finance for loss and damage is no longer taboo, views on how to operationalize it diverge. One approach piloted by Germany and a host of private actors is to address loss and damage through insurance schemes.

Transparency is a crucial factor here. First, novel technologies such as satellite-based monitoring make possible new parametric insurance products for extreme weather events such as drought. Second, donor countries will want to report on the finance provided to these insurance schemes as climate finance. But views diverge as to how amounts should be calculated. Moreover, much uncertainty persist around whether and how insurance schemes will align with principles of climate justice such as polluter-pays and common but differentiated responsibilities enshrined under the Convention.

5.    A (mis)match? Transparency and ambition

Ambition is a word that sparked fierce debate at the previous climate talks in Bonn. The latest synthesis report shows that countries are off track to keep temperatures below the agreed 2 degree goal, let alone 1.5. (Similar conclusions in the second periodic review).

In Glasgow, the ‘work programme to urgently scale up mitigation ambition and implementation in this critical decade’ was established to ramp up ambition. In Bonn, discussions on operationalizing this programme were contentious and did not yield any outcome documents.

If the mitigation work programme is to ramp up ambition, then what does it draw on to discuss who should do more and when?

Transparency is often assumed to be the backbone of ambitious climate action and the key source of information. Will the mitigation work programme at any point draw on transparency reports? Or do the two remain politically detached?

Nothing is set in stone yet. The AOSIS submission to the work programme suggest that Biennial Transparency Reports will be an input for the work programme. By contrast, Australia and Norway do not list Biennial Transparency Reports as inputs. Rather, they prefer NDC and long-term net-zero pledges as inputs. This may indicate their reluctance to have scrutiny about actual past implementations.

Conclusion

Transparency may not make the headlines this year. However, its tentacles penetrate various domains of high-stake negotiations, including loss and damage and enhanced ambition. Moreover, routine negotiations to consider transparency reports have proved difficult. At the same time there are a series of events about ‘getting ready for the ETF’ under the #together4transparency initiative. What does this mean for the prospects of the Enhanced Transparency Framework? These and other questions remain open-ended and will be on our mind during COP27.

TRANSGOV representatives will be at COP27 to cover the latest transparency developments. Follow daily updates via the TRANSGOV twitter.