Takeaways from the Bonn Climate Change Conference (SB 58)

The first two weeks of June saw the 58th session of the Subsidiary Bodies (SB 58) to the UNFCCC (United Nations Framework Convention on Climate Change), also known as the Bonn Climate Change Conference. The Subsidiary Bodies meet annually in Bonn, Germany, to progress the agreements made at the previous COP and lay the groundwork for the next one. 

Sylvera was on the ground to follow developments and get the inside track. Here is an overview of the most relevant takeaways for carbon markets, the topics that created controversy, and what to expect going forward.

What was SB 58?

To understand what SB 58 is, we need to understand the structure of the UNFCCC's main bodies. Collectively, these institutions participate in the process of developing policies and guidance to support Parties (i.e. governments) to implement the Convention (through the COPs), the Kyoto Protocol (through the CMP, the COP for the Kyoto Protocol), and now the Paris Agreement (through the CMA, the COP for the Paris Agreement). Each body has a specific role and they all meet simultaneously at the same events.

SB 58 was the 58th session, or meeting, of the two permanent Subsidiary Bodies (SBs) to the UNFCCC:

• SBSTA (Subsidiary Body for Scientific and Technological Advice) - assists the governing bodies in providing information and advice on scientific and technological matters.
• SBI (Subsidiary Body for Implementation) - assists the governing bodies in the implementation of treaties and provides strategic direction to the secretariat.

These sessions primarily give the opportunity for the SBs to hold negotiations, both behind closed doors and in sessions open to observers. Many Parties negotiate in groups or blocs rather than individually. In addition, there are side events to capitalise on the attendance of so many experts and negotiators. Essentially, the events in Bonn are similar to COP but smaller in scale, with fewer side events and a lower turnout of private sector players.

Main takeaways

This year 186 Parties attended, bringing around 5,000 people to the conference - double the attendance of last year. A large proportion of attendees are negotiators for the Parties but, considering the growing interest in international climate policy there is steadily rising attendance by the private sector and campaigners. (Seeing Greta Thunberg was a highlight for the Sylvera team!)

Some have claimed that SB 58 will be remembered for the lack of progress achieved during the event. Others believe that this lack of progress is justified to some extent by the increasing number of workstreams to be covered and the limited time allocated to the discussions. But what everyone agrees on is that the novelty of the topics included in the agendas adds to the challenge and slows down the negotiations. 

Those agendas even became the focus of attention as they were not agreed until the penultimate day of negotiations. Until then, Parties worked on the basis of the provisional agendas and outcomes were officially recognised once the agendas were agreed except for those topics that fell by the wayside. Despite this distraction, some important issues were discussed, and the Parties even reached an agreement on some issues.

Article 6 market mechanisms

Article 6.2 and Article 6.4 of the Paris Agreement cover the market mechanisms that Parties can use to cooperate in achieving their Nationally Determined Contributions (NDCs). Some decisions around these mechanisms can send strong signals to the VCMs. This is especially the case for Article 6.4, where the key live question is which methodologies will be accepted under this system. The conclusion could make many VCM buyers revise their sourcing strategies.

Although no major announcements came out of SB 58, several technical and practical aspects were discussed. For example, the question of whether the authorisation of an ITMO (Internationally Transferred Mitigation Outcome) could be revoked, and when, sparked a heated debate. In the absence of agreement, a technical paper will be written on this issue.

Global Stocktake (GST)

The Global Stocktake (GST) is the process through which the UNFCCC assesses global progress towards the Paris Agreement goals. Apart from mitigation and adaptation goals, the GST remit includes tracking performance against financial commitments (known as ‘means of implementation and support’). The GST plays a key role in identifying drawbacks, gaps and areas for improvement, being a strong tool to call for greater ambition. A GST will be completed every five years, scheduled two years before each round of NDC updates (also happening every five years). This way,  GSTs can inform Parties' future plans.

SB 58 hosted the third and last technical assessment of the GST before COP28. However, it was agreed to organise an additional workshop before the GST outcomes are discussed in Dubai. Many worry that five months won’t be enough enough to complete the work in time.

Mitigation Work Program (MWP)

The Mitigation Work Program (MWP) was formally created during COP27 and is dedicated to upscaling mitigation ambition and implementation. Two dialogues are supposed to be held each year to discuss the MWP.

The EU - with the support of others such as the Environmental Integrity Group  - pushed for the MWP to be discussed at SB 58. But the item didn’t make it beyond the provisional agenda so the discussions around the topic will be collected on an informal note. Many criticised this decision, considering that mitigation will be one of the main topics to cover at COP28. And others celebrated the decision while trying to add finance to the agenda instead. This agenda item fight shows the struggle between raising ambition and securing the finance to deliver on that ambition.

Climate finance

Climate finance was, not surprisingly, one of the main sources of disagreement. Once more, developing countries showed their disappointment for not receiving the promised funds from richer nations. But SB 58 witnessed dialogues that will hopefully translate into a brighter future for climate finance. The Loss and Damage Fund for vulnerable countries and the New Collective Quantified Goal on Climate Finance (NCQG) were covered in Bonn.

COP27 culminated with the historic agreement to establish a loss and damage fund to compensate countries suffering the negative consequences of climate change. SB 58 witnessed discussions about how to operationalise this new fund and what the funding arrangements could look like.

The NCQG is set to be agreed by 2024 and supersedes the goal committed to in 2009 (and that expires in 2025) of deploying US$100 billion per year to support developing countries. This target was rather arbitrary and has yet to be met. Now, developing countries are at the core of the process and the NCQG will be informed by their needs and priorities. One of the main challenges will be to estimate what support developing countries need.

The road to COP 28

The next big UNFCCC conference will be COP 28 in Dubai, between 30th November and 12th December. In the run-up, several UNFCCC processes will occur in parallel.

The Article 6.4 Supervisory Body meetings are the ones that will receive most attention from the carbon markets community. Between now and COP28, three meetings have been scheduled to define the methodologies that will be eligible under the mechanisms. The final recommendations from the SB to the CMA is expected to be sent after SB007 (11-14 Sep). Also, SB 58 agreed a list of workshops to be held - such as a  GST workshop in October and a few Article 6 related workshops to be scheduled -  as well as technical papers to be written before COP28.

‍Keep up to date

There is still a lot of progress to be made on Article 6 implementation, among other issues. To stay up to date with all the latest climate policy and carbon markets news, subscribe to our monthly newsletter and keep an eye out for our fortnightly policy news roundups shared on LinkedIn and Sylvera’s blog.