（原标题：SFC Markets and Finance | Martin Hession: The Article 6.4 of Paris Agreement Charts A Great Progress）

南边财经全媒体记者缴翼飞 杨雨莱 阿塞拜疆、广州报说念

On November 11, 2024, the twenty-ninth Conference of the Parties (COP29) to the United Nations Framework Convention on Climate Change was held in Baku, the capital of Azerbaijan. On the first day of the opening, Article 6.4 of the Paris Agreement was approved, marking a historic moment for the global carbon market.

The Article 6.4 aims to establish an internationally supervised carbon trading market under the United Nations, providing a guiding framework for global carbon trading, allowing countries to buy and sell each other's emissions, thereby creating fund flows between developed countries, high-emitting countries, and emerging economies.

How will the Article 6.4 be effectively advanced? What impact will it have on the global carbon market? Martin Hession, Vice-Chair of the Article 6.4 Supervisory Body provided a deeper interpretation in the interview. 

SFC Markets and Finance: Do you think that Article 6.4 will be effectively and rapidly implemented internationally?

Martin Hession: I think we've changed the rules to make us more power-intensive and more effective. I know you want a concrete example, but let's say that we're replacing fossil fuel power out with renewables, that would be a decreased emissions, for which the profits would be shared between those countries. And you might also have a removal to where the oxygen, or CO2, is stored, or forestry projects, whenever that also happens. So essentially, there's a whole range of things looking to be done. And if it depends on the different countries, what they see is transformation. There will be cheap things that they want to do themselves, and then the more expensive things, which are important. You think that they want to sell in international market. But we're dependent on that demand, and we're also depending on those countries very much to decide what is transformation for them.

SFC Markets and Finance: Can you briefly outline the next steps in terms of making the Article 6.4 operational?

Martin Hession: Yeah, we're going to have meetings next year, during the COP. So, we're expecting a negotiation process for further checks to be given to the party, and parties will be expressing concerns, priorities, we've yet to hear. Now, obviously, we're all very aware of what the parties are saying, and there are differences of views and different things, but I think broadly, there's a welcoming of things.

I'm worth coming in here. But obviously, we will get the decision that we need to respond to. On a boring note, we've got a work programme to address a lot of issues, and there's an implementation that we need to do. As Maria ALJishi was saying, I'm expecting the first methodologies to be read under the standards, because they make it look like it's the end of next year. We've got methodologies in the past, as well. So, this decision frees up, and that process gives us a direction. So, the first projects are probably going to be those that are in transition, hopefully, from the CDM with the new ones. I think we expect certainly by the end of next year or a minute or so.

SFC Markets and Finance: In the process of implementing Article 6.4, is third-party verification necessary?

Martin Hession: We have a system of DOEs. But we have a system of crediting that, typically in the past, companies like Det Norske Veritas (DNV), even though it credits standard supplies, as we have our own accreditation standards, where they go for particular competencies. And it'll be the term party verifier, market, DNV, trying to remember the names. Essentially, they're in the business of verifying things. And we will have a process to make sure that they are doing correctly and that they have a policy system, which we require them to have. And that process is ongoing, as well. 

There's always an argument to have a standalone UN agency. I think we can't do everything on our own. And we get criticism that we need to have a third-party independent voice. We got that criticism from the PMs, and I think we do have an independent third-party, if you know what I mean. And I think, in terms of... Obviously, we'll be checking the projects and checking the standards ourselves. To have that third voice is important. We've had offers to do this from different agencies, but I think that this is just not in as fast of a deployed, the most effective way that is unknown.

SFC Markets and Finance: Do the developing countries have the financial capabilities to engage these third-party accreditation? Are they aware of this process? How do we avoid the greenwashing at the end of the day?  

Martin Hession: It's for the investors to engage the verification. I have my motto, right? Effective and fair. Fair is about distribution of benefits, right? And we have many provisions within our process about ensuring that local communities are consulted. Obviously, the country itself has to approve. I mean, these are features that don't exist in the broader market. We're a UN-based system responsible to parties, and we have processes in place that are not just about consulting the party, but about consulting the local communities, indigenous people, effective people, and a grievance system that things come directly to us, complaints about how the tool is being implemented, and appeals against our decisions should we get it wrong. So, I think there's a process for access to justice, if you can call it that, or access to make sure that we're doing what we say we want.

SFC Markets and Finance: Do we have a timeline of when this market is going to mature? Do we foresee any?

Martin Hession: I don't think it's my business or our business to tell you that, because we are an enabler. And I think we're setting out a high-quality standard, and there are arguments that if we set it too high, people will go elsewhere. But what we're saying is that this is the high quality, this is parents' rights, and if you want to do something that's contributing to 1.5℃ and distribution of benefits, come to us. It's not going to be cheaper, because guess what, getting to 1.5℃ is actually a significant cost to it. We will reduce the cost of that, and we will make sure that there's fairness in doing that, I think.

SFC Markets and Finance: When the money starts flowing, is that at the outset of a project? If money flows on the basis of an assumed outcome in terms of carbon reduction, carbon removals, and then it doesn't pan out, what happens to that money?

Martin Hession: Well, I mean, now this is getting into commercial stuff. I mean, first of all, there's a process to get to the touch, and then there's a price associated with that term. And people will invest in getting that term based on what they think they will get to it. And I can't speak to the different commercial arrangements that might be around that. The unit of value is this term, and what its value is, is dependent on the demand. And then people will invest and take risks around price as the markets do, that's their job, not ours. We're not setting a price, and sadly we're not in charge of price. We're just in charge of the quality of the supply.

SFC Markets and Finance: Is there a demand in the carbon trading market?

Martin Hession: There is demand out there, certainly. We've heard heard some of this out there. But I also, you know, I want to undermine the figures that we get are dependent on some assumptions. And carbon market players will be saving trillions. And it's basically an assumption that we have ever since they've assessed a formal 1.5℃, which we don't have. And it's highly dependent on being willing to do the trade. And I think the willingness to do the trade really just does depend on whether it's effective for countries, I mean, whether it's effective and whether it's fair. And that's what we're trying to do. So I don't know that the demand's there for, those big values. But we're certainly enabling it. The door is open if you want to come. 

SFC Markets and Finance: Do you expect the first investor to be companies or countries?

Martin Hession: I think we have a mixture of both. There are some countries that have already said that they want to buy 100 trillions at a time. So there's significant demand, maybe not the markets that we want to employ.  So we will have priorities coming to buy. And there are companies interested in buying. You know, I haven't done the research exactly, but I used the international emissions trading at our site and we were saying that there's significant interest in this high-quality thing. Companies will come to us. And I know that there's interest in companies.

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