What does the Paris Agreement mean for companies?
For a long time, the precise implementation of the Paris Agreement was unclear. This changed with the decisions of the COP26 climate conference in Glasgow, when a detailed set of rules was drawn up for bilateral and multilateral cooperation in climate protection, and at the same time, the importance of market mechanisms was strengthened. This set of rules has an impact on the voluntary commitment of companies and private individuals to climate protection, so myclimate has been working intensively on this regulatory paradigm shift and is now responding consistently to the changes in the framework conditions.
All signatory states to the Paris Agreement are required to set binding targets for reducing their greenhouse gas emissions and have committed to limiting global warming to as close to 1.5°C as possible and well below 2°C warming compared to the pre-industrial level of 1850. This means that all countries in which climate protection projects are implemented by myclimate are now introducing (or have already introduced) a greenhouse gas inventory in which the emissions of greenhouse gases in their own country are recorded. In accordance with the set of rules for intergovernmental mechanisms laid down in Article 6 of the Paris Agreement (Article 6.2, see our FAQs, specifically: What is bilateral climate protection?), in future double counting (or “double claiming”) of emissions reductions must also be ruled out for projects in the voluntary market for companies and private individuals. This is ensured by means of Corresponding Adjustments (CAs).
Many countries do not have the financial resources to implement possible measures needed to reach the 1.5°C target. This is why the Paris Agreement provides for the possibility of climate protection measures being financed by third parties and the host countries ceding the rights to the emissions reductions and therefore not counting the emissions reductions achieved in the project towards their own reduction target.
When myclimate carries out a climate protection project with financing from companies or private individuals, greenhouse gas emissions are reduced, or CO2 is sequestered. The country in which the project is located, referred to as the host country, can then decide whether it credits these reductions to its own emissions reduction target or whether it cedes this credit so that myclimate customers can claim these reductions for themselves, for example as part of a climate neutrality claim. If the host country does not claim the emissions reductions for itself, it amends its reported emissions in connection with the achievement of its own emissions reduction target. This is referred to as a Corresponding Adjustment (CA). If, however, the host country decides not to adjust its reporting with regard to progress towards its own emissions reduction target, i.e. it credits itself for the reductions made, then a CO2 certificate without a CA is issued for myclimate. This proves to our customers the effect achieved with the help of their contribution – the carbon reduction in the respective host country. You can find detailed information on Corresponding Adjustments and double counting in our FAQs on the Climate Change Conference in Glasgow.
myclimate is in close contact with project partners on the ground to ensure its capacity to offer CO2 certificates with CAs for projects in its own portfolio as quickly and as plentifully as possible. So far, however, no CAs have been issued in our host countries. To date, only a few countries have reached agreements among themselves that actually make intergovernmental trading of CO2 certificates possible to start with. Even the climate conference in Sharm El-Sheikh in November 2022 failed to provide any certainty about the issuance of CAs in future.
A CA does not change anything about the significance, the meaningfulness and, above all, the actual impact of the myclimate climate protection projects. Its sole purpose is to clearly regulate who may take credit for the impact and thus prevent double counting or double claiming. Many host countries of climate protection projects do not have the financial means to implement potential climate protection projects on their own, so financing from the private sector remains an indispensable component of global climate protection. Companies and private individuals make a valuable and urgently needed contribution to climate protection by financially supporting high-quality climate protection projects. What is new here is that emissions reductions confirmed with CO2 certificates without CAs can no longer be used to designate products, companies, etc., as climate-neutral. However, the climate protection effect in the host country and the other positive effects (impact) of the project, in relation to the Sustainable Development Goals of the United Nations, (SDGs) can be indicated instead.
This is primarily an improvement in communication that ensures the highest integrity in climate protection. Previously, anyone who calculated the emissions of a product or a flight could offset them by buying CO₂ certificates. myclimate, in association with partners, ensured that the emitted CO₂ quantities were saved elsewhere through climate protection projects. Companies received a confirmation, and many of them also acquired the label certifying that the company, product, etc. was climate-neutral. Since this practice is now no longer possible without CAs, in December 2022, myclimate introduced the myclimate label “Engaged for Impact” (impact label for short). This helps companies to communicate their important financial commitment to climate protection transparently and with integrity. You can find out more about the new impact label “Engaged for Impact” and the future of climate neutrality here.