Decarbonisation deals: A proposed COP Negotiations Presidency initiative

Decarbonisation deals: A proposed COP Negotiations Presidency initiative

Advice from Australia’s Climate Change Authority to the President of Negotiations – 31st session of the Conference of the Parties (COP31)

Summary

COP31 marks an inflection point in global climate cooperation. Climate impacts are intensifying, trade flows are shifting, and the global economy is becoming more multipolar. Governments are under growing pressure to deliver emissions reductions at the speed and scale required to meet climate goals, while also protecting prosperity, jobs and social cohesion. Australia is uniquely exposed to these forces and uniquely positioned to play a significant leadership role in this next phase of international cooperation.

Against this backdrop, the Climate Change Authority’s 2035 Targets Advice identified COP31 as a strategic opportunity to launch a Decarbonisation Deals Platform. Decarbonisation deals are negotiated arrangements between willing governments, with industry as delivery partners, to align emissions reduction, trade, investment and industrial policy in support of a longer-term prospect for supply chain and market development. They do not require formal multilateral negotiations and endorsement by COP. Nor do they depend on universal participation – an opt-in approach is both sufficient and desirable. 

They generally take 2 complementary forms:

1. Bilateral clean industrial transformation deals, covering multiple projects and technologies across the value chain. Such agreements might include removal or avoidance of tariffs and import duties, accelerated approval pathways, joint funding and financing platforms, offtake agreements and long-term assured product supply, and collaboration on research, development and deployment. Together, these elements lower costs, de-risk investment and bring forward real-world emissions reductions.
2. Plurilateral green industry development clubs where groups of countries agree on shared definitions, taxonomies, standards and rules for low-emissions products and markets. This includes resolving questions such as what qualifies as “green” steel and developing shared standards to reduce uncertainty for investors and enable interoperability across markets. 

Decarbonisation deals could provide the missing link between nationally determined contributions and trade cooperation – between climate ambition and economic implementation . By helping to reduce costs, align standards and de-risk investment, decarbonisation deals could make higher ambition more feasible and global decarbonisation faster and cheaper. Yet despite strong momentum, current efforts are fragmented. With greater coordination, a shared platform would enable faster, more coherent deal-making by aligning taxonomies, rules, and ultimately decarbonisation plans. 

For Australia, decarbonisation deals are fundamentally about getting ahead of the game. As global markets change what they buy, Australia can either supplement market conditions to support production or risk losing markets that have underpinned national prosperity for decades. Doing nothing is the riskiest option. 

Globally, the imperative is even larger: enabling faster, cheaper decarbonisation across borders and supply chains. Decarbonisation deals could help create ‘coalitions of the willing’ that move faster, delivering sectoral progress that can be showcased and scaled, demonstrating that climate action and economic competitiveness can align. 

The Authority’s 2035 Targets Advice recognised emissions reduction is now inseparable from trade, investment, and industrial policy. It set out a strategic proposition: Australia can commence a shift from being a net exporter of emissions to a net exporter of abatement, complementing domestic action with international cooperation that accelerates regional decarbonisation. 

Since that advice was delivered, several developments make leadership both more urgent and more feasible:

• Australia will be President of Negotiations, a new, specialised function introduced for COP31. Senator The Hon. Penny Wong explained(Opens in a new tab/window) that this means ‘Australia will have ‘“exclusive authority in relation to the negotiations”, to shape and guide global decision making in support of the multilateral system and global trade and investment in clean energy industries.’
• 24 countries, including Australia, signed the Belém Declaration on the Transition Away from Fossil Fuels at COP30, and the Republic of Korea (Korea/RoK) announced a coal-fired power phase-out by 2040, reinforcing the inevitability of declining demand for Australia’s fossil fuel exports.
• 40 countries and organisations, including Australia, signed the Belém Declaration on Global Green Industrialization, complementing the Global Clean Power Alliance (GCPA) Supply Chains Mission established by Australia, Canada, Kenya, the Netherlands, the United Kingdom, and Zambia.
• Brazil launched the Integrated Forum on Climate Change and Trade, intended to generate new international collaboration that aligns trade practices with climate goals. Australia has been working closely with Brazil to develop this concept.
• Brazil launched the Integrated Forum on Climate Change and Trade, intended to generate new international collaboration that aligns trade practices with climate goals. Australia has been working closely with Brazil to develop this concept.
• Carbon border adjustment mechanisms (CBAMs) are moving from theory to practice, with the EU progressing to implementation, countries like Türkiye considering their own domestic carbon prices specifically to avoid paying the EU CBAM charge, and other countries including Australia actively considering a CBAM of their own.

Globally, the focus has shifted decisively from ambition-setting to implementation, finance and supply chains. This shift is reshaping the role of COPs, from primarily multilateral UNFCCC negotiations to hubs for plurilateral and bilateral deal-making, often with industry at the table. The creation of a COP negotiations presidency comes at an opportune moment, with scope to define negotiations broadly and to use the presidency’s convening power to advance practical agreements that accelerate real-world outcomes alongside formal UNFCCC processes. 

A Decarbonisation Deals Platform at COP31 would offer a practical way for countries to work together on reducing emissions embedded in traded goods, scaling clean supply chains, and managing the orderly transition of emissions-intensive industries – turning climate ambition into trade-linked action. 

This concept note updates and builds on the Authority’s earlier advice, providing further guidance on next steps should Australia choose to use its COP31 role to advance a Decarbonisation Deals Platform, a flagship first bilateral decarbonisation deal, or both.