1 week Ago By [email protected] (Gulf Times)
A deal at the COP29 climate talks on trading carbon credits could see billions of dollars move into emissions-reduction projects this decade but after a string of scandals, the market will first need to win over wary countries and communities. Carbon trading is seen as one way for richer countries to meet their emissions reduction targets at the same time as helping poorer countries move to greener energy and to improve their resilience against climate change. A UN-backed global market for creating and trading carbon credits has been discussed for at least 10 years.
In its absence, a patchwork of voluntary standards has led to a number of situations where credits were found to not be delivering the climate benefits they claimed. While an early deal last week saw nations agree on some quality standards, points still to be hammered out include what a global registry to track trades and label carbon credits would look like, and what information projects will need to disclose. If a deal can be reached this week in Baku, Azerbaijan, “the main impact would be a confidence boost”, said Andrea Bonzanni, international policy director at the International Emissions Trading Association (IETA).
“It would provide both countries and the private sector with the signal that there is consensus on the rules of the game. And that would mean that companies would invest with more confidence,” he added. IETA has said a UN-backed market could be worth $250bn a year by 2030, and count towards offsetting an extra 5bn metric tons of carbon emissions annually.
Governments including Bolivia, Singapore and Switzerland have struck dozens of agreements already to do carbon credit trades under the impending UN rules, backing investments in clean cookstoves and solar power. Others are expected to join in as they face pressure to show progress towards their national emissions-cutting targets. Private sector buyers could include airlines, under a UN-backed plan to scale up their purchases launching in 2027, as well as companies looking to burnish their green credentials with customers and investors.
The boss of carbon project backer Key Carbon, Luke Leslie, said his firm would look to expand its investments in countries that quickly get their local market up and running. While the prospect of selling credits could offer a boost to cash-strapped governments, some remain wary - or outright opposed. Environmental group Greenpeace has called offsets a “smokescreen” while the WWF opposes their use.
Some local communities are also against using them. Eriel Deranger, executive director of campaign group Indigenous Climate Action, and a member of the Athabasca Chipewyan First Nation in northern Alberta, Canada, said carbon credits distracted from calls for more public funds for climate action, and for companies to simply cut their own emissions. “It’s going to do substantively nothing to actually reduce our emissions,” she said.
For those countries which do opt to sell credits, African Development Bank Chief Executive Akinwumi Adesina warned against doing so too quickly or too cheaply, to avoid being “short changed”. Uganda’s energy minister, Ruth Nankabirwa, said her country was seeking to attract investment in clean cookstove projects, but had yet to use credits. “It isn’t clear how one can benefit, how the auditing is done of carbon credits,” she said.
Nkiruka Maduekwe, director general of Nigeria’s national council on climate change, agreed, describing high integrity carbon credits as “the key”. The rules of the registry being addressed at the COP talks will be central to answering those concerns, but governments are struggling to agree. The European Union — which has ruled out using credits to meet its domestic climate goals — wants a registry that can issue and manage credit trades, to help poorer countries access the market, people familiar with the negotiations told Reuters.
The United States, however, is advocating for a registry that only tracks credit trading, arguing that empowering it to execute trades could risk giving a UN seal of approval to credits with weak environmental credentials, the sources said. Even if a deal is reached between countries, companies may still need government incentives to buy in, given their pledges so far have been voluntary and boards are concerned about reputational risk, said Sheri Hickok, chief executive at carbon project developer Climate Impact Partners. Flooring company Interface and Australian telco Telstra Group, previously big buyers of credits, both told Reuters a UN deal would not change their decisions to exit the carbon markets, as they focus on cutting their emissions directly.
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