Carbon buying and selling guidelines below negotiation at Cop27 local weather talks may open the door to company greenwashing, consultants have warned.
As a rising variety of corporations set web zero objectives, the UN is working to ascertain requirements and finest practices. Which means reducing their very own emissions with minimal reliance on carbon offsets, a taskforce led by Catherine McKenna recommends.
However as talks in Sharm el-Sheikh entered their remaining scheduled day, the newest draft textual content allowed for double claiming below the Paris Settlement. Which means an organization should purchase credit score for an emission discount that can be being counted by a rustic in the direction of its local weather objectives. It might assist US local weather envoy John Kerry’s push for firms to plug gaps in local weather finance.
A broad coalition of developed and creating nations oppose the proposal. “This would be really bad. It has to go,” one negotiator advised Local weather Dwelling Information.
“This is largely about whether the claims companies are making are truthful or not,” Gilles Dufrasne of Carbon Market Watch, advised Local weather Dwelling.
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Negotiators outlined a broad framework for establishing a brand new world carbon buying and selling scheme at Cop26 final yr. Now they’re filling within the particulars.
In Glasgow, nations agreed there could be no double counting: if one nation buys an emission credit score from one other to make use of in the direction of its goal, the host nation must make an accounting adjustment. This additionally applies to worldwide compliance markets similar to aviation’s buying and selling scheme Corsia.
Two-tier system
However the Sharm el-Sheikh talks may create a second-tier marketplace for carbon credit. Referred to as “mitigation contributions”, these could be utilized by non-public corporations in the direction of their local weather objectives, with none accounting tweak.
In that case, each the host nation the place the carbon-cutting undertaking is positioned and the corporate paying for it may declare the identical emission discount.
Matt Williams, local weather and land lead on the London-based Power and Local weather Intelligence Unit, advised Local weather Dwelling these have been “junk credits that create a sub-prime carbon market”.
“Calling these credits a ‘contribution’ is “an important signal,” stated Williams. It implies they shouldn’t be utilized by corporations to rely in the direction of a goal however solely as a approach to fund local weather motion.
If they’re utilized by the non-public sector as offsets, “we might kid ourselves we’ve achieved net zero when we haven’t by any stretch,” he stated.
Nation opposition
Small island creating states and an alliance of Latin American and Caribbean nations are amongst these pushing for tighter guidelines.
Switzerland, which is counting on the carbon market arrange below the Paris Settlement to fulfill its 2030 local weather targets, has known as for proscribing using these “mitigation contributions” so that they can’t be used as offsets by non-public corporations.
The European nation proposed to rename them “unadjusted contributions” to make them unattractive for companies to purchase.
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What an organization can declare when it buys an carbon credit score is a key query for the credibility of the market.
Permitting an organization to assert an offset already being utilized by a rustic is “corporate greenwashing,” Argentinian campaigner Catalina Gonda, of the Surroundings and Pure Sources Basis (Farn), advised Local weather Dwelling.
The Voluntary Carbon Market Integrity (VCMI) initiative is because of publish suggestions on this in late 2022/early 2023.
An consequence which guidelines out double claiming would ship the voluntary market a robust sign, Gonda stated.
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Hugh Salway, head of environmental markets at Gold Normal which verifies carbon credit, advised Local weather Dwelling there’s a position out there for credit which don’t carry an accounting adjustment. “But how they are being used is the big issue,” he stated.
These credit may very well be purchased by corporations to adjust to a home carbon buying and selling scheme to speed up nationwide emission cuts, for instance. However Gold Normal advises corporations towards claiming offsets which are already being utilized by a rustic.
Confidentiality
Individually, nations together with European nations have raised involved {that a} proposal for an oversight mechanism for nations bilaterally buying and selling credit lacks enforcement capabilities and transparency.
The draft textual content features a clause which permits nations to designate as “confidential” any details about the credit score they’re buying and selling, making it tougher to reveal irregularities.
Gonda stated the present proposal would render any oversight “toothless” and impede accountability. “It will be the wild west,” she stated.
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