Progress on carbon markets key for climate talks: Experts
Creating an official global carbon market will be discussed at the UN climate summit in Dubai, according to the UAE, which holds the COP presidency.
New Delhi:
Creating an official global carbon market that can help generate climate finance for developing countries would be one of the major issues to be discussed at the upcoming UN climate summit in Dubai, an official said.
“We see carbon markets as a really important component of COP28. We are having a lot of discussions with parties on carbon markets and how we can revive them,” an official from the United Arab Emirates said on Friday.
The UAE holds the presidency of the 28th Conference of Parties (COP28) to the United Nations Framework Convention on Climate Change, which will be held in Dubai from November 30. The parties denote nations that are signatories to the convention.
“For many years, they (carbon markets) have stagnated and that’s mainly around integrity. It’s about ensuring that there is confidence in the market,” the official said. “That’s how carbon markets are really going to make a difference.”
“It will be a major component of the finance story and an important way to raise the private capital that is needed to address the challenges that face us,” he added. “We are encouraging parties both on the negotiation and non- negotiation side to deliver on shaping a carbon market.”
In the absence of rules and regulations, the global voluntary carbon market has exploded in recent years and India is an integral part of this boom, according to an analysis released earlier this month by the Centre for Science and Environment, an advocacy group. India is the world’s second-largest source of carbon offsets in the voluntary carbon market, it said.
India’s voluntary carbon market is worth over $1.2 billion, the analysis claimed. As on June, over 1,400 projects were registered or were under various stages of consideration in the two major crediting programmes called the Verra and Gold standards.
When researchers travelled to 40 villages and towns across India to understand how the market works, they found that communities, their lands and their labour were central to the business, but community members were mostly unaware that they were working to generate carbon credits. There were several issues with accounting practices in these projects, like overestimation of emission reduction, the researchers said.
“There is widespread overestimation of emission reductions by project developers,” the report said. “One lesson that must be learnt is to keep the project design simple and not to trust the army of consultants and profiteers in this business. It means keeping their role minimal and to keep the control of the projects with public institutions and people.”
Despite a sluggish economy, the demand for voluntary carbon-emissions credits is growing rapidly,” the Boston Consulting Group said in January. The focus of credit trading is shifting from reducing emissions to removing them altogether, the consultancy found, mainly because most private firms have adopted net- zero emission goals.
A reputable monitoring, reporting and verification framework has become a priority when making purchase decisions for companies in this regard, the consultancy recommended. “Despite greater economic challenges, most respondents think that the volume of emissions compensated through offsets will increase as more companies set net-zero targets. We found, in fact, that demand for some classes of credit, such as nature-based credits, could soon outstrip supply,” its analysis said.
The voluntary carbon market must work within the confines of the government’s nationally determined contributions, CSE recommended. The only “exportable” credits have to be those that are expensive for the country to do but where there is an advantage for the country, as they can transform its emission trajectory, it said.
The current voluntary carbon market is based on cheap options and it means that countries have sold off the lowest-hanging fruit—the options of emission reductions that they could easily afford, CSE said, adding that the market mainly seems to be working for the interests of project developers, auditors, verifiers and registries.
"Our initial approaches to these projects encountered significant transparency challenges. Project developers and local partners were initially unwilling to share information and even requested non-disclosure agreements. Emission reductions appeared overstated, especially in household and community projects, which were based on the assumption that the mere distribution of devices such as cookstoves would change user behaviour. Poor monitoring was evident in some cases, and in others, there was an absence of any monitoring at all. In the community projects that we sampled; the people who were shouldering the effort of emission reduction remained oblivious to the concept of carbon credits. They neither owned the credits nor received proceeds from them. The carbon credit business seldom seemed to serve any purpose beyond feathering its own nest," said Trishant Dev, programme officer at CSE.
India has finalised a list of activities that can be considered for trading in carbon credits in the international market under article 6 of the 2015 Paris climate pact, where signatories agreed to contain the global temperature rise to within 2 degrees Celsius and make efforts to keep it within 1.5 degrees compared with pre-industrial times.
The list released in February includes carbon removal activities such as carbon capture and storage, and mitigation activities such as generating renewable energy with storage, solar thermal power, offshore wind, green hydrogen and compressed biogas and alternate materials such as green ammonia. It was primarily a wish list of areas where India would like to attract investments with the carbon credits generated from offsetting of planet- warming emissions through these technologies.
Some features of Article 6 on carbon markets were finalised at the 2021 climate summit held in Glasgow but the modalities are yet to be decided. Article 6 of the Paris Agreement allows countries to voluntarily cooperate with each other to achieve emission reduction targets.
New Delhi:
Creating an official global carbon market that can help generate climate finance for developing countries would be one of the major issues to be discussed at the upcoming UN climate summit in Dubai, an official said.
“We see carbon markets as a really important component of COP28. We are having a lot of discussions with parties on carbon markets and how we can revive them,” an official from the United Arab Emirates said on Friday.
The UAE holds the presidency of the 28th Conference of Parties (COP28) to the United Nations Framework Convention on Climate Change, which will be held in Dubai from November 30. The parties denote nations that are signatories to the convention.
“For many years, they (carbon markets) have stagnated and that’s mainly around integrity. It’s about ensuring that there is confidence in the market,” the official said. “That’s how carbon markets are really going to make a difference.”
“It will be a major component of the finance story and an important way to raise the private capital that is needed to address the challenges that face us,” he added. “We are encouraging parties both on the negotiation and non- negotiation side to deliver on shaping a carbon market.”
In the absence of rules and regulations, the global voluntary carbon market has exploded in recent years and India is an integral part of this boom, according to an analysis released earlier this month by the Centre for Science and Environment, an advocacy group. India is the world’s second-largest source of carbon offsets in the voluntary carbon market, it said.
India’s voluntary carbon market is worth over $1.2 billion, the analysis claimed. As on June, over 1,400 projects were registered or were under various stages of consideration in the two major crediting programmes called the Verra and Gold standards.
When researchers travelled to 40 villages and towns across India to understand how the market works, they found that communities, their lands and their labour were central to the business, but community members were mostly unaware that they were working to generate carbon credits. There were several issues with accounting practices in these projects, like overestimation of emission reduction, the researchers said.
“There is widespread overestimation of emission reductions by project developers,” the report said. “One lesson that must be learnt is to keep the project design simple and not to trust the army of consultants and profiteers in this business. It means keeping their role minimal and to keep the control of the projects with public institutions and people.”
Despite a sluggish economy, the demand for voluntary carbon-emissions credits is growing rapidly,” the Boston Consulting Group said in January. The focus of credit trading is shifting from reducing emissions to removing them altogether, the consultancy found, mainly because most private firms have adopted net- zero emission goals.
A reputable monitoring, reporting and verification framework has become a priority when making purchase decisions for companies in this regard, the consultancy recommended. “Despite greater economic challenges, most respondents think that the volume of emissions compensated through offsets will increase as more companies set net-zero targets. We found, in fact, that demand for some classes of credit, such as nature-based credits, could soon outstrip supply,” its analysis said.
The voluntary carbon market must work within the confines of the government’s nationally determined contributions, CSE recommended. The only “exportable” credits have to be those that are expensive for the country to do but where there is an advantage for the country, as they can transform its emission trajectory, it said.
The current voluntary carbon market is based on cheap options and it means that countries have sold off the lowest-hanging fruit—the options of emission reductions that they could easily afford, CSE said, adding that the market mainly seems to be working for the interests of project developers, auditors, verifiers and registries.
"Our initial approaches to these projects encountered significant transparency challenges. Project developers and local partners were initially unwilling to share information and even requested non-disclosure agreements. Emission reductions appeared overstated, especially in household and community projects, which were based on the assumption that the mere distribution of devices such as cookstoves would change user behaviour. Poor monitoring was evident in some cases, and in others, there was an absence of any monitoring at all. In the community projects that we sampled; the people who were shouldering the effort of emission reduction remained oblivious to the concept of carbon credits. They neither owned the credits nor received proceeds from them. The carbon credit business seldom seemed to serve any purpose beyond feathering its own nest," said Trishant Dev, programme officer at CSE.
India has finalised a list of activities that can be considered for trading in carbon credits in the international market under article 6 of the 2015 Paris climate pact, where signatories agreed to contain the global temperature rise to within 2 degrees Celsius and make efforts to keep it within 1.5 degrees compared with pre-industrial times.
The list released in February includes carbon removal activities such as carbon capture and storage, and mitigation activities such as generating renewable energy with storage, solar thermal power, offshore wind, green hydrogen and compressed biogas and alternate materials such as green ammonia. It was primarily a wish list of areas where India would like to attract investments with the carbon credits generated from offsetting of planet- warming emissions through these technologies.
Some features of Article 6 on carbon markets were finalised at the 2021 climate summit held in Glasgow but the modalities are yet to be decided. Article 6 of the Paris Agreement allows countries to voluntarily cooperate with each other to achieve emission reduction targets.
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