Jennifer A. Dlouhy
Fri, April 19, 2024
(Bloomberg) -- The US soon will unveil tougher standards meant to drive greater integrity for carbon markets — a bid to ensure the trading regimes drive real emission reductions and not just greenwashing.
Climate envoy John Podesta said Friday the State Department will be calling for carbon credits to represent real, additional and permanent emission reductions that wouldn’t have happened otherwise. The US also will make clear the regimes must avoid carbon leakage, where reductions in one area are simply replaced by increased pollution elsewhere. The standards will also make clear companies should not use carbon credits to substitute for or delay in investments in reducing their own emissions, Podesta said.
The initiative marks a high-level endorsement of carbon credits amid increasing interest in using offsets to drive private sector finance toward renewable power and emission-cutting projects in developing nations. Critics warn it’s difficult to assess the real-world impact of carbon offsets and worry companies will use the tools to avoid cutting their own pollution. The guidance being developed by the US State Department dovetails with similar efforts by the UK and EU.
The United Nations-backed Science Based Targets initiative, the world’s main verifier of corporate emissions plans, drew scrutiny recently for indicating companies should have greater leeway to use carbon credits to offset their Scope 3 emissions, the climate footprint of their supply chains.
Carbon markets “can help deliver the finance that developing countries need to help lead the clean energy transition and protect forests,” Podesta, senior adviser to the president for international climate policy, said Friday at a State Department event on the issue. But, he added, it’s essential they have integrity and provide “confidence” for investors.
Former Secretary of State John Kerry argued the efforts are critical to unlocking trillions of dollars in private sector finance to counter climate change. “If we do not mobilize the private sector, we do not win this battle,” he said. “We need high-integrity carbon markets to drive climate ambition and action.”
Separately Friday. a carbon offset initiative championed by Kerry, the Energy Transition Accelerator, took a step toward full operations with an announcement the Center for Climate and Energy Solutions will serve as its secretariat. The program will be guided by a newly announced consultative group, including Kerry as honorary chair and other members, such as International Energy Agency Executive Director Fatih Birol.
--With assistance from Alastair Marsh.
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