US Government Supports Carbon Credit Industry’s Self-Reform Efforts
The US government is aiming to support carbon offsets by endorsing industry-led efforts to reform a market that has faced increasing criticism.
The Biden administration has introduced a set of principles to define “high-integrity” carbon credits, emphasizing their role in reducing greenhouse gas emissions and attracting significant private capital for climate change mitigation.
A 12-page policy document released on Tuesday outlines measures to ensure carbon credit projects achieve genuine emission reductions, protect local communities, and encourage companies to decarbonize their own operations before purchasing offsets.
Additionally, it suggests that businesses should be permitted to use carbon credits to offset some emissions from their suppliers and customers, known as “Scope 3” emissions. This recommendation follows a controversial similar move by the board of the Science Based Targets initiative (SBTi), which recently faced backlash.
Hope for Strengthening Carbon Market Initiatives
Although the US government guidelines are not binding or enforceable, supporters hope they will strengthen ongoing initiatives by carbon credit developers, buyers, and environmental groups to improve standards and enhance the role of carbon markets in climate and nature protection.
Last year, polluting companies, including major fossil fuel producers and airlines, spent an estimated $1.7 billion on voluntary carbon offsets to compensate for their direct emissions by funding climate-friendly activities like tree planting and renewable energy projects.
However, several revelations have raised doubts about the environmental and social benefits claimed by some developers and users of carbon credits, undermining confidence in the market.
Scientific studies and investigative reports, including those by Climate Home, have revealed that many projects have not delivered the promised emission reductions. NGOs have also condemned cases of human rights abuses and environmental harm caused by carbon-offsetting activities.
Criticism of Voluntary Carbon Markets
“Voluntary carbon markets are a huge distraction and a waste of time and resources,” said Mohamed Adow, founder of the Nairobi-based think tank Power Shift Africa. “It’s disheartening to see politicians in the Global North scrambling to find ways to avoid directly cutting their carbon emissions,” he added.
In its announcement, the US government recognized the deficiencies in voluntary carbon markets (VCMs), noting that “in too many instances” credits fail to meet the required high standards.
“For good reasons, many people outside this room are skeptical,” National Climate Advisor Ali Zaidi told attendees at the policy launch in Washington. “[They are] deterred by news stories of failures and the appearance of greenwashing.”
He emphasized that this is “an occasion to speed up” and improve efforts.
The Biden administration aims to lead in developing VCMs for high-quality decarbonization, aligning with industry-led bodies reforming the carbon market.
The Integrity Council for the Voluntary Carbon Market (ICVCM) is evaluating project methodologies to establish the first global benchmark for “high-integrity” carbon offsets, known as the “Core Carbon Principles.”
“We are in a climate emergency and need every tool to meet the 1.5°C target,” said ICVCM Chair Annette Nazareth. “High-integrity carbon credits can mobilize private finance for projects to reduce and remove billions of tonnes of emissions that would otherwise not be feasible.”
Given that many of the world’s major carbon offsetting projects are situated in the Global South, affluent governments view the market as a means to direct funds to developing nations without relying on public budgets.
Criticism of Voluntary Carbon Markets
This is evident in the US, where political divisions have impacted climate funding. President Joe Biden committed to increasing international climate finance to over $11.4 billion annually by 2024. However, Congress allocated only a fraction of this amount in the current $1.59 trillion budget: $1 billion.
Zaidi from the White House stressed that with enhanced integrity, voluntary carbon markets could attract substantial investment. BloombergNEF predicts that improved regulation could boost the market from its current $1.7 billion to $1.1 trillion by 2050.
In fact, Gilles Dufrasne, global policy lead at Carbon Market Watch, underscored the need for the US government to translate its commitments to transparency and integrity into concrete actions. He highlighted the absence of public data on the distribution of finance for climate action through carbon credits.
In international negotiations, the US supports private sector-led carbon credit initiatives. At COP28, the US advocated for a simplified approach to setting rules for a new UN-governed carbon market, favoring players from the voluntary market. However, this stance faced opposition from the European Union, leading to a deadlock. Discussions will resume at the mid-year UN climate talks in Bonn.
To conclude, Trishant Dev, a carbon market expert at the Centre for Science and Environment in Delhi, criticized the US for diminishing the multilateral process and overrelying on private sector-led voluntary carbon markets. He argued that this shift places the burden of financing climate action on the private sector rather than the government.
Read the original article on: Climate Home News
Read more: Major Meta-Study Confirms the Effectiveness of Carbon Pricing
