Global carbon markets must be climate (not greenwashing!) tools

 The COP26 was postponed until November 2021, the dates for UNFCCC “inter-sessional” climate conferences for 2021 are not set yet

• 25 January: High-level “Davos Dialogues” The presentation of the “Carney Taskforce” report on scaling voluntary carbon markets

Governments didn’t find common ground on the rules for global carbon markets at the latest UN climate talks in Madrid. The next attempt at clinching a deal on Article 6 will likely be at the COP26 this year. But this doesn’t stop countries from making bilateral deals on global markets.

Switzerland has struck such a carbon offsetting agreement with Peru. This agreement includes positive elements that could form a basis for the ongoing Article 6 negotiations, such as the provision to avoid double counting. However, it lacks a system to ensure that global markets reduce overall emissions and a grievance mechanism where any stakeholder could make a complaint about a project. A similar agreement was also struck with Ghana.

While only a few countries currently plan to use global markets as part of their climate action (the EU has banned the use of international offsets starting this year), private companies are increasingly turning to them as part of their climate pledges (and PR campaigns).

In the absence of commonly agreed rules, those planning to use global markets should ensure that they only buy good quality credits. This means supporting projects that reduce emissions, benefit local communities, and uphold human rights. In addition, to avoid double-counting, only one country/company should be counting any given emission reduction.

Scaling carbon markets is not the same as scaling emission reductions

Voluntary carbon markets are growing as more and more companies make climate-related commitments. The so-called Taskforce for Scaling Voluntary Carbon Markets aims to further develop the market. Carbon Market Watch responded to the public consultation on this initiative with the following key comments:

• The taskforce should prioritise reduction or avoidance of emissions rather than simply boost trading.
• It should promote transparency and avoid creating opaque financial instruments.
• The voluntary carbon market should ban all projects that use fossil fuels and should exclude biological carbon sinks.

From plain offsetting to financing climate action
Just because a company finances, for example, a tree-planting project in Uganda doesn’t mean that the product it’s selling (petrol for cars, a flight…) doesn’t have a negative impact on the climate. 

Companies using voluntary carbon markets should therefore give up on the “climate neutrality” claims when they finance climate projects elsewhere in the world.

To be clear, that doesn’t mean that they should stop the financing part. It means to provide finance because it helps the receiving country to become more sustainable and reach its climate targets, not because it can be used as an excuse to continue polluting at home.  

In this scenario, the emphasis would no longer be on finding the cheapest reduction, but on financing projects that cut emissions AND benefit local communities.  This is currently a mere afterthought and a major omission in global carbon markets.