Climate 411

What a carbon credit buyer wants: New survey from BCG shows higher demand for high quality in the voluntary carbon market

By Alex Hanafi / Published: September 15, 2023

The voluntary carbon market has been in a flurry in the past year to define integrity and quality for carbon credits. Between the recently released Core Carbon Principles from the Integrity Council for the Voluntary Carbon Market, to the Claims Code of Practice from the Voluntary Carbon Market Initiative, we now have more guidance and insight than ever before to guide carbon crediting programs and project developers toward high quality and integrity.  

But the question remains: are companies willing to spend more for higher-quality carbon credits, as they seek to credibly achieve their climate goals? Little research exists to quantify the preferences of carbon credit buyers themselves—which credit attributes they prefer, how much they are willing to pay for them, and which qualities they consider must-haves. Understanding these preferences – and what shapes them – can help reveal pathways to a higher-quality voluntary carbon market, including by better directing carbon credit suppliers’ investments, as well as guiding interventions by standard setters and civil society organizations to where they are most needed. 

To better understand carbon credit buyer preferences, Boston Consulting Group (BCG), with contributions from EDF, surveyed nearly 500 company leaders in charge of voluntary carbon credit purchases for their companies. The results are now in: the new study found that buyers across market segments are willing to pay significantly more for credits with demonstrably high quality.  Read More »

Posted in Carbon Markets / Comments are closed

COP 25: Carbon markets in the spotlight

By Alex Hanafi / Published: December 3, 2019

Staff and volunteers welcomed at COP 25 in Madrid.
UNclimatechange via Flickr

International cooperation on carbon markets, covered in Article 6 of the Paris Agreement, is at the top of the agenda for the COP 25 climate talks in Madrid this week. Since leaving the Article 6 section of the Paris Agreement without agreement at COP 24, negotiators have continued to work over the past year to garner support for a deal, before countries shift focus to preparing their critical next round of NDC pledges, due next year.

They will do this against a backdrop of political disruption, but continued determination to finalize the Paris Agreement’s operating instructions, known in the UN as the “rulebook”.

Civil unrest in Chile led that country’s president to take the unprecedented step of canceling the climate conference only five weeks before its scheduled start. Spain quickly stepped in the next day to offer to organize the negotiations, known as COP 25, in Madrid. The United States earlier this month officially began the process to withdraw from the Paris Agreement. All this is happening while the increasing impacts of climate change are being felt around the world; fires have ravaged Australia and California, while historic flooding is drowning Venice and dangerous pollution is choking Indian cities. And a new World Meteorological Organization report confirms that the atmospheric concentration of three key greenhouse gases – methane, CO2, and nitrous oxide – continues to rise.

Although the ultimate success of the Paris Agreement will be judged many years from now, how the rules on international carbon markets are decided in Madrid could make or break the ambition of the Paris Agreement.

That’s because international carbon market cooperation underpinned by strong accounting and transparency rules can help drive emissions down significantly: research shows that well-designed carbon markets could nearly double the ambition of current national climate pledges, at no extra cost.

However, weak rules for carbon trading between countries could fundamentally undermine the Paris Agreement. By allowing countries and the private sector to “count” carbon credits that don’t represent real emissions reductions, a bad set of rules on Article 6 could negate the climate ambition of current climate pledges.

What is a good Article 6 agreement?

Read More »

Posted in Carbon Markets, COP 25, Paris Agreement, United Nations / Comments are closed

Carbon markets: Can countries fill in the missing chapter of the Paris rulebook in Bonn?

By Alex Hanafi / Published: June 17, 2019
https://www.flickr.com/photos/unfccc/48078728413/in/album-72157709079202332/

Bonn Climate Change Conference opening plenary. UNclimatechange

Negotiators are meeting in Bonn, Germany this week and next on the back of the successful negotiations in Katowice, Poland where the Paris climate agreement “rulebook” was mostly agreed, on time. A feat nearly unprecedented in the often glacial UN climate talks provides hope that countries can continue to work together in light of the urgency to address climate change.

The one exception to the success in Katowice was international cooperation through carbon markets. Despite taking the session into overtime, negotiators could not agree on a key chapter of that rulebook – the text meant to catalyze international cooperation on carbon markets under Article 6.

Among other things, Article 6 guidance will spell out how countries can “count” the results of international emissions reduction trading toward their Paris greenhouse gas reduction pledges (known as nationally determined contributions, or NDCs). Article 6 has three main components framing international cooperation under the Paris Agreement. Article 6.2 provides for the accounting framework, Article 6.4 establishes a new UNFCCC mechanism and Article 6.8 provides a framework for non-market approaches.

As one of the last items that need to be addressed after COP24, carbon markets will be a central focus of the negotiations in 2019 and Article 6 will benefit from additional political focus on the road to agreement at COP25 in Santiago de Chile in December.

Here we answer key questions about carbon markets and the UN climate talks.  Read More »

Posted in Carbon Markets, International, Paris Agreement, United Nations / Comments are closed

COP 24: Transparency, ambition and carbon markets on the Paris rulebook agenda in Katowice

By Alex Hanafi / Published: December 3, 2018

See EDF’s COP 24 materials and meet our Katowice team at edf.org/cop24.

COP 24 Opening Plenary in Katowice, Poland. Flickr/ UNclimatechange

As the world’s leading climate scientists made clear in a recent special report, we are in the race of our lives against climate change, and we need to move faster. The Paris Agreement’s rapid entry into force in 2016 broke records, but records are also being broken outside of the UN that emphasize the urgency of action: record wildfires, record temperatures, record storms, record levels of carbon in the atmosphere.

So the stakes are high in Katowice, Poland, as countries meet to finalize the operating manual for the landmark Paris Agreement on climate change. In 2016, countries set themselves a deadline of this year to complete their task. Once agreed, the Paris “rulebook” will guide them in their efforts to implement the Agreement, including how countries will measure, report and hold each other accountable to their Paris commitments.

Two interrelated issues will be particularly important for the rulebook discussions in Katowice.

First is how to operationalize the Paris Agreement’s transparency system; transparency is vital to strengthening ambition and to the success of the agreement itself.

Second is how that transparency system should link to a new framework for international carbon market cooperation designed to spur the deeper emissions cuts that climate science demands. Read More »

Posted in Carbon Markets, Paris Agreement, United Nations / Comments are closed

7 reasons avoiding double counting of emissions reductions helps countries, and the environment

By Alex Hanafi / Published: September 26, 2018

Photo credit: iStock

Meeting the Paris Agreement’s ambitious goal – to hold “the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial level” – will necessitate dramatic reductions in total emissions of greenhouse gases.

Market-based approaches that follow well-established “rules of the road” for emissions accounting and transparency have a powerful role to play in helping countries to meet their near-term commitments as efficiently as possible, and in encouraging and even accelerating the broad and ambitious long-term climate action that the Paris Agreement demands.

By affirming a role for market-based approaches in Article 6, the Agreement recognizes the realities on the ground, where emission-trading systems are already at work in over 50 jurisdictions home to nearly 2 billion people. More than half of the world’s countries have so far expressed an interest in using carbon markets to meet their pledges, including for achievement of conditional targets, in their NDCs (“nationally determined contributions”) under the Paris Agreement.

But if the Paris Agreement goals are to be met, the risk of “double counting” emissions reductions must be avoided.

That is why the Paris Agreement rulebook to be finalized this December in Poland at COP 24 should clearly and unambiguously state that any country that voluntarily chooses to transfer some of its emissions reductions must transparently “add back” a corresponding amount of emissions to its own emissions account. This is known as a “corresponding adjustment,” and it should apply to all transfers: whether the transferred reductions occur inside or outside the country’s NDC; and whether the reductions are being transferred to another country or to the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

A corresponding adjustment has clear environmental benefits for both participating countries and our shared climate. Here are 7 of them:

Read More »

Posted in Aviation, Carbon Markets, Paris Agreement, United Nations / Comments are closed

Once is enough: how climate negotiators can protect the environmental integrity of the Paris Agreement by avoiding double counting

By Alex Hanafi / Published: September 4, 2018

Climate ambition is often thought of in terms of the stringency of emission reduction commitments, expressed by countries under the landmark Paris Agreement as Nationally Determined Contributions (NDCs). While the NDCs that have been pledged by countries are important, they are only the first step.

To truly assess progress in reducing global climate pollution, it is necessary to look behind country pledges to understand exactly how their emissions are counted and reported. We need consistent accounting rules and transparent reporting to ensure the world is on track.

The details of accounting and transparency may sometimes sound boring and technical. But the content of these rules is as important as countries’ headline climate targets, since the headline numbers are only as good as our ability to ensure countries are clearly reducing emissions and counting those reductions accurately.

Fortunately, these same accounting and transparency rules – if done right – can also help unlock the potential of carbon markets to drive investment and innovation up, and pollution down. Read More »

Posted in Aviation, Carbon Markets, United Nations / Comments are closed