Policy news round up - June 1 2023
Here is our rundown of the top policy stories from the past 2 weeks:
1. International cooperation can double emissions savings under the Paris Agreement, new report finds
- Summary: International cooperation under Article 6 of the Paris Agreement could more than double the volume of carbon reductions that nations can make towards their national targets by first exploiting reductions that can be made at a lower cost. Full text here.
- So what? Confirms the economic principle behind carbon markets and particularly supports the role of trading between countries, not just in the private sector. This report is commissioned and published research by IETA - the International Emissions Trading Association.
2. World Bank report: State and Trends of Carbon Pricing 2023
- Summary: An annual World Bank report on carbon markets. Chapter 3 focuses on VCMs and Article 6. Chapter 2’s analyses on compliance markets are also interesting, and include the statistic that international revenues from carbon taxes and Emissions Trading Systems (ETS) have reached a record high: ~$95 billion. Full text here.
- So what? It’s a pretty long and detailed report with a useful reference resource for any questions and statistics about what has been going on with carbon markets and pricing in the last 12 months.
3. Adverts claiming products are carbon neutral by using offsetting face UK ban
- Summary: Adverts that claim products are carbon neutral using offsets are to be banned by the UK’s advertising watchdog unless companies can prove they really work, the Guardian reports. Amid growing concern that firms are misleading consumers about the environmental impact of their products, the country's advertising standards authority (ASA) is to begin stricter enforcement around the use of terms such as “carbon neutral,” “net zero” and “nature positive”. Full text here.
- So what? The rapid pace of change in this area matters for organizations and for the wider VCMs. This would be the first time a country has set such a stringent test for carbon neutrality claims but is likely to be followed in other jurisdictions. There is still uncertainty how carbon credits will fit into new climate claims.
4. US plans to launch carbon removals purchasing program by year-end, as senators push reverse auction mechanism
- Summary: Joe Biden's administration aims to expand its support for carbon removals beyond direct air capture by launching a purchasing program covering all forms of removals by year-end. Full text here.
- So what? The IRA (Inflation Reduction Act) included tax credits for direct air capture (DAC) and point source carbon capture and storage (CCS). This new project aims to increase the scope by covering al carbon dioxide removal (CDR). At the moment demand for durable CDR is still hugely exceeding supply - companies have purchased >million tonnes of engineered CDR despite only a few thousand tonnes being delivered so far. But scaled up CDR is essential for keeping us tracking towards the Paris Agreement targets, and so wider systemic support through schemes like this is hugely valuable, as long as it’s not pulling funding from elsewhere.
5.Open-source carbon credit metadata system unveils prototype
- Summary: Climate Action Data (CAD) Trust released a detailed prototype of its open-source metadata system, demonstrating how users will be able to more easily navigate carbon markets on a single platform. The platform's goal is to integrate all registries across voluntary and compliance markets. Full text here.
- So what? CAD Trust is a World Bank/ Singapore/ IETA collaboration aiming to bring transparency to carbon markets. This launch comes after a nearly 4 year testing and consultation period. At the moment we can only see a sneak preview of what's to be fully launched in July, but it has so far been met positively.
6.Engineered removals community slams ‘skewed’ UN stance ahead of key talks
- Summary: An information note published ahead of the Bonn Intersessional aiming to reflect the views submitted by governments and stakeholders so far says engineered removals 'do not serve the objectives of the Article 6.4 mechanism.’ In contrast, NBS are presented very positively. Full text here.
- So what? The Bonn Intersessionals are meetings held roughly halfway between COPs (June 5 -15th this year) to progress negotiations on key issues that parties (i.e. countries who signed the Paris Agreement) hope to agree at the COPs.
A big focus will be the discussions around operationalizing Article 6.4. In preparation for this, the UNFCCC has released some information notes explaining the state of play and summarizing the views submitted by parties. Many parties are suspicious of DAC and other engineered removals because they are worried it will distract from the investment needed in mitigation and adaptation needed in less developed countries. However, many other parties see engineered carbon as the only way to scale carbon removals to the scale needed to meet the Paris goals. An interesting debate to follow over the next few weeks.
7. Zimbabwe to take over carbon credit trade, void past deals
- Summary: All past agreements signed with international agencies and organizations are now “null and void,” according to Monica Mutsvangwa, the information minister. Under the new framework, put together by Finance Minister Mthuli Ncube, Treasury will be entitled to 50% of any revenue from the credits while foreign investors can earn as much as 30% and local investors must get at least 20%. Full text here.
- So what? Zimbabwe is a large forested nation and hosts a number of projects including controversial REDD+ project Kariba. There has been a lot of reaction to this news - in Carbon Pulse commentators called it 'an opportunistic move that could render offset projects in the country and elsewhere unattractive or unviable, while also potentially spurring other nations to demand similar concessions.’The news triggered a fall in Quantum Commodity's nature-based index, taking it to an all time low. But others have welcomed the news, and recognized that there will be mistakes and uncertainty as this is new, but it is the right direction of travel to safeguard the rights of host countries and benefit-sharing.
8. Brazilian state to ink jurisdictional REDD+ deal with Mercuria
- Summary: The central Brazilian state of Tocantins is expected to sign a 10-year emissions reduction purchase agreement (ERPA) with commodity trader Mercuria on 245 million jurisdictional REDD+ credits. This will make Tocantins the first subnational state in the world to transact its credits. Full text here.
- So what? Another milestone for JREDD+: the first JREDD+ credits from Brazil to be sold through the VCM, and the first sub-national JREDD+ credits. Credits are yet to be verified, validated or registered but are expected to go through either ART TREES (Tocantins's programme was approved in 2020) or Verra JNR.
9.Colombia Indigenous people’s REDD+ lawsuit progressing could set precedent in voluntary carbon market
- Summary: Colombia’s High Court has selected to hear a lawsuit from an Indigenous group against a REDD+ project within their territory in the Amazon rainforest, potentially setting a precedent for drawing legal limits on similar voluntary carbon market projects in the country. Full text here.
- So what? A very specific case but one that could set a precedent for how the rights and opinions of Indigenous peoples and local communities (IPLCs) must be better considered in the design and implementation of REDD+ projects in Colombia and further afield. Even if the case isn’t eventually found in their favor, it is expected to take a while to conclude, and in the meantime projects may be more cautious with their IPLC engagement processes.
10.World likely to breach 1.5C climate threshold by 2027, scientists warn
- Summary: The World Meteorological Organization says El Niño and human-induced climate breakdown could combine to push temperatures into ‘uncharted territory.’ The world is almost certain to experience new record temperatures in the next five years, as temperatures are likely to rise by more than 1.5C above pre-industrial levels at least temporarily. Full text here.
- So what? Disappointing news and should encourage everyone to work harder towards their net zero goals.
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