Policy news round up - June 27 2023
1. Negotiators advance talks on Article 6 technicalities despite chaos of UN Bonn summit
- Summary Parties negotiating rules for the new Article 6.4 UN carbon crediting mechanism under the Paris Agreement managed to advance discussions on technical details during UN climate negotiations held in Bonn over the past two weeks, despite chaotic scenes that held up wider progress at the gathering. Full text here.
- So what? There haven't been many headlines from Bonn, despite the important topics discussed and the amount still to be agreed on for Article 6 (6.4 in particular). However, steps forward have been taken on the technical details, and some countries are starting to think about implementation.
2. US regulator seeks whistleblower tips on carbon markets misconduct
- Summary: The US Commodity Futures Trading Commission (CFTC) on Tuesday issued an alert to inform the public on how to report instances of fraud and manipulation in carbon markets, as the regulator asserts its authority to oversee the spot credits that inform environmental futures contracts. Full text here.
- So what? Another sign that regulators in the US are interested in Voluntary Carbon Markets (VCMs), particularly market integrity and that the CFTC sees VCMs as their jurisdiction. It will be interesting to see if anything does come from this - if not it may confirm to regulators that no intervention is needed for now.
3. Indonesia expected to resume VCM crediting in September, as regulation opens conservation areas up for REDD+
- Summary: Indonesia will likely resume the approval of crediting voluntary projects once the country’s carbon exchange begins operations in September, according to the head of an industry body, as new government regulation will see REDD+ projects allowed in conservation areas. Full text here.
- So what? Some good news from Indonesia after a long period of uncertainty, and hopefully a positive sign of things to come from other countries updating their carbon markets regulation. As a major source of REDD+ credits, Indonesia is of particular interest in VCMs. Indonesia also this weeks signed an agreement with Verra. Hopefully, this shows that host countries can benefit from hosting carbon projects and have some autonomy over how they are run and regulated while remaining open to international collaboration and existing infrastructure.
4. VCM could boost investment needed in the Global South: report
- Summary: An enhanced voluntary carbon market could help boost private investments needed in Emerging Markets and Developing Economies (EMDEs) to meet rising energy demand and the goals of the Paris Agreement, according to a new report. Full report here.
- So what? We have seen negative coverage of the VCMs recently, but this report sheds light on the positive of the market.This paper demonstrates a valuable role for VCMs alongside other sources of climate finance to the Global South. VCMs will not singlehandedly solve climate change, but are a valuable tool to get capital flowing from the private sector to where it is most needed... (the credits bought must be high quality).
5.REDD+ developer rejects NGO's 'human rights abuses' claims
- Summary: The developer of the Southern Cardamom REDD+ project in Cambodia has rejected what it called "inaccurate and misleading" claims of human rights abuses cited by an NGO that prompted US certification body Verra earlier this week to conduct a review of further credit issuances from the scheme. Full text here.
- So what? The latest in a story that's been developing since last week. Verra suspended issuances from the project following 'stakeholder comments' relating to human rights abuses. Sylvera has placed this project on watch as a result of this stressing the importance of considering the impacts of a project beyond carbon.
6.SBTi launches consultation on 'beyond value chain mitigation'
- Summary: Global body the Science Based Targets Initiative (SBTi) has launched a public consultation on “beyond value chain mitigation” (BVCM), which relates to the need for companies to go above and beyond their current targets to further reduce emissions beyond their value chains. Full text here.
- So what? SBTi is a leading initiative that is taken seriously by many - over 5000 companies set targets through them. Their guidance has an important role in driving demand in the market. Along with VCMI, we hope this guidance will give clarity to credit buyers about how to use credits in a high-integrity way, alongside wider climate actions.
7. Saudi carbon credit company to launch exchange in early 2024, chief executive says
- Summary: A Saudi company established to scale up voluntary carbon market involvement across the Global South has announced it will launch an Article 6-ready exchange in 2024 and aims to establish one of the largest global markets by the end of the decade, as it hosted its second auction of credits on Wednesday. Full text here.
- So what? Another country pitching to be a global VCM leader, alongside Singapore, the UAE, and a number of other countries, continue to set up VCM infrastructures.
8. Just 5% of global emissions are covered by credible targets
- Summary: Current disclosed corporate targets are not sufficient to limit warming to 1.5C, according to CDP's new tracker, finding that only 5% of the world's emissions are covered by robust plans. Full text here.
- So what? You often hear optimistic stats about the high percentage of global GDP that is covered by net zero targets. However, this study challenges that by examining which of those targets are backed up by credible plans to achieve emissions reductions.
- There is a risk that future targets are the next frontier of greenwashing, as they require little action now and can always be reneged in the future. Initiatives such as the UK's Transition Plan Taskforce aim to crack down on this by developing frameworks for net zero transition plans that are required alongside claimed targets.
9. Biodiversity offsetting scheme has had limited-to-no impact, study finds
- Summary: A scientific study carried out by a group of scientists from British and Australian universities evaluating the impact of one of the first established biodiversity offsetting schemes on native vegetation found it was not possible to conclusively demonstrate the policy had resulted in a net biodiversity gain due to limited data and the lack of robust impact evaluations. Full study here.
- So what? This study is interesting because of the potential lessons for biodiversity credits, a hot topic at the moment. Particular challenges highlighted include limited additionality and the challenges of finding robust evidence to quantify impacts. Nature offsetting is increasingly being enforced through policies including in the UK, but there is a risk that little real impact is achieved unless big improvements are made from these early experiments.
10. UK heatwave prompts National Grid to fire up coal plant to meet aircon demand
- Summary: National Grid has asked the Ratcliffe coal-fired power station to warm up to cope with extra electricity demand for air conditioning as much of Britain swelters in the recent heatwave. Full text here.
- So what? This coincides with another story this week: France will reach the level of electricity consumption expected in 2050 as early as 2030. Electrification is seen as a key part of decarbonization, but this is only true if the grid is greened. At the moment, extra demands for electricity have to be met by fossil energy. This raises tricky questions for climate solutions such as DAC, which have huge electricity demands. How can this be met without displacing clean energy from the grid and delaying moves away from fossil power?
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