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Policy news round up - May 17 2023

May 17, 2023

Here is our rundown of the top policy stories from the past 2 weeks:

1.EU Parliament votes to clamp down on carbon neutral claims, early obsolescence

  • Summary: The European Parliament voted in favor of amendments to the draft updates to consumer protection legislation which would ban companies making “carbon neutral” claims, including outlawing environmental claims based solely on carbon offsetting. A prohibition on future 'net zero 2050' performance claims was rejected. MEPs have voted in favor of allowing only sustainability labels based on official certification schemes or established by public authorities. This law would now need to be approved by the European Council and Commission. Full text here
  • So what? Another week, another story about claims. This move will drive transparency and bring more clarity to corporates about what they can and can't do. Although some might fear that banning 'carbon neutral' would reduce demand for credits, we know from our research that most buyers of carbon credits are also decarbonizing and so can credibly make more ambitious climate claims.

2.Adverts claiming products are carbon neutral by using offsetting face UK ban

  • Summary: The Advertising Standards Authority (ASA) plans to enforce stricter regulations around the use of terms like "carbon neutral," "net zero," and "nature positive" due to concerns of greenwashing. The crackdown comes after a six-month review amid growing worries about businesses misleading consumers regarding the environmental impact of their products. Full text here
  • So what? Yet another claims story — many consumers are influenced by climate claims in adverts when they are making purchases. There is a low public understanding of what these different terms mean and these new regulations by the ASA could bring much-needed transparency to the advertising industry.

3. Eleven carbon credit program pitch for CORSIA eligibility

  • Summary: CORSIA has received 11 applications from companies and organizations that will be assessed on their eligibility to supply emissions reduction units for the first phase that goes live next year. Full text here
  • So what? The first phase of CORSIA will begin next year (after the pilot phase which began in 2021). Approved standards hope that this will drive an uptick in demand for credits. Additionally, several of the standard-level criteria for ICVCM's CCP approval are based on CORSIA criteria (with some additional tests). Which of these standards are approved will be an indicator of what to expect with the ICVCM

4.India to participate in CORSIA aviation offsetting scheme from 2027

  • Summary: India have announced their plans to join the aviation sector's emission reduction and offsetting scheme. They will not participate in voluntary phases but will join from the start of the mandatory phase in 2027.Full text here
  • So what? India and China have two of the world's largest aviation sectors, and were historically holding out against CORSIA, limiting its impact. Now India have signed up, China might be feeling the pressure to do so too. CORSIA is seen as a positive for driving demand for carbon credits, although its use of a 2020 baseline (during a global pandemic when international travel was hugely limited) means that demand so far has been minimal.

5. Australia to finance Article 6 demonstration carbon credit projects under IPCOS, action plan says

  • Summary: Australia will fund demonstration Article 6 eligible carbon credit projects in Papua New Guinea as part of the Indo-Pacific Carbon Offset Scheme (IPCOS), although the government has said it will only focus on capacity building in the initial phase of the scheme. Full text here
  • So what? A positive sign that countries continue to engage in operationalizing Article 6, if slowly. This is also an example of how Article 6 might impact VCMs - PNG still has a moratorium on REDD+ and might be hoping that it can engage in carbon markets only through Article 6, where the government can have more direct control and receive a higher proportion of the finance. 

6.Senators eye ‘CHIPS 2.0’ as vehicle for carbon tariff

  • Summary: US lawmakers on both sides of the aisle are discussing how to pass CBAM legislation that would put tariffs on foreign manufactured technology (particularly looking to make Chinese imports less competitive). There are currently four separate CBAM proposals in the US Senate, two from Democrats and two from Republicans. Full text here
  • So what? The US interest in CBAMs is driven by a desire to make Chinese imports less competitive and support US industry. Regardless of the motivation, introducing more robust carbon-pricing infrastructure is likely to have a positive impact on emissions. It will also encourage the development of carbon pricing regimes elsewhere: the EU's CBAM is already accelerating China's interest in developing a domestic carbon market.

7.Indigenous organizations publish letter supporting REDD+

  • Summary: Forty indigenous organizations have published a letter in support of REDD+ as a mechanism to transfer climate finance to the Global South. Full text here
  • So what? Pushing back against the recent negative coverage of REDD+, these organizations point out that their voices are still not being represented in coverage. They see huge value in the co-benefits of REDD+. REDD+ might be a priority area for biodiversity credits, to more explicitly value these non-carbon benefits of forest conservation.

8.Indonesia plans open, registered carbon trading: ministers

  • Summary: Government minister has said that "carbon trading in Indonesia is open but it must be registered" (through the Ministry of the Environment and Forestry). Reflects government intention for Indonesia to become a carbon market-maker rather than being dependent on international prices. Full text here
  • So what? Indonesia is the world's largest issuer of REDD+ credits, but last year the government indefinitely suspended the issuances of carbon credits for 2021 vintages onwards in 2 of the largest provinces. New legislation was released but didn't bring much clarity, and only one project has been re-validated so far. 
    This is one example of how the Paris Agreement and Article 6 are indirectly affecting VCMs, and as we expect it'll still be at least a year for the final rules for Article 6 to be agreed this might drag on for some time. This latest update is a positive sign for Indonesian projects but also indicates a permanent change to how Indonesia approaches the carbon projects they host. This seems to be the start of many countries as justifiably demanding more sovereignty on carbon.

9.VCMI seeks forum participants to assess new code of practice

  • Summary: The VCMI has announced that it will launch an 'operable' Claims Code of Practice on 28 June. It is also convening a stakeholder forum "to ensure that VCMI guidance is well designed, easy to understand and effective". Full text here
  • So what? The issue of how companies can talk about their purchase and retirement of carbon credits is becoming a very hot topic. On the one hand, we need to guard against greenwashing , but on the other hand without an incentive companies are unlikely to engage in VCMs. VCMI is the attempt for the VCMs to self-regulate this issue, and we're waiting to see if this turns out to be an effective solution. If guidance is strong and well-received, it could herald a revival in demand in VCMs and legitimize the role of credits alongside decarbonization. However, they have a tricky task balancing many conflicting opinion.

10.South Pole proposes new 'Paris-aligned' corporate climate claim

  • Summary: South Pole has launched a stakeholder consultation on the introduction of a new corporate claim that attests to funding climate action aligned with the temperature goals in the Paris Climate Agreement, in the wake of "backlash" against terms such as carbon neutral. Full text here 
  • So what? A different approach to the claims issue. South Pole takes credit for coining the term 'carbon neutral' but recognizes that term is no longer ambitious enough and so have come up with a new approach. If this new claim catches on like carbon neutral did, it could have a big influence
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About the author
Policy Associate

Polly Thompson is a Policy Associate at Sylvera. She holds a masters degree in Climate Change from UCL and a degree in Natural Science from the University of Cambridge. A former teacher, her role in the policy team focuses on communications and sharing climate and Voluntary Carbon Markets expertise.