Policy news round up - September 18 2023
September 18, 2023
1. Apple using nature-based offsets to achieve carbon neutral status
- Summary: Tech giant Apple is using “high-quality” nature-based carbon credits to offset residual emissions as it rolls out its first carbon-neutral products. The latest version of the Apple Watch represents the company’s first carbon-neutral product and “marks a major step” towards the goal to make every product carbon neutral by the end of the decade, including the entire global supply chain and the lifetime use of every device Apple makes, the company said Tuesday. Full text here
- So what? “Carbon neutral” has remained relevant in the US, whereas it has become increasingly risky from a legal/ regulatory perspective in the EU, and many certifications are dropping the claim. Large corporations like Apple have the potential to influence expectations and norms, and this move has shown a vote of confidence in the use of carbon credits.
2. Biden-Harris administration announces up to $1.2 billion for nation’s first direct air capture demonstrations in Texas and Louisiana
- Summary: US President Joe Biden's administration revealed on Friday that it will provide $1.2 billion in funding to advance the development of the nation's first commercial-scale Direct Air Capture & Storage (DACS) facilities. Full text here.
- So what? The IRA (Inflation Reduction Act) included tax credits for DAC and point source CCS. But the Biden Administration has been signaling for months that they are interested in more direct support for 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 hugely scaled-up CDR is essential for keeping us to 2 degrees, and so wider systemic support through schemes like this is hugely valuable, as long as it’s not pulling funding from elsewhere.
3. ANALYSIS: One year in, the US IRA climate law has triggered a global green industry race.
- Summary: One year has passed since the launch of the subsidy-laded Inflation Reduction Act (IRA) in the US, with the legislation igniting domestic clean tech development but also sparking a green investment race in Europe and worldwide. Full text here.
- So what? An analysis of Biden's flagship IRA one year in. Although a compromise from his original proposal, the policy seems to be having a net positive effect in incentivizing green growth both in the US and overseas. More analysis in this MIT report.
4. UN body hails "quantum leap" in carbon mechanism discussions, but leaves methodologies guidance to go to the wire
- Summary: The UN body responsible for guiding the Paris Agreement's carbon crediting mechanism made significant progress at this week's penultimate meeting, with observers noting they had never seen such consensus among the group, but ultimately failed to adopt final texts on methodological guidance after running out of time, leaving crunch discussions for the final meeting later this year. Full text here
- So what? We were hoping for some news this month about a position on methodologies and removals for Article 6.4. New norms established here have the potential to shape the VCMs, and also Article 6.4 in itself. But we'll have to wait a little longer for any meaningful news about what we can expect and when.
5. Science-based targets see 87% increase in companies with validated targets, but monitoring remains a challenge
- Summary: The Science-Based Targets initiative (SBTi) signaled a significant increase in validated corporate climate targets in its 2022 annual report, but flagged a lack of full coverage with progress reporting. Full text here
- So what? An increase in companies setting science-based net zero targets is only good for the climate if progress is made towards those targets. This annual report highlights particular gaps around monitoring and reporting, as highlighted by our report on climate-related disclosures. New regulations in jurisdictions such as Singapore, the US and the EU might address some of these concerns, but there is increasing interest in whether SBTi will start to require more stringent disclosures or even third party verification (see below).
6. Arbiter of corporate climate plans faces shake-up
- Summary: The Science Based Targets initiative (SBTi) will become a standalone UK company that will examine and validate corporate net zero emission targets, a service for which it charges fees. The profits will go to a separate non-profit umbrella body that will continue to set the standards for those targets, with the full structure to be put into place by year end. Full text here.
- So what? This has mainly been done to address criticisms of the previous structure about possible conflicts of interest due to the lack of independence between the body setting standards and the validating body.
- One issue highlighted in the FT coverage is that 'the SBTi does not check the accuracy of the emissions data reported by companies, and does not require the data to be verified by a third party'. Recently proposed guidance including the VCMI's Claims Code of Practice and Singapore's climate disclosure rules do require third party assurance. With this direction of travel we might expect SBTi to come under pressure to up its stringency here.
7. Suriname set to issue 8.9m Paris-era sovereign credits
- Summary: The South American country of Suriname is set to issue 8.9 million sovereign REDD+ credits for the years 2020-2021, representing its efforts to arrest deforestation under a protocol developed by the UN. Full text here.
- So what? Jurisdictional approaches to REDD+ are becoming increasingly popular as a way to address concerns such as baseline inflation and land tenure. However, RRUs previously issued from Gabon failed to sell due to concerns around additionality and vintage. For a recap on RRUs vs JREDD+ credits, check out our Guide to Jurisdictional REDD+.
8. Amendments to Brazil ETS legislation seek VCM integration, energy transition crediting
- Summary: Brazilian senators over the past week proposed eight amendments to Brazil's emissions trading system legislation to integrate the voluntary carbon market (VCM) and set offset usage limits, give credits to firms for transitioning to renewable energy sources, and narrow down the list of regulated sectors. Full text here.
- So what? A Brazilian ETS is good news for the climate, and also could be positive for carbon markets everywhere as the new amendments suggest that regulated entities could use domestic carbon credits to meet their obligations and that SBCE allowances and carbon credits would be eligible for international transfers, subject to authorization.
9. Zimbabwe backtracks on carbon credit revenue grab, but will still take 30% -media
- Summary: Zimbabwe has reportedly rolled back on its plans to take half of all carbon credit sale proceeds and ringfence a further 20% for local communities in the wake of concerns from investors. Full story here.
- So what? In May 2023, Zimbabwe had announced that the government would be entitled to 50% of all carbon project revenue, with an additional 20% of gross revenue to be set aside for local communities/local investors. Along with this announcement, all existing carbon crediting agreements were declared null and void. This rollback has been met gladly by many investors, but it’s unlikely to be the last story we hear about new policy and regulation in host countries as they adapt to new market dynamics.
10. Push for biochar carbon removal to be considered as permanent removal in EU’s CRCF
- Summary: The CRCF (Carbon Removal Certification Framework) is a EU voluntary regulatory framework for the certification of carbon removals. So far it recognizes 3 types of carbon removal categories: carbon farming (such as reforestation and soil carbon management), permanent carbon storage (such as BECCS and DACCS), and carbon storage in products. Now, the EU AGRI Committee is pushing for biochar to be considered.
- So what? There are a number of implications for how this shapes demand for and perceptions of biochar and other removals. One of particular importance is that biochar could be allowed to be used to meet some EU ETS obligations, if removals are integrated into the EU ETS in coming years (as many think is likely long term).
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