Carbon credit ratings service launched

An independent credit ratings service has been set up to give ratings for carbon offset assets in both the voluntary and compliance markets.

The Carbon Ratings Agency, part of IDEAcarbon, said the scheme was a world first and it has won the backing of Nicolas Stern, the vice chairman of IDEAcarbon’s parent company, IDEAglobal Group.

Assets will be awarded with scores ranging from AAA for the highest quality, lowest risk assets, through to C and D for those which the agency believes are least likely to meet their goals.

Bosses said the level of risk in the carbon trading market needed to be cut substantially if the market is to become as big as they predict – worth a total of Euro 1 trillion by 2020.

The agency has already rated 25 assets and plans to provide about 10 new ratings a month on a subscription basis, as well as offering its services on a mandated basis.

Speaking at the official launch at the London Stock Exchange, Ian Johnson, chair of IDEAcarbon and former vice president for sustainable development at the World Bank, said: “We need to encourage transparency, differentiate quality by price, ensure regulatory stability.

“Today we hope we are making an important contribution to that improving market solution.”

Speaking in support of the scheme, Lord Stern said: “For markets to work well, they have to have information, and they have to have information that’s respected.

“This is, I believe, the first project on ratings in markets. It is very important for them to be done well by people who understand what they are doing.”

When asked whether the scheme was still viable given the current loss of faith in credit ratings schemes, he added: “Do we conclude we want no ratings at all? I don’t think so. We would be rudderless without them.

“We have to conclude the answer is better ratings so the key issue here is to show that this is done well and that’s why the ratings process itself has to be transparent.”

Kate Martin

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