Carbon offsetting: Global governance body to be formed this year
With more businesses turning to carbon offsetting as a means to net-zero, the sector will need to grow dramatically - but concerns persist about greenwashing. To that end, plans have been drawn up to launch an independent governance body by the end of 2021.
The plans have been unveiled today (8 July) by the Taskforce on Scaling Voluntary Carbon Markets (TSVCM) – the organisation set up by former Bank of England Governor Mark Carney late last year, with the aim of taking stock of existing voluntary offsetting schemes and identify key challenges to scaling them up while ensuring credibility.
The Taskforce has developed the plans using the results of an in-depth public consultation earlier this year, which attracted more than 130 responses from individual academics, thought leaders and policy experts, as well as businesses and NGOs. Before the consultation, the Taskforce had already consulted with its 450+ members and more than 100 external “interested parties”, it said in a statement.
Throughout these processes, the majority of respondents voiced strong support for the launch – sooner rather than later – of an independent governance body for the sector with a global remit. This body would be tasked with overseeing a “unified voluntary carbon market, with high-quality carbon credits and legal standards”.
In 2020, the Taskforce estimated that the current market for offsets will need to grow by at least 15-fold by 2030 if the private sector is to align with the Paris Agreement’s 1.5C trajectory. By 2050, he warned, it may need to be up to 160 times bigger than in 2020. But with concerns about greenwashing, double-counting and standards varying between nations and regions persisting, the Taskforce has proposed measures to weed out the sector’s biggest problems as it scales.
A set of ‘Core Carbon Principles’ has therefore been outlined for the new governance body. Principles stipulate that credits must be real; based on realistic and credible baselines; monitored, reported and verified; permanent; additional; minimise leakage; only counted once and not contribute to any other net-harm (e.g. on biodiversity or local communities). The hope is that the Core Carbon Principles can be embedded into legal standards by nations and through international agreements.
However, the new TSVCM report does state that the body “will not exclude any credits from the market”. Instead, only "high-quality" credits will be labelled as compliant with the Core Carbon Principles.
There are also principles concerning the operation of the Taskforce. These cover issues such as programme transparency and public participation; independent, third-party verification; operating a publicly accessible registry and having strong governance.
The TSVCM has this week opened a channel for expressions of interest to join the new body’s board of directors, expert panel and executive secretariat. At each of these levels, multiple parts of the carbon offsetting value chain will be represented, such as NGOs, investor alliances, industry associations, academics and market participants, including suppliers, buyers, investors and market intermediaries.
“Today, demand in the voluntary carbon market is held back by a lack of a high-quality standard for credits,” the World Resources Institute’s director of private sector climate mitigation Cynthia Cummis said.
“Corporate buyers are concerned about the environmental and reputational risks connected with the purchase of credits. The work of the Taskforce is playing an important role to advance efforts to increase carbon credit quality and drive climate action, beyond abatement, on the path towards net-zero.”
Banking on ‘Project Carbon’
In other major carbon offsetting news this week, a group of large banks have announced plans to collaboratively pilot a digital platform for trading carbon offsetting next month, using blockchain to ensure credibility.
The platform, called Project Carbon, is being developed by NatWest, CIBC, ITAU and the National Australia Bank. It will provide a book of record for the ownership of carbon credits, allowing holders to demonstrate possession. Blockchain will be used to create a tamper-proof chain of audit, enabling the holders of the credits to trace credits back to their source projects. This, it is hoped, will mimise the risk of double-counting and weed out projects that do not offer additionality.
Project Carbon will launch as a pilot in August. This trial, the banks said in a statement, will be used to "demonstrate the operational, legal and technical capability of the platform" ahead of a broader roll-out.
The statement added: "Tackling climate change is everyone's job. "We're helping to find solutions and support our customers as they take action to transition to net-zero by 2050. Project Carbon is a terrific example of how technologies such as blockchain can address existing barriers and make carbon offsets more accessible for our customers - as part of their broader plans to reduce overall emissions and achieve their own targets."
Elsewhere, a group of UK local authorities have teamed up to pilot a new framework for accelerating insetting - the process of sequestering additional carbon within their jurisdictions. The framework has been developed with support from sustainability consultancy Anthesis and, in the first instance, is being used by the councils that co-developed it: Brighton & Hove City Council, Blackburn with Darwen Borough Council; Cheshire East Borough Council; Horsham District Council; Leicester City Council; Leicestershire County Council; Oxford City Council; Richmond Borough Council; Shropshire Council; Trafford Council; Wandsworth Borough Council and West Sussex County Council.
An insetting guidance framework for other local authorities will then be pulished in the fourth quarter of 2021.
Sustainable Business Covered podcast: What role do carbon markets and pricing play in the net-zero transition?
Readers interested in this article are encouraged to stream edie's recent podcast episode on carbon offsetting by businesses and trading schemes orchestrated by nations.
The episode features exclusive interviews with he Taskforce on Scaling Voluntary Carbon Markets’ Chris Leeds and Lord Barker of Battle, former UK Energy and Climate Minister and current chairman of aluminium and hydropower conglomerate EN+ Group. Lord Barker speaks in his new role as co-chair of The World Bank's Carbon Pricing Leadership Coalition.
You can stream this episode, the 103rd in edie's Sustainable Business Covered Podcast series, by clicking here.