The Taskforce on Scaling Voluntary Carbon Markets (TSVCM), launched by former Bank of England governor Mark Carney, now UN special envoy for climate action and finance, announced the formation of a currently unnamed oversight body yesterday. It will “reduce CO2 emissions, preserve natural habitats, mobilise much-needed capital to develop sustainable technology and ultimately accelerate the transition to net zero”, according to a statement.
Its primary mission will be to finalise a global benchmark – the Core Carbon Principles – to provide assurance that carbon credits are valid. They have long been beset by concerns that the carbon savings they promise are not always reflected in reality, though companies and countries alike are expected to rely on them to reach net zero.
By converting offsetting into a reliable global commodity market, like steel or wheat, the market should grow substantially, distributing polluters’ money to projects that will absorb their carbon. Carney has previously said that a unified market could be worth $100bn by the end of the decade, up from only $300m in 2018.
The governance body will review the work already conducted by the taskforce and engage experts where concerns about integrity have persisted.
Its 19-member board is deliberately diverse, representing individuals from 12 countries, with 40% from the developing world. A further three members are being sought from indigenous and local communities. In a clear attempt to allay concerns about the influence of big business, representatives from civil society have taken the majority of positions.
Four are British:
Chris Leeds, head of carbon markets development at Standard Chartered
Jeff Swartz, BP’s director of climate
Mark Kenber, managing director at the Climate Advisors Trust
Michael Hugman, director of climate finance at the Children’s Investment Fund Foundation
Others come variously from the worlds of finance, diplomacy, business, academia and conservation. They will be supported by an expert secretariat and advisory panel, with further input from the TSVCM’s 250 members and a “senior advisory council of global leaders”, it says.
The principles are expected to be rolled out gradually next year. To comply, offsetting projects will have to have clear, measurable and direct impacts on reducing emissions and “full environmental and social integrity”. Accreditation will be administered by standard setters approved by the governance body.
The taskforce’s chair Bill Winters, the chief executive of Standard Chartered bank, and its own chief executive Tim Adams, president of the Institute of International Finance, will now hand over its running and join the advisory council. Operating lead Annette Nazareth, a lawyer and former US securities and exchange commissioner, will join the board.
“The governance body brings together some of the world’s most experienced and knowledgeable individuals in sectors ranging from forestry management to emissions reduction technologies in a common mission to transform VCMs, thereby giving organizations a critical tool to act on their high ambition commitments to transition to net zero emissions,” said Winters.
Dame Clara Furse, chair of the UK Voluntary Markets Forum, said: “Carbon credits are an important step in securing a path to net zero. The work of the taskforce has been essential in setting out a clear pathway towards significantly scaling voluntary carbon markets, whilst ensuring they are transparent, well governed, verifiable, and robust. The climate benefits are clear, including enabling the efficient channelling of investment from the global north to support nations in the global south who have made significant Paris-based climate commitments and offer the world an array of nature-based solutions.
“As a global financial centre at the forefront of pioneering new green financing tools and techniques, London is keen to accelerate the development of high quality, high integrity carbon credit markets. We are delighted to be involved and look forward to playing a vital role.”
Dirk Forrister, the chief executive of the International Emissions Trading Association, said that TSVCM has formed an “impressive leadership group”.
“IETA is honoured to be involved in the work of the Secretariat, with three such well-regarded partners in the Green Finance Institute, the British Standards Institute and the Center for Climate and Energy Solutions,” he added.
But critics remain unpersuaded about the project – and the validity of carbon offsetting in principle.
“Now is not the time for congratulations and praise, as we still don't have a clear picture of what it will actually recommend,” said Gilles Dufrasne, policy officer at Carbon Market Watch. It remains unclear if dubious forestry projects and double-counting by countries and companies will be hit by the rules, or if an expiration date will be introduced.
“The main priority of the taskforce should be to address and solve the existing lack of quality of carbon credits. Today's market enables practices such as oil and gas companies claiming to be selling ‘carbon neutral’ fossil fuels on the basis that they have purchased meaningless carbon credits. Many of these credits come from decade-old renewable energy projects that don't need to sell credits to operate, or from large scale forestry projects which often largely overestimate their impacts,” he told ENDS.
TSVCM has another problem, Dufrasne added: the focus on ‘scaling up’ the volume of trading, rather than climate impact. “If one tonne of CO2 is traded 100 times, the climate impact is still only one tonne of CO2. What we need is finance for mitigation, not infrastructure for speculation,” he said.