© Leo Correa / AP Photo Filao trees form a buffer to reduce coastal erosion along Senegal’s Atlantic coast. US climate envoy John Kerry has announced a carbon market plan that could allow countries to offset climate change emissions.
Sharm el-Sheikh, Egypt. US climate envoy John Kerry on Wednesday presented a proposal for companies to pay billions of dollars to developing countries to reduce their reliance on fossil fuels. A plan that would allow the White House to bypass potential opposition. He led the republican assembly.
But other countries at the United Nations climate conference in Egypt said the plan was an attempt by the world’s richest nation and the largest producer of greenhouse gases in history to avoid providing direct aid to countries fighting climate change.
“It’s not enough,” said a senior Latin American negotiator attending the global climate summit in Sinai, referring to the United States. “And they come up with these big plans and big goals and say, ‘Now we’re saving the world.'”
The person spoke on condition of anonymity to avoid angering US officials.
The framework, which Kerry announced Wednesday morning in Sharm el-Sheikh, two days before President Joe Biden’s planned visit to COP27, aims to address two competing concerns: one addressing the growing scourge of a warming planet. Getting that help outside of Republican opposition in Congress is “not realistic,” Kerry said in a September speech.
The chances of Congress approving climate aid in January will be slimmer as Tuesday’s midterm elections push for Republicans to take control of the House of Representatives.
Kerry instead proposed creating a voluntary market where companies buy carbon credits to offset greenhouse gas emissions and meet corporate climate goals. These credits will be generated when developing countries or their subnational governments transition their energy systems away from fossil fuels.
“We need to accelerate our clean energy transition, and that, my friends, takes money,” Kerry said, adding that there is not enough government funding to keep global warming below the 1.5 degrees Celsius set by the Paris Commission. Who: 2015 Climate Agreement
“There is no government in the world that has enough money to do that,” he said.
Kerry spoke as the Biden administration touted cooperation in Sharm el-Sheikh. He agreed to include climate offsets as a topic for discussion on the conference’s official agenda. A senior US administration official told reporters on Tuesday that Biden, who will attend Friday’s talks, will use his presence to discuss financing for developing countries, including an injection of taxpayer dollars.
“We are very interested in solving the problems of vulnerable countries and doing everything we can to show solidarity with these communities,” said the official, who spoke on condition of anonymity to discuss Biden’s plans in advance.
Kerry’s proposal would use private dollars to help close the climate finance gap. Kerry developed the framework in close cooperation with US banks, and the State Department and the Rockefeller Foundation have met with experts in New York and Washington over the past few months.
Experts attending the meeting said the funding could come before energy improvements, such as early commissioning of coal-fired plants, wind power, new solar power or grid upgrades.
The proposed carbon offset initiative would be separate from the transboundary emissions trading program that countries can use to meet greenhouse gas reduction targets under the Paris Agreement. These markets are subject to the so-called Article 6 rules, which were finalized by delegates at last year’s climate talks in Glasgow, Scotland.
The government’s right to sell credits in Kerry’s proposed market would depend on its ability to demonstrate carbon reductions beyond the baseline emissions path, which path would be verified by an independent agency.
Credits will be based on national or national clean energy transition plans rather than individual projects to ensure sustainability and take full advantage of emission reduction opportunities. This is a lesson learned from previous UN emissions trading efforts, such as the 1997 Kyoto Clean Development Mechanism, where environmental benefits from program offsets were often offset by development elsewhere in the same location.
The proposal has some similarities to the US-led coalition with the UK and Norway’s Conference of the Parties last year to finance the private sector to fight deforestation. The companies have pledged $1.5 billion to buy forest-related carbon credits, now known as the LEAF Alliance.
Like LEAF, the power sector proposal appears to primarily target a subset of developing countries. In this case, the largest explosion will occur in countries with large energy networks based on fossil fuels, and thus prime candidates for a green transition.
However, it is not clear how prepared companies will be for such compensation.
Climate experts and representatives of developing countries who spoke to Kerry about the proposal said it underscores the need to maintain the environmental integrity of the compensation program. Such high-quality offsets are much more expensive than the low-quality options currently available in the voluntary carbon market.
In other words, there are cheaper ways for companies to show progress toward their climate goals.
Climate Consultants, a climate research and advisory firm, said in a report Wednesday that Kerry’s offset program, called the Energy Transition Accelerator, could raise $77 billion to $139 billion by 2030. This assumes that there are enough companies participating and that developing countries accept proposals to reduce emissions in the energy sector enough. The initiative could lead to a separate allocation of $3.8 billion to $6.9 billion for climate change adaptation, the report said.
Speaking from Sharm Al-Sheikh, Kerry said Wednesday’s announcement was the start of a consultation process that would form the basis for ETA development as it launches at climate talks in Dubai next year.
“I think the State Department wants to adjust it to get feedback and engagement,” said Nathaniel Keohane, president of the Center for Climate and Energy Solutions. “But I think they’ll be the first to admit that he’s not quite ripe yet.”
Sources said the foreign ministry had discussed the idea with other developed countries, but at least one, Germany, refused to join. Jennifer Morgan, Germany’s special envoy for international climate action, told POLITICO earlier this week that Germany is focused on “absolute” emissions reductions, not bilateral aid to poor countries and carbon offsets.
‘It’s not the same cake’But some experts familiar with the proposal say the U.S. priority is to reach out to poor countries that could benefit from an injection of private capital to modernize their power sectors.
They said the U.S. proposal is likely to include a provision that would allow part of the funding to be directed toward adaptation efforts rather than mitigation. Less developed countries that lack extensive infrastructure based on fossil fuels can benefit from it.
Angela Choury Callhaug, Executive Vice President of the Environmental Defense Fund, described the Adaptation Fund as a “silver bullet” for developing countries.
Its inclusion shows that U.S. officials “listen to what developing countries want, especially least developed countries, and put that into the process,” he said.
“We know that [the program] will certainly start with the countries with the highest emissions, but this essentially indicates that we are looking for comprehensive solutions and solutions that address multiple problems at once,” he said.
Keohane said the initiative’s success will depend on the quality of the offsets and whether the plan meets the Paris Agreement’s goal of keeping temperature rise to 1.5 degrees Celsius. The third-party agency charged with its governance should use a carefully designed framework to ensure that developing country compensation leads to measurable emissions reductions that are greater than would have occurred in the absence of such funding.
“There is nothing specific to support or endorse,” he said. “So, our position is it’s worth doing. We can do it right and we have a lot of potential.”
But the UN has a mixed history on carbon offsets.
The Clean Development Mechanism of the Kyoto Protocol has been criticized for allowing the sale of weak carbon credits that have not led to further emission reductions or long-term removal of carbon from the atmosphere. Some debt was also created by violating indigenous land rights in areas such as the Amazon.
Carbon markets, if not carefully designed, create opportunities for polluters to qualify for emission reduction credits, effectively reducing carbon pollution directly from their operations.
“We have seen how compensation money is laundered and proceedings are delayed,” said Harjit Singh, head of strategy at the Climate Action Network. “I think the big question is how will it be different?”
A new UN report has similar warnings. Environmental integrity measures must be carefully considered before carbon offsets can be considered a viable means of meeting non-climate commitments.
“The lack of standards, rules and rigor around voluntary carbon market credits is of deep concern,” UN Secretary-General Antonio Guterres said at Tuesday’s conference.
“Shadow markets for carbon credits cannot undermine real efforts to reduce emissions, even in the short term. Objectives must be achieved through real emissions reductions.”
Kerry said in a presentation on Wednesday that he had met with the secretary-general, who told him that if there were such guarantees, he “should look for them”.
Developed countries are under tremendous pressure to meet their commitments at COP27 to mobilize $100 billion annually in climate finance for poor countries. Developing countries want this pledge to be raised from 2025 onwards and are looking for a new financing mechanism to compensate poorer countries in particular for the inevitable impacts of climate change.
Barbados Prime Minister Mia Mottley unveiled a proposal last month that she said could save trillions of dollars for climate-related projects in poor countries. Avinash Persaud, one of his advisers, said Kerry was right to seek ways to maximize private sector participation. He said it could help reduce the cost of capital for projects in developing countries.
But he said such schemes could provide all that was needed until the carbon market expanded and the price of carbon credits rose dramatically.
“I think the truth is that there is still no market for carbon credits,” Persaud said.
Currently, carbon markets are the “icing on the cake, but not the icing on the cake” when it comes to providing financial support to developing countries to respond to climate change.
And we still need a cake,” Pearson said.
Politico Europe’s Carl Matthiessen and E&E News’ Sarah Schoenhardt contributed to this story.
A version of this report first appeared in ClimateWire E&E News. E&E News-এ শক্তি, প্রাকৃতিক সম্পদ, জলবায়ু পরিবর্তন এবং আরও অনেক কিছুতে রূপান্তর বিষয়ে আরও ব্যাপক এবং গভীরভাবে প্রতিবেদন অ্যাক্সেস করুন ।
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