March 29-30, 2023 – Opinion by Mathew Carr
CarrZee: In the U.K., such a bank could operate alongside the Climate Change Committee, which advises government on meeting ghg targets, or within it.
It would ensure the voluntary carbon markets and Paris article 6 programs are credibly tackling ghg not already regulated by law or covered by carbon markets.
It would advise government departments, corporations and small business …as well as consumers, clamping down on heat-trapping gas over the next 30 years on the way to net zero.
It would enhance carbon sinks / removals.
The ‘rolling whitelist’ opportunity to make the global voluntary carbon markets more politically acceptable
Source: Mathew Carr
I’ve been thinking about how governments / standard setters / a central carbon bank can make the voluntary carbon markets more politically acceptable (inspired by other smart people).
See the rough chart above.
It shows how almost all emissions become regulated over the next 30 years. (About 20%-25% of global emissions are currently regulated.)
By 2050, net emissions need to be zero. That is emissions plus sinks (a minus number … or emissions minus sinks) equals zero.
The private sector seems willing right now to cut emissions and boost GHG sinks over and above that required by politicians. Yay (but it isn’t happening).
So, as politicians catch up, investors can argue that anything they do over and above regulated or banned GHG deserves crediting.
That is, any investment outside nationally determined contributions under the Paris climate deal deserves carbon credits — that might be a more simple way of thinking about “additionality” although it sort of is how we should be thinking of it now — ie the notion that if something is already profitable / required by law without carbon credits, it does NOT deserve carbon credits to support it financially.
Countries / standard setters and the Paris 6.4 supervisory committee can allow voluntary crediting where that crediting is over and above what governments are mandating …or over and above what existing market rules are making profitable.
Sink enhancement should be rewarded if it is not yet regulated *
Governments should mandate sink enhancement (oceans, water-treatment plants, soils, forests, [ cookstoves, methane combustion], direct air capture, geo engineering) as soon as it’s politically feasible **
But in the meantime, the private sector should be free to strike voluntary deals for emission cuts and sink enhancement without criticism if they are outside what governments deem is politically palatable right now for regulation – whether right now is 2023 or 2050. [NOTE: I made this sentence clearer]
These voluntary-carbon-market deals should have crediting periods of 5-99 years, depending on a best-guess assessment on when politicians will catch up in that particular country / region / globally.
Voluntary deals should always include clauses that dictate what happens if governments / politicians introduce laws / mandates / market rules quicker than expected — ie before the end of the crediting period.
Environmental groups / first-nation groups could be consulted before voluntary deals are struck to limit public criticism… to enhance climate justice.
Critics should be given the right to comment, but not the right to veto. If environmental groups later decide the voluntary carbon credits are not of high quality, then the issuers can say those groups (or a credible portion of interest groups) were at least given the opportunity to comment at the time the deal was struck.
In this way, a “whitelist” of acceptable carbon-credit projects could be created, perhaps under the Paris rules. This whitelist — the opposite of a blacklist — could be updated annually. It could be first struck at climate talks in Bonn in June, 2023.
Importantly (but perhaps this needs more thought) carbon credits issued under this basis could be given a floor value – (ie €5-€50/ton of CO2 equivalent) to limit financial risks.
Reverse auctions of carbon put options — “options to sell” — could be held to ensure value for money.
Under such a created facility or facilities, private developers of low-carbon projects bid in a reverse auction for an option to sell their credits to the facility at a set price.
If carbon market prices rise, auction winners don’t have to use their option and the facility keeps the premium.
If markets fall, the developer receives the fixed price
This fixed price would potentially spur immediate investment in emission-reduction projects. It might also spur more ambitious GHG targets for 2030. Say 10% of those more ambitious targets could be met with whitelisted credits.
This will also probably take the heat out of the criticism of voluntary carbon credits.
If there’s a reason the reserve bank can’t also be the carbon reserve bank, I can’t see it. It’s certainly not because it’s a “distraction”.
UK example trajectory
(Comments / feedback / criticism my way: email@example.com)