The policy wonk trying to tame carbon markets

Feb 23, 2022 View in browser   By Catherine Boudreau VERBATIM Mark Kenber speaks while Tony Blair, former British PM, (left) and then-NYC Mayor Michael Bloomberg (right) listen at the launch of the Clean Revolution campaign in New York on Sept. 19, 2011. | (Photo: Business Wire) Voluntary carbon markets around the world are exploding as corporations clamor to offset their greenhouse gas emissions by paying someone else to reduce theirs. The emissions credit market needs to grow 15-fold to meet goals set under the Paris Agreement, by some estimates — and could be worth as much as $50 billion by 2030. But without international standards, there's a risk the market could fail because of a lack of credibility. Mark Kenber is one of the climate policy wonks trying to bring more legitimacy to the market. He's co-executive director for external affairs at the Voluntary Carbon Markets Integrity Initiative , a U.N.-backed group that aims to ensure companies aren't using credits to avoid reducing their own emissions and aren't making claims that mislead the public. The group will issue guidance for companies to test this spring, before finalizing it in time for COP27 in Egypt later this year. This interview has been edited for length and clarity.   BECOME A GLOBAL INSIDER:  The world is more connected than ever. It has never been more essential to identify, unpack and analyze important news, trends and decisions shaping our future — and we've got you covered! Every Monday, Wednesday and Friday, Global Insider author Ryan Heath navigates the global news maze and connects you to power players and events changing our world. Don't miss out on this influential global community. Subscribe now.     Long Game: What are some of the flaws in voluntary carbon markets that VCMI aims to address? Kenber: Companies are making a lot of claims: net zero, carbon neutral, you name it. One company may only be using carbon credits, while another isn't using any. There is no clear benchmark on what a company should be doing to reduce their own emissions first before compensating [by] using carbon credits. There is no common guidance on how to report that. Corporates, investors and civil society want consistent and objective guidelines on what companies should do at the source first; what kind of credits they should buy and from whom; what claims they can make about those credits; how it aligns with the Paris Agreement; and what they should report and disclose. This is what we've been working on. Our guidance will say, 'Before companies start thinking about using carbon credits or making claims about them, they need to get their own house in order.' The guidance will also make clear what emissions are acceptable to compensate with carbon credits. LG: You also want to prevent misleading climate claims, right? Kenber: Yes, we don't want companies using carbon credits instead of taking action to reduce emissions themselves, and making claims that they are carbon-neutral. We also don't want them to then say to governments, 'Hey, we don't need more policy because look, we're carbon-neutral.' If companies can make a carbon-neutral claim without decarbonizing, and all they do is buy offsets, that isn't above and beyond. That may actually be counterproductive, in that it slows investment in low-carbon technologies. If you've got a get-out-of-jail cheat card by buying offsets, that could slow progress toward net zero. LG: Is that what a lot of companies are doing now? Kenber: It's shifting, but not nearly enough. There are still a lot of companies using more offsets than they should be, or not doing anything because they're confused and don't want to get it wrong. But if we're going to keep warming below 1.5 degrees Celsius, we have to reduce and remove as many emissions as fast as we can. That involves channeling finance to developing countries to help them take more ambitious climate action. Carbon markets are one part of that. LG: There is a lot of debate over what a "high quality" credit is. Is your group addressing this? Kenber: That is not something we are working on directly, because there are already two initiatives looking at this. The Integrity Council for the Voluntary Carbon Market, which originated with a task force set up by [former Bank of England governor] Mark Carney and [Standard Chartered CEO] Bill Winters. There also is the Article 6 supervisory board, the UN body charged with creating rules for carbon projects under the Paris Agreement. We will point to those and have some buyer-beware guidance. For example, only use a standard where independent third-party verification is required, has a registry that is independently managed and the public has access to. Make sure that when buying credits, there is full disclosure of who's benefiting from the proceeds. If companies are looking at credits from nature-based projects, do they respect the rights of local land owners? If companies are going to invest in carbon credits, they don't want to do something that's wrong or have their reputation trashed. LG: So what sets VCMI apart from those initiatives you just mentioned? Kenber: The Science-Based Targets initiative sets out what companies should do with their Scope 1, 2 and 3 emissions between now and 2050. There is not a lot of guidance on offsetting, or what's good practice in the short and medium term. The [Integrity Council for the Voluntary Carbon Market] and Article 6 supervisory board will look at what rules are needed to ensure that a credit is really backed by the reduction or removal of one ton of carbon, that it's permanent, and there is no leakage — as in if you retire a coal-fired power plant here, it's not just built somewhere else. What VCMI does is put those together. A company on its science-based pathway will still have emissions it can't eliminate. If it buys carbon credits to offset those emissions, our guidance will outline how they should do that and what they can say about it that's credible. LG: Are you consulting national governments? Kenber: Yes, for two reasons: Developing countries want to host projects that generate carbon credits, but don't want to see corporates hoover up all the easy projects that they could fund on their own. The finance should go to projects that are too expensive for developing countries to do themselves. Also, governments see that corporate claims and advertising around climate activity is not properly regulated. Customers at a supermarket might be confronted with products labeled as climate-friendly, but won't know what it means. Often, the claim is misleading. So a number of countries are looking at whether it's enough to have independent verification against a voluntary standard, or regulation of advertising is needed for consumer protection. But that is something we will work on after the launch. WHAT WE'RE CLICKING — Private equity is drying up for fossil fuel producers, according to Bloomberg. The world's largest alternative asset manager, Blackstone Inc., is reportedly telling clients its private equity arm won't invest in oil and gas exploration and production. — Billionaire investor Carl Icahn is picking a shareholder fight with McDonald's over pork, NYT reports. He says the company — which buys roughly 1 percent of all U.S. pork — isn't living up to its own pledge to move pregnant sows out of small crates. — Utilities and tech researchers are racing to get ahead of wildfires with cameras, AI and  sensors, E&E News reports. Will it be enough?   DON'T MISS CONGRESS MINUTES: Need to follow the action on Capitol Hill blow-by-blow? Check out Minutes, POLITICO's new platform that delivers the latest exclusives, twists and much more in real time. Get it on your desktop or download the POLITICO mobile app for iOS or Android. CHECK OUT CONGRESS MINUTES HERE.       Follow us on Twitter Catherine Boudreau @ceboudreau Debra Kahn @debra_kahn Greg Mott @gwmott Lorraine Woellert @Woellert Jordan Wolman @jordanwolman   Follow us

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