Institute for Democracy and Innovation - IDI’s Post

Last week, the U.S. Government released the Joint Policy Statement and Principles on Voluntary Carbon Markets, recognising the role of the carbon market in accelerating climate action. This marks an important milestone showing the U.S. Government’s support for the carbon market and addressing the existing challenges in using carbon credits for corporate decarbonisation strategy.    There are 7 principles, primarily focusing on:  1) Demand-side, with an emphasis on improving carbon credits’ quality, avoiding harm to the environment and communities, and delivering co-benefits to the program.  2) Supply-side, encouraging corporate buyers to prioritise emission reductions and to transparently communicate the nature of carbon credits purchased.  3) Market structure, to improve the market governance, interoperability of standards, and pricing transparency, among others.  https://lnkd.in/gArPsdd3

Interesting overview of the recent US Voluntary Carbon Markets Joint Policy Statement and Principles. https://lnkd.in/e9YPnuBy

The U.S. government has unveiled new rules to enhance confidence in voluntary #carbonmarkets, aiming to boost their credibility and effectiveness. A joint policy statement was issued by the Treasury, Energy, and Agriculture Departments, alongside President Biden's top climate and economic advisers. The new principles aim to ensure: Real and quantifiable emissions reductions. Monitoring to avoid harm to local communities. Prioritizing decarbonization before purchasing credits. "Voluntary #carbonmarkets can unlock the power of private markets to reduce #emissions, but only if we address significant existing challenges," said Treasury Secretary Janet Yellen. Initiatives from the Energy and Agriculture Departments, along with international programs like the Energy Transition Accelerator and LEAF coalition, aim to support high-integrity #carbon #offset projects. High-integrity #carboncredits are crucial for mobilising private finance and achieving climate targets. This aligns with principles from organisations like the Integrity Council for Voluntary Carbon Markets (ICVCM). #ClimateAction #Sustainability #CarbonCredits #VCMs #Decarbonization #PrivateFinance #EmissionsReduction

Today the Australian government released the second consultation paper for the Carbon Leakage Review. The paper and other information is available here: https://lnkd.in/gVhD3Cbg As lead reviewer, I’ll anchor the consultations, together with the Review team at the Department for Climate Change, Energy, Environment and Water (DCCEEW). We warmly welcome input from stakeholders in Australia, and internationally. Consultation is open until 3 December. In a recorded webinar on 6 Nov, 11.30 AEST we’ll run through our analysis and preliminary findings. The Review will make its recommendations to government by the end of 2024. Government has not yet considered the findings. The paper describes our analysis and sets out our preliminary findings. The Review has ·     analysed potential future carbon leakage risks including materiality of such risk for individual commodities, on the basis of quantitative and qualitative analysis; ·     assessed different possible policy approaches to address leakage risks; and ·     investigated the feasibility and potential impacts of border carbon adjustments. The Review’s work is guided by the following principles. One, the overall goal is to promote economically efficient low and zero emissions industrial production towards net-zero trajectories. A durable market-based system to incentivise investments in low and zero emissions industries is important to this. The Review focuses on carbon leakage solely in terms of shifts in industrial production due to differences in climate change policy between countries, not on other policy objectives. Two, the Review places emphasis on Australia’s opportunity to become a major producer and exporter of clean energy and industrial commodities in a net zero world economy. Policy frameworks that provide market premiums for low emissions products, including for traded goods, can contribute to this goal. Addressing carbon leakage means helping create the preconditions for investment in new low emissions industrial structures in the most suitable locations, rather than shielding existing high emissions processes from change. Three, the Review places importance on the international rules-based trading system and on maintaining open and liberal trade relationships, especially in Australia’s region. Our economic prosperity has been enhanced by open trade, and strong trade relations will be vital to achieve net zero emissions in Australia and globally. The Review seeks to identify ways in which any potential future measures, especially potential border carbon adjustments, respect international trade rules and obligations, facilitate trade that is consistent with climate change policy objectives, and could be collaboratively implemented with Australia’s trade partners. We also seek to identify opportunities to support progress in multilateral and plurilateral forums. We look forward to your reactions and input to the process.

The next stage in Australia's review on carbon leakage: "addressing carbon leakage means helping create the preconditions for investment in new low emissions industrial structures in the most suitable locations, rather than shielding existing high emissions processes from change." New Zealand needs to get on board with that thinking, or we will miss out on the next wave of low-emissions industrial investment that governments elsewhere are facilitating. Our current ETS free allocation was designed to maintain high-emissions activities, not to incentivise and support transition. That might have been a defensible position in 2009, it's not in 2024.

The second round consultation paper from DCCEEW for addressing #carbonleakage in Australia has been released today. As touched on previously, carbon leakage occurs when production shifts from countries with more ambitious emissions reduction policies to those with weaker (or no) such policies. Particularly relevant for emission intensive, trade exposed (EITE) sectors like steel, cement, aluminium etc. As we have seen, the EU and UK have adopted a Carbon Boarder Adjustment Mechanism (#CBAM) as part of their environmental policies to address carbon leakage, and this, as well review of exisiting measures under the Safeguard Mechanism, form part of the policy considerations for Australia also. Consideration given to the environmental concerns caused by production shifts of these emission intensive commodities as well as our regional agreements and open trade obligations. The review is open until 3rd December 2024 https://lnkd.in/g9kZF2AV

Gold Standard’s Reaction to US Government's "Principles for High Integrity Carbon Markets" We welcome the “Voluntary Carbon Markets Joint Policy Statement and Principles” from the US Government, and the clear signal it sends in endorsing core integrity principles for Voluntary Carbon Markets (VCMs). This unified stance is a promising move towards ensuring that carbon markets to effectively contribute to global Net Zero and help spur real development impact. Gold Standard hopes that the US Government will build on this statement through further concrete steps to catalyse corporate climate action in line with planetary boundaries. While it’s important that the market continually increases in quality, we would welcome clarity that companies should take responsibility for their entire carbon footprint, including Scope 3 emissions, reducing in line with science, and supporting beyond value chain mitigation for what they have not yet abated. This clarity will help companies use the voluntary carbon market correctly, and to its full potential. The US Government would also be well placed to further facilitate efficient market participation and to invest in technologies and tools that can lower transaction costs, and expand carbon finance opportunities globally, not just within the US, in partnership with other governments that need finance to meet and exceed their nationally determined contributions. We look forward to collaborating with policymakers and market participants to ensure that carbon markets not only uphold high integrity standards but also encourage real, accountable, and comprehensive climate action that delivers a just transition. For the Voluntary Carbon Market to drive real impact it is important that it is used only where appropriate. Using it in the wrong way has the potential to divert resources away from more appropriate mechanisms, and opens it up to criticism from opponents. Companies must take responsibility for their unabated emission while reducing their footprint. If we work together to support them to do so the market will grow, without the need to rely on inappropriate use-cases. #VoluntaryCarbonMarkets #NetZero #ClimateAction #JustTransition #SustainableDevelopment https://ow.ly/aV9350S2fy3

"The key to industrial pricing being effective is both that the price does gradually increase over time, and critically that industry players gain confidence that the system is going to be durable and be there for the long term," Michael Bernstein, executive director of Clean Prosperity, told CBC News. 🔗 Read more: https://lnkd.in/gcNGBd39

The transition to net zero offers incredible opportunities and inevitable challenges. Over the last year I’ve had the opportunity to work closely with Prof Jotzo and a brilliant team at Australia’s Department of Climate Change, Energy, the Environment and Water as we investigated the risk of carbon leakage and how Australia could respond - a challenge and opportunity for Australia’s transition. The second consultation paper of the review is open for consultation until 3 December. It sets out preliminary assessments of leakage risk and policy options to respond. Whilst I could chew your ear off (and I will if you give me a chance) on the details in the paper I’ll point you to a few elements that particularly interest me: 1. Check out the principles set out in the exec summary which highlight the underpinning thinking that supported the review’s assessment. 2. The design considerations in the section on border carbon adjustments (and associated parts in the Appendix) are worth a read. 3. Chapter 6 on multilateral and plurilateral initiatives sets out the review’s thinking on the ongoing role for international cooperation (the review’s TLDR - the role of int’l cooperation is significant and it’s time to get stuck in). Enjoy the read or check out the recorded webinars on the website (below).

This is known as Article 6.2: the second aims to create a central, UN-managed system for countries and companies to begin offsetting their carbon emissions and trading those offsets, known as Article 6.4.