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presentation on voluntary carbon market.pptx
- 1. 0 Voluntary carbon market governancepost-2020 Brad Schallert Director, Carbon Market Governance and Aviation WWF-US
- 2. 1 Underlying questions on voluntary carbon markets •Whento buy carbon credits? •How to account for and report carbon credits? What to say about carbon credit purchases? •What to buy?
- 3. 2 What makes ahigh-quality carbon credit? Carbon Credit Guidance for Buyers project
- 4. 3 Carbon credit marketsare experiencing explosive growth in quantity Issuance from independent crediting programs has increased more than 4-fold since 2016… …and experts expect breakneck growth to continue into the medium- and long-term 29 28 53 67 2015 2017 2016 2019E1 2018 c.125 4.5x 1. 2019 data is based on 11 months of actuals and an indicative estimate for December 2019 Source: Forest Trends Ecosystem Marketplace carbon credit reports; Verra; Gold Standard; S&P Global Platts; Financial Times; BCG analysis $44b Carbon credit market (2050) Carbon allowances market (2018) For comparison Carbon credit market (2019) $200b $0.6b CAGR: +21% Carbon credit issuances under the 2 largest voluntary standards (VCS and Gold Standard), MtCO2e
- 5. 4 However, lack ofa clear benchmark for "high-quality" carbon credits No market certainty on where to direct most impactful carbon financing, low quality units remain in-demand Responsible buyers lack understanding of the market making them susceptible to reputational risks Buyers have no simple means to disclose carbon credit purchases and demonstrate impact Public transparency is lacking despite increasing expectations (e.g. around non-financial disclosures) No clear path for navigating a complex carbon credit landscape No independent source assessing credit quality (see next slide) No transparency about carbon credit buying practices No clarity over what a "good" carbon credit buying strategy is Uncertainty about "double claiming" linked to Paris Agreement negotiations Irrespective of buyers' intent, industry accused of greenwashing as difficult to differentiate between credits' integrity
- 6. 5 Many carbon creditson the market are questionable, with no real, measurable, and additional emissions reductions Backup Clean Development Mechanism (CDM) is one major source of carbon credits According to a 2016 study conducted by Oeko-Institut… 7% Potential CER supply highly likely to be additional and not over-estimated 73% CERs (CDM credits) highly unlikely to be additional and likely over-estimated Our analysis suggests that the CDM still has fundamental flaws in terms of overall environmental integrity Source: "How additional is the Clean Development Mechanism?", Oeko-Institut, 2016
- 7. 6 WWF-US & EDFare working on a solution Clear guidance to carbon credit buyers supported by authoritative, easy-to-use ratings Phase 1: Detailed criteria for assessing carbon credit quality, validated with stakeholder consultation Phase 2: Robust methodology for applying criteria Phase 3: Ratings application to various project types Phase 4: Publication of a report (incl. criteria, methodology and ratings) with endorsements from major stakeholders, including guidance on: o When to consider a carbon credit purchase and how to purchase responsibly o How to navigate carbon credit landscape Lead organizations Research partner Support for Phase 2 In progress
- 8. 7 Phase 1: Whatmakes a high-quality carbon credit? Available now at: https://www.worldwildlife.org/ publications/what-makes-a- high-quality-carbon-credit
- 9. 8 Help buyers identifyquality carbon credit projects to protect their reputation and leverage brand benefits Signal to carbon crediting entities and project developers how their activities/procedures might need to change to adjust to a new level of environmental integrity Help civil society, NGOs, and other interested entities assess offsetting claims of buyers Provide guidance to policy makers (e.g. governments on the ICAO Council) on determining project quality and how to future-proof projects Exhaustive and easy-to-use report… …to provide crucial guidance to many audiences Carbon Credit Guidance for Buyers (CCG4B) will provide comprehensive, clear, and independent guidance relevant to stakeholders across all sectors 1. An introduction to carbon credits 2. The role of carbon credits in a responsible mitigation strategy 3. A discussion of the possible types of claims that may be made after purchasing carbon credits 4. An explanation of the criteria/methodology 5. Guidance on how to interpret the results 6. A visual presentation of the findings 7. Additional due diligence steps that may be applied to assess the quality of specific carbon credits 8. The full methodology and set of assumptions in an appendix
- 10. 9 Thank you! Please contactBrad Schallert with further questions Brad.Schallert@wwfus.org