DUBAI, United Arab Emirates (AP) — A major, long-term effort is underway to mobilize money to save planet Earth.
Climate finance experts say trillions of dollars are needed for forestry projects and renewable energies such as solar and wind in the developing world, all aimed at reducing pollution from the burning of oil, gas and coal that causes climate change.
The price tag is eye-watering: According to the International Renewable Energy Agency, an intergovernmental group, investments in energy transition technologies amounted to $1.3 trillion last year, and that amount must at least quadruple to avoid levels of warming scientists say. catastrophic.
Even wealthy governments can’t provide that kind of money, and often have difficulty getting their respective congresses and parliaments to sign even modest amounts.
Introduce a plan to combine the cash-flowing power of the private sector with carbon credits, a hot topic of discussion at the annual climate talks taking place in Dubai.
“It’s a huge amount of capital to raise in a short period of time, so governments are going to have to be creative in how they get there,” said Yousef Alhorr, founder and chairman of the Global Carbon Council, an international carbon credit and sustainability organization. development program based in oil-rich Qatar.
Carbon markets already exist and come with a lot of baggage, so the plan has a lot of naysayers. Critics of the plan being developed say there has been poor oversight of existing volunteer programs, leading to cheating and rights abuses.
Advocates such as US climate envoy John Kerry, lenders such as the World Bank and the UN recognize that there is room for improvement in the markets. They say their plan would improve oversight and allow for more money turnover.
Such voluntary schemes would resemble carbon offsets long offered by airlines to travelers, who willingly pay an additional fee to offset the CO2 emissions generated by their flights, often to fund tree-planting projects or to finance protection of existing forests.
The markets would work like this: participating countries could generate carbon credits based on projects aimed at achieving their own climate goals, such as protecting existing forests from development or closing coal-fired power stations.
Private sector players could then buy the credits, which would allow them to emit a certain amount of carbon dioxide or other greenhouse gases. Heavily polluting companies would be important customers.
Each credit would be equivalent to one ton of CO2 or the equivalent of other greenhouse gases in the air that could be reduced, stored or avoided by using green energy instead.
The money from the generated credits would go to local projects. The price per ton of carbon would fluctuate in the market, meaning that the higher it rises, the more green projects could be raised through the new credits generated.
In Dubai, the US government, together with the Bezos Earth Fund and the Rockefeller Foundation, announced a project called the ‘Energy Transition Accelerator’. It aims to drive the plan using “high integrity” carbon credits to eliminate potential cheating and support local communities and populations.
Until now, accountability has largely lay with independent carbon market registries. The ETA scheme would give governments a greater role in ensuring the implementation of safeguards.
Chile, the Dominican Republic and Nigeria are pilot countries for ETA, which aims to launch by Earth Day in April. Advocates estimate that between $72 billion and $207 billion could be mobilized for the transition to clean energy projects by 2035.
It is a voluntary program and companies such as Bank of America, Mastercard, Morgan Stanley and PepsiCo have signed a letter of interest to participate.
In the past, companies participating in other carbon markets have made false claims about projects, known as greenwashing, and some financiers, farmers and others count a single project multiple times – meaning the benefits are overestimated. Some corporate cheaters have increased emissions only to reduce them later and claim credits for going greener.
Critics say carbon credit programs allow polluters to continue polluting and have shifted focus from the main goal: ending the use of fossil fuels, which is the leading cause of global warming.
“Buying offsets in carbon markets without phasing out fossil fuels will always be greenwashing,” said Erika Lennon, senior attorney at Climate & Energy at the Center for International Environmental Law.
Kerry admitted that “some people are abusing” carbon credit systems and that “they have wronged everyone.”
“We believe it is beyond cure with the approaches we have put together,” he said during a December 4 panel event at COP28, where he outlined the Energy Transition Accelerator.
Simon Steill, executive director of the UN Framework Convention on Climate Change, warned against overreliance on such programs. He said they “cannot replace government action” and must be accompanied by “robust domestic emissions reductions by the private sector.”
He called for new projects in agriculture, energy storage, decommissioning fossil fuels, green hydrogen produced from renewable energy sources and electric mobility.
Yet it is difficult to imagine that governments will foot the bill for the energy transition on a large scale.
Ajay Banja, the president of the World Bank, said there is a need to unify a fragmented market to create greater scale. The Washington-based multilateral bank has developed its own carbon credit program, the Forest Carbon Partnership Facility.
In it, several countries, including Guatemala, Vietnam and Congo, plan to issue the first 24 million credits in the coming year, and eleven other countries are lining up to join. The bank says the project hopes to reach $2.5 billion by 2028.
“Ultimately, these credits have the potential to voluntarily transfer billions of dollars to communities of businesses and governments,” Banja told the panel event.
“This is difficult and we will be criticized: I’m pretty sure. We will make mistakes: I am quite sure of that,” he added. “But we will learn from them.”
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AP journalists Seth Borenstein and Sibi Arasu contributed to this report.
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