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Supersize me: new taskforce looks to upscale voluntary carbon market

Thursday, 03 September 2020

A bevy of leading figures within the business, financial, and academia sectors led by UN Special Envoy for Climate Action Mark Carney has announced on Wednesday (2 September 2020) a private sector Taskforce to scale up voluntary carbon credit markets. The anticipated surge in demand for carbon offsets was the catalyst behind the initiative as countries and corporations quickly move to meet emissions targets set under the Paris Climate Agreement.

Mr. Carney stated that "Companies and the investment community are increasingly focused on supporting the transition to a net-zero economy and developing credible transition plans." Recent trends within the market continue to support this sentiment as market giants like Ingka Group who own IKEA pledge €600m towards sustainable investment as well as the UK's HMRC announcing plans to cut its own emissions and supporting the country's net-zero plans to name but a few.  

Many of these corporations pledging net-zero emissions strategies will be turning towards the voluntary carbon markets as they search for ways to offset their unavoidable emissions in the short to medium term by funding projects that offset or abate CO2. "The financial sector can use their expertise in building market infrastructure to create a carbon offset market which connects this demand with supply,” said Carney in a statement.

Voluntary carbon markets allow buyers to purchase carbon credits that financially support an array of emissions-reducing projects that span from forestry protection to carbon abatement. These projects are regarded as one of the ways contribution can be made to decrease the world's carbon footprint.

Launched yesterday (2 September 2020), the Taskforce on Scaling Voluntary Carbon Markets is comprised of over 40 leading figures from six continents with expertise in various sectors such as the CO2 market value chain, financial sectors, market infrastructure, and buyers and suppliers of carbon offsets. Figures from global corporate giants such as Shell, BP, RWE, Unilevel, Tata Steel, Simens, Nestle, Etihad, BNP Paribas, Bank of America, BlackRock, UBS, and Maersk have joined the Taskforce alongside carbon market specialists such as ClimateCare, Verra and Natural Capital Partners.

The Taskforce will work towards taking stock of existing voluntary carbon markets while identifying the key challenges to scaling it up. A State of the Voluntary Carbon Market report by Ecosystem Marketplace placed the 2018  voluntary carbon market value at $259.7m with an estimated volume of 98.4 MtCO2e voluntary carbon credits. 

The Taskforce will be chaired by Standard Chartered CEO Bill Winters and will eventually build a consensus and present a blueprint of actionable guidelines for businesses. 

“By scaling voluntary carbon markets and allowing a global price for carbon to emerge, companies will have the right tools and incentives to reduce emissions at least cost," said Winters.

The Institute of International Finance (IIF) will be sponsoring the Taskforce with financial consultant McKinsey& Company providing advisory support and former commissioner of the US Securities and Exchange Commission Annette Nazareth serving as operational lead. 

This Taskforce comes at a crucial point within the carbon markets with the tightening of emissions caps established under the EU ETS cap-and-trade schemes and the development of a new international aviation offset scheme named CORSIA expected to add a positive boost to global carbon markets. 

That being said there is still push back against the offset market with opponents having a growing consensus that offsets distract efforts in cutting emissions at source as well as questioning the credibility of emission reduction projects within the market. Additionally, there has been much disagreement on the rules that govern international carbon markets and the role that the offset market will play under the Paris Agreement which will be discussed at next year's COP26 Climate Summit in Glasgow.

"Since the Paris Agreement was signed five years ago, one of the key elements to support its goals, an effective international carbon market, has been missing," Winters acknowledged.

Winters further added that he was pleased "that the experts from across the financial system as well as buyers and sellers of offsets will come together to create a blueprint for such a market. This collaboration could make an enormous contribution to supporting the whole economy transition as required to achieve the climate goals that our society demands and future generations deserve."

The list of Taskforce members and observers can be found here.




Institute of International Finance (IIF)