On the twenty seventh Conference of the Parties (COP27) of the United Nations Framework Convention on Climate Change (UNFCCC), world leaders, environmental advocates, and associated stakeholders got here together in Sharm El-Sheikh, Egypt to debate global climate-related goals.
The annual conference has been liable for past landmark decisions, just like the 2015 Paris Agreement, during which leaders world wide agreed to limit global warming below 2 degrees Celsius, and ideally 1.5 degrees Celsius, in comparison with pre-industrial levels.
At COP27, after tense discussions, the parties agreed to maintain that 1.5 degrees Celsius goal alive, though not everyone thinks enough was done to make that a sensible goal.
“Attempts on the climate talks to get all countries to conform to phase out coal, oil, natural gas and all fossil fuel subsidies failed. And countries have done little to strengthen their commitments to chop greenhouse gas emissions up to now yr,” notes a Salon article by Peter Schlosser. So, Schlosser adds, the world appears to be on the right track to overshoot 1.5 degrees, “likely by a great amount.”
Others, nonetheless, are more optimistic.
As John Kerry, the U.S. Special Presidential Envoy for Climate, noted in COP27 closing remarks, projections from the International Energy Agency (IEA) found that warming could possibly be limited to 1.8 degrees Celsius if all commitments from last yr’s COP26 were upheld. And after COP27, “the IEA now tells us that if the brand new commitments and actions announced listed here are fully implemented, we will limit warming to 1.7 degrees,” said Kerry.
Getting More Private
While COP27 won’t have resulted in as strong commitments as all participants would have liked, it’s possible that the world can at the very least stay below the two degree threshold from the Paris Agreement. And maybe additional commitments within the near term would make 1.5 degrees more feasible.
Getting there, nonetheless, likely requires more motion from the private sector.
“It’s becoming clear from COP27 and other recent events that we will’t entirely lean on governments to take climate motion. Certainly one of the large takeaways appears to be that we want to lean just a little bit more on the private sector, which for my part is unquestionably not a nasty thing,” says Christopher Ruck, “director of environmental commodities trading at Terrapass”
As Ruck explains, though corporations might face relatively limited climate-related regulation, customers and investors generally wish to see stronger sustainability commitments. “In case your customers want it, and in case your shareholders want it, those are your two essential bosses, so that you higher do it,” he says.
Improving Climate Financing
Governments appear to be recognizing the importance of the private sector too when it comes to meeting climate goals.
One other highlight from COP27 was Kerry introducing the Energy Transition Accelerator (ETA), which is a government partnership with the Rockefeller Foundation and the Bezos Earth Fund “intended to catalyze private capital to speed up the clean energy transition in developing countries,” as a press release from the U.S. Embassy in Egypt explains.
The ETA will involve the creation of carbon credits for clean energy produced in developing countries, which could help meet emissions reduction targets while supporting sustainable development.
“By providing jurisdictions with fixed-price advance purchase commitments for verified emission reductions, the ETA will create a predictable finance stream that may unlock upfront private finance at more favorable rates,” the embassy press release adds.
This private capital is vital, provided that “a global transformation to a low-carbon economy is predicted to require investments of at the very least USD 4-6 trillion a yr,” notes the UNFCCC.
While the small print of the ETA still should be worked out, the goal is to have it running by next yr’s COP28. And it can have parameters in place in order that only certain private sector organizations can access carbon credits via the ETA.
“The credits will only be available to corporations that commit to eliminating their net greenhouse gas emissions entirely by 2050, set science-based interim goals, report recurrently on their progress, and aren’t fossil fuel suppliers,” reports Quartz.
This carbon credit mechanism ties into one other big theme emerging from COP27, which involves wealthier countries providing funding to developing countries to arrange for climate change, often known as a loss and damage fund.
“The deal was widely lauded as a triumph for responding to the devastating impact that global warming is already having on vulnerable countries,” reports Reuters.
Specifics, nonetheless, still should be worked out, with more details likely coming at COP28 next yr.
The Importance of Additionality
With numerous speak about carbon credits at COP27, it’s becoming increasingly clear that these should be high-quality, verifiable, impactful offsets, slightly than accounting gimmicks that get corporations off the hook for his or her emissions.
Particularly, carbon offsets often must play a task in giving back to society, equivalent to when it comes to supporting wealth transfers between developed and developing countries and aligning with the UN’s Sustainable Development Goals (SDGs).
“As guidelines emerge for a high-integrity voluntary credit market, credits may be used above and beyond efforts to attain 1.5°C aligned interim targets to extend financial flows into underinvested areas, including to assist decarbonize developing countries,” notes a report from the UN High‑Level Expert Group on the Net Zero Emissions Commitments of Non‑State Entities, released during COP27.
To that time, Terrapass has been seeing increased interest in carbon offset projects which have a social profit along with the environmental profit, explains Sam Telleen, general manager and director of renewable solutions at Terrapass.
“There’s the next demand for those projects and better pricing for those projects given the demand,” he adds.
That demand could pick up more steam following COP27, and market participants will likely increase their scrutiny of carbon offset projects to ensure that their spending is making a positive impact.
For a lot of businesses, “it’s not an issue of whether we must always use carbon offsets,” says Telleen. It’s just an issue of what type of rules are we going to set around them, because we do need them.”
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