Panelists at the North America Carbon Summit (NACS), part of Climate Week NYC, discussed the urgent need to build integrity into carbon markets in order to meet the public demand for transparent and impactful carbon offsetting.
ClimateTrade participated in the North America Carbon Summit organized by the International Emissions Trading Association in New York on Wednesday, September 21, with CEO Francisco Benedito speaking in two panels.
In both cases, speakers highlighted the importance of making carbon offsetting more transparent and traceable, and of standardizing the quality of carbon credits to bring the market to its full potential.
The value of the voluntary carbon market topped US$2 billion this year, and this number is expected to skyrocket in the coming years, as more and more companies resort to carbon offsetting to complement carbon reduction measures.
At one of the NACS panels, Stephen Donofrio, Managing Director of Ecosystem Marketplace, the organization that monitors the growth and evolution of the voluntary carbon market, noted: “The voluntary carbon market is now too global to be slowed down, with demand coming from every continent. The true global nature of the market has taken off, and it needs high-quality, high-integrity data.”
This unstoppable growth makes it all the more important to bring integrity to the market, at a time when the actual impact of carbon credits on the planet is sometimes put into question.
“Trust underpins the value of the voluntary carbon market, and there are a lot of gaps we need to fill in order to create that trust,” said Lydia Sheldrake, Director of External Affairs at the Voluntary Carbon Markets Integrity Initiative (VCMI).
Lack of consensus on integrity initiatives
Organizations like the VCMI and the Integrity Council for the Voluntary Carbon Market (ICVCM) aim to create industry-backed standards and guidelines to establish a quality baseline for carbon credit generation and trading. ICVCM, for instance, is currently gathering comments from different industry stakeholders on its draft Core Carbon Principles (CCPs), Assessment Framework, and Assessment Procedure.
But reaching consensus is proving difficult. Voluntary carbon registry Verra yesterday published an opinion letter saying its faith in the initiative is “shaken” and the CCPs are “on the wrong track”. Speaking at one of the NACS panels, Verra’s CEO David Antionioli explained: “The ICVCM and VCMI are great initiatives, but my belief in them is shaken because much of the process they are trying to set up is unworkable.” He added that integrity is not the only issue in the market, but that there’s also a lot of confusion around carbon credits, with most people unable to compare their quality. “We shouldn’t let a small group of individuals make decisions for the entire market.”
ICVCM Chair Annette Nazareth admitted that a big point of contention in the consensus-seeking process has been “stringency vs workability”.
ClimateTrade’s Head of Impact José Lindo reacted to Verra’s statement that CCPs are too burdensom to direct significant flows of financing to projects in Carbon Pulse on September 21: “Perhaps this was the case in the past, however there are now emerging technologies such as DLT/Blockchain, IoT, smart contracts which can automate processes in ways which were unthinkable only five years ago. Yet we must acknowledge that CCPs are an innovative tool to raise integrity standards and interdependence across the industry,” he said.
Technology for traceability
In a panel on the role of technology to streamline transparent decarbonization, Santander’s Head of Responsible Banking, Marta Aisa, and Global Cards Product Manager, Clara Arrocha talked about the bank’s experience integrating ClimateTrade’s carbon offsetting capabilities into their app and web page. “With this functionality, we’re tracking the customers’ footprint and offering tips, but we’re also enabling offsetting. Traceability is key for the customer to know that the credits they buy are actually being used to offset their carbon footprint,” said Arrocha.
ClimateTrade uses blockchain technology to create this traceability, with each transaction resulting in the emission of a certificate with information about the project selected and a unique blockchain key. And while the relevance of so-called “crypto carbon” has come under fire recently, our CEO Francisco Benedito reminded the audience that blockchain and crypto are not the same thing.
“Crypto is different from blockchain. Tokenization will be important for B2C at some point, but blockchain is already key for transparency in carbon markets today. It is not the panacea, but it’s a very important element,” he said.
Want to learn more about corporate decarbonization and the voluntary carbon market? Download ClimateTrade’s free white paper ‘A Comprehensive Guide to Designing Efficient Net Zero Strategies’.