John Kerry, the United States’ climate envoy, unveiled the Energy Transition Accelerator yesterday (November 9) at COP27: a carbon offset plan that comes as the vote of confidence the market needed.
The Energy Transition Accelerator is a public-private initiative to fund renewable energy projects through carbon offsets, with the purpose of of accelerating the clean energy transition in developing countries. As our CEO Francisco Benedito said in a letter to the editor published in the Financial Times on November 10, the initiative is exactly what the carbon market needs.
Private capital at the service of climate action
Announcing the program at COP27, Kerry said the noted that the Energy Transition Accelerator is a way for private capital to support the work of governments and NGOs in transitioning to renewable energy sources. “Our administration is working as hard as we can to deliver on President Biden’s pledge to quadruple U.S. climate support by 2024. We are absolutely committed to doing our part. But no government in the world has enough money to get this job done. We will only succeed with a massive infusion of private capital,” he noted.
Under the scheme, developing countries could generate carbon credits by shutting down fossil fuel-based power plants and adopting cleaner energy sources. These credits could then be sold to global corporations looking to offset their own emissions.
Transparency will be key to success
At a time when the credibility of carbon offsets is sometimes put into question, Kerry’s initiative confirms the validity of this climate finance mechanism, when implemented transparently.
But as Benedito explains in his letter to this editor, the real work begins now. “For this program to work, it must be executed with precision and transparency. Companies that purchase these credits will want to know from which country and decarbonization initiative they were generated, and they will ask for a guarantee that credits cannot be sold more than once,” he explains.
Of course, blockchain technology can support these efforts as reliable infrastructure that allows stakeholders to trace carbon offsetting transactions, increasing trust, transparency and credibility in the market. We at ClimateTrade hope that the Energy Transition Accelerator will follow best practices and leverage the technical and commercial expertise of the entire carbon market ecosystem.