As we reach the end of COP28, EcoAct’s Chimdi Obienu recaps the announcements and agreements made on the voluntary carbon market, and what this means for businesses. EcoAct’s Nature and Technology-based Solutions Director, Mathilde Mignot and Principal Portfolio & Partnerships Manager, Léo Barruol (pictured above) were at COP28 meeting key organisations and partners.
After two intense weeks of negotiations in Dubai, Parties to the United Nations Framework Convention on Climate Change (UNFCCC) found common ground at COP28 in an agreement that signals the “beginning of the end” of the fossil fuel era. Even though the first ‘global stocktake’ since the Paris Agreement omitted any commitment to globally “phase out” the use of fossil fuels, it lays the ground for tripling of renewable energy capacity and doubling energy efficiency improvements by 2030.
Governments also came to a landmark agreement on the Loss and Damage fund at COP28, securing vital financial and technical support for countries facing the worst impacts of climate change. Commitments to the fund are already totalling more than USD 700 million to date.
Multilateral negotiations, however, fell short of expectations on some other topics, a crucial decisions on Article 6 of the Paris Agreement – regarding how countries can collaborate to achieve their Nationally Determined Contributions (NDCs), largely using carbon credits – were delayed for another year.
Within the carbon finance space, the success of COP28 lays in fact in the suite of new initiatives designed to improve corporate confidence in the voluntary carbon market (VCM). Alongside further climate finance commitments, influential bodies unveiled an invaluable framework explaining how to combine leading guidance on emissions reductions, offsetting, and reporting. Moreover, market-leading certification standards announced a historic partnership, offering stakeholders hope that the VCM is transitioning to an era of alignment, integration, and clarity.
During COP28, EcoAct actively engaged with both existing and potential partners to help channel private investment into the VCM. Mathilde Mignot and Léo Barruol from EcoAct’s Nature and Technology-based Solutions (NTBS) team observed a significant surge in interest in carbon offsetting projects, and particularly for clean cooking initiatives, notably through a landmark report published by the International Energy Agency (IEA). EcoAct particularly welcomes the high-level International Summit on Clean Cooking in Africa, to be held in Paris, France, in the spring of 2024, and will seize this opportunity to showcase the positive impacts of clean cooking projects such as the Hifadhi project in Kenya. This heightened interest aligns with EcoAct’s commitment to champion offsetting projects that not only contribute to environmental sustainability but also generate substantial social benefits for local communities, in line with the UN Sustainable Development Goals (SDGs).
The world’s leading independent carbon crediting standards declared they will start working together to improve consistency, transparency, and quality across the carbon project certification landscape. American Carbon Registry, Architecture for REDD+ Transactions (ART), Climate Action Reserve, Global Carbon Council, Gold Standard, and the Verified Carbon Standard will for instance collectively produce common principles for the quantification of carbon removals and reductions. Within an extensive set of actions, they will also help improve transparency on the use of carbon credits, and support work by the Integrity Council for the Voluntary Carbon Market (ICVCM) to set minimum standards for carbon credit quality.
The news was welcomed by all participants in the VCM, as it protects against the further fragmentation of the industry, which has previously been a source of uncertainty and confusion. Unified language on quality and transparency will encourage companies to offset their emissions using carbon credits, with more confidence in making credible climate claims that stand up to scrutiny. All of this, accompanied by new indicators to ensure that projects are having the desired impacts on the ground, will strengthen the market and consequently improve and scale the flow of climate finance to host countries.
Internationally recognised organisations from across the climate sphere have combined efforts to provide a clear roadmap on how to connect carbon footprinting, decarbonisation, and offsetting as part of a holistic strategy. Companies are now advised to calculate their emissions following the standards of the GHG Protocol; set emissions reduction targets validated by the Science Based Targets initiative (SBTi); follow guidance from the Voluntary Carbon Markets Initiative (VCMI) on how to use carbon credits; select the highest-quality credits that meet ICVCM’s Core Carbon Principles (CCP); and report all related information transparently via CDP.
In providing a credible and end-to-end framework that incorporates the use of carbon credits, these bodies, in conjunction with the We Mean Business Coalition, aim to bolster the reputation and integrity of the VCM. Corporations have been left unsure about how to set realistic climate targets while uncertain about the extent to which offsetting is considered viable. This initiative, particularly due to the involvement of GHG Protocol and CDP, which had previously said little about the VCM, offers valuable clarity and a sense of direction regarding how companies can accelerate their climate journeys and follow through on their ambitions to achieve our collective global net-zero goals.
COP28 was an exciting opportunity to engage with a range of initiatives that channel private finance into the VCM. Among others, our representatives met with officials from project developers, certification standards, rating agencies, development finance institutions, investors, and NGOs. They also attended events on nature-based carbon projects, such as one organised by the Central African Forest Commission (COMAC), the Congo Basin Forest Partnership (CBFP) and Climate Chance on biodiversity corridors, in line with an ongoing project on “Biodiversity Corridors in Guinea”.
EcoAct’s strength lies in fostering ties with actors in both the private and public sectors. Mathilde and Léo also liaised with delegates from countries in which EcoAct is developing carbon offsetting projects to better understand their plans and to make sure our associated projects remain in line with local needs and expectations. Our partners in countries including Kenya, Uganda, DRC, Guinea, Cameroon, India, Colombia, or Mexico are looking closely at how Article 6 negotiations may influence changes to their approach towards the VCM.
Fundamentally, EcoAct is encouraged to see the VCM continue to grow and evolve. Our goal is to help companies invest in projects that suit their needs and to direct them towards the highest quality solutions, while never compromising on our commitment to environmental and social responsibility.
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We answer this and other FAQs is our factsheet, to help provide clarity on how carbon offsetting really works, the benefits provided by offsetting projects, and its role in tackling climate change.
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