Eyes on the Carbon Credits Market: Demand Driven by the Race to Net Zero
By Dail St. Claire, Contributing Author/ November 6th, 2023
Hopeful Promise for Action
“We Can. We Will.” Climate Week NYC’s theme resounded during ten days of 585 events attended by over 70,000 from 131 countries. Aiming to provide a platform for discussions and collaborations on climate and sustainability societies, the largest Climate Week NYC since its inception in 2009 promoted a hopeful promise for action. It included influential scientists, investors, and leaders from government, business, and the climate community - public and private sector professionals across age, race, gender, and demographics. Climate impact is discussed across industries, and many are around net zero greenhouse gas (CO2) emission goals. Climate Week discussions reflected a wide range of topics, including emerging trends towards CO2 emissions globally, energy transition, sustainable finance, smart agriculture, sustainable food systems, infrastructure, and climate private equity funds, and the debate to drive climate action.
Focus of Global Corporate Executives
Global corporate executives focused on what and how to address their company’s stated net-zero 2030, 2040, or 2050 goals. Many focus on designing or enhancing their energy transition policies and plan to evaluate if carbon credit has a role. With 2030 looming ahead, more companies elect to parallel path energy transition policies and buy carbon credits. Companies may purchase carbon credits to offset their carbon emissions. While energy transition policies can reduce a company’s carbon emissions, nothing can eliminate them if they continue to operate. High quality carbon credits can mitigate a company’s emissions.
Lack of Transparency
In January 2023, the Guardian reported that 90% of forest credits approved by Verra, the world’s leading certifier, were worthless. Among the buyers of these credits, Disney, Salesforce, Shell, and Gucci were discussed. Solutions addressing Verra’s, the other leading carbon voluntary carbon market (“VCM”) registries absent trust layer focused on using Blockchain, AI, drones, and satellite imagery. The lack of transparency impacts buyers’ ability to determine carbon credit quality. There are ten core principles of carbon credits, including effective governance, tracking, and additionality, such that is the carbon credit designed on a solution that is additional and permanent. For example, a Bloomberg investigation on a tree-planting project in the Mississippi Delta revealed credit was taken for trees already planted or would have been planted anyway.
Existing Technologies
Climate Week NYC highlighted existing technologies addressing the VCM and impacting the quality of carbon credits. Using the blockchain allows anyone with computer access to look up individual carbon credits and supporting documents. One engineered carbon credit solution demonstrated its ability to contribute 1GT annually to the 23GT emissions gap today. The UNEP Emissions Gap report finds a gap of 23Gt CO2 between the current pledges of what is needed by 2030 to limit warming to 1.5 degrees C. The basis of another discussion is whether there should be a focus on limiting warming.
Global Requirement Increases
Globally, there are increasing requirements for businesses to track and report their carbon footprint, and many corporations have stated Net Zero goals. Moreover, the global carbon credit market is now valued at $25bn and is expected to reach $145Bn by 2030. Climate Week NYC 2023 themes continue in other climate weeks hosted on different continents this year, cumulating with the UN Climate Change Conference (COP28) in Dubai, UAE, November 30 – December 12, 2023.