A “credible” carbon offsetting market is being set up, led by former Governor of the Bank of England, Mark Carney

The former Governor of the Bank of England has established a private sector task force to establish standards for the booming market. The task force will “establish the standards for the infrastructure around a voluntary carbon market. Hayley Dixon explains in an article on The Telegraph website.


Mark Carney to set up ‘credible’ carbon market by beginning of next year

Mark Carney, the former Governor of the Bank of England, is set to establish a “credible” carbon offsetting market by the beginning of next year so buyers trying to offset their emissions “do the good they intend to”, it can be disclosed.

Boris Johnson’s climate change advisor has established a private sector task force to establish standards for the booming market, which they estimate will have to grow by up to 160 times if ambitious net zero targets are to be met.

Bill Winters, the CEO of Standard Chartered who has been appointed to lead the task force, said that they hope to begin trading under a new framework, which will include a transparent price for carbon, by the beginning of 2021 as the world cannot afford to wait for Governments to take action.

It comes after an investigation by the Daily Telegraph in February this year found consumers are at risk of being ripped off in the current “Wild West” market, with concerns raised about the validity of offsetting projects around the world.

To offset their emissions, companies and individuals can purchase carbon credits which have been generated by projects elsewhere, for example tree planting or setting up renewable energy sources.

But this newspaper discovered that deforestation was taking place in illegal mining sites in Madagascar, that were situated within a protected forest where carbon credits were being sold.

But as it stands the markets to purchase these credits are “fragmented”, lack transparency and have no one set of standards or a core price for carbon, Mr Winters said.

As a result of a lack of standardisation the voluntary offset market cannot grow fast enough to meet the booming demand fuelled by big multi-national companies, including oil giants and airlines, pledging to get their emissions to net zero.

Mr Winters told Daily Telegraph: “I think that there is a legitimacy, a credibility problem [with the current market] because there are some people, including some NGOs who say too much money has been invested by people who think that they’re doing good for the climate but it’s being invested in projects that aren’t actually making a difference.”

To counter the problem a task force has been established by Mr Carney to “establish the standards for the infrastructure around a voluntary carbon market”.

Without a functioning market, they believe that it will be very difficult to limit the increase in global temperatures by 1.5 degrees Celsius, as set out in the Paris Agreement.

Mr Winters said companies such as airlines and steel manufacturers “simply cannot” eliminate carbon emissions so “the only way to get to net zero, which is what shareholders and employees are children are all demanding, requires some purchases of carbon offsets”.

The American banker said that he and Mr Carney, who also acts as the UN Special Envoy for Climate Action and Finance, decided the way to create a market was to get some of the main players in the trade to agree.

The task force is made up of 50 representatives, including major buyers of credits such as Shell, BP, Emirates, Tata Steel and Nestle, banks including Bank of America and Goldman Sachs, the verification companies Verra and Gold Standard, and environmental companies which run the projects including ClimateCare.

Mr Winters said they are looking at “how do we make the market more credible so that, so that when a buyer puts his hard earned company or individual money into an offset scheme they are highly confident that they’re actually doing the good that they intend to do”.

One thing that they will look at is a benchmark “meaningful price” for carbon and whether there should be a “core carbon contract” similar to Brent or WTI in oil trading. The taskforce will not look at which types of projects are viable.

“What we’re focused on is a purely private sector set of solutions”, Mr Winters said. “The power of the private sector and private markets to solve the climate problem is overwhelming. We are the emitters and the opportunity for us to harness the power of private markets to solve this intractable problem is one that’s very much within reach.

“Our objective in this taskforce is to put the underlying infrastructure and standards in place that will unleash the power of private markets to solve this problem.”

They aim to establish standards and infrastructure and take “mechanical steps to make it an easier market to navigate, both economic and also legally”.

Within the task force and its 100 or so advisors they have each element of the market represented, so the hope is that once the standards are agreed it will grow organically.

“If we are reliant on Government sign off I think that we will have missed the point,” Mr Winters said.

He “completely rejected” claims made by some that carbon offsetting is a form of greenwashing because it allows emissions to continue.

“The world is not ready to go live in the forest in a wood hut which is what we would have to do if we had no alternates at all, because power and transportation are going to depend on fossil fuels for the foreseeable future,” Mr Winters said.

“We don’t have to eliminate them, we need to get them reduced dramatically in order to hit this 1.5 degree target, which we can do. People want it to succeed.

“The voluntary carbon market used by companies and consumers is distinct from the compliance markets, which have been established by Governments around the world to meet their own emission reduction targets.”

The task force plan to release an interim report in November and had originally the final report presented to Davos early next year, but the meeting of the World Economic Forum has also been postponed because of the coronavirus pandemic.

“We will find some other appropriate form in the early part of next year to give a wrap up, but it will immediately lead into a series of other efforts to actually implement and move forward to some of the recommendations,” Mr Winters said.

But he is certain that their plans will not be subject to the constant delays which plague so many parts of public life at the moment.

“I think we are seeing the evidence every day that climate change is real and it is not going slower than the scientists have said, if anything it is going faster than the scientists have said, and if anything the commitments that we have made as private corporations are commitments for now, that we need to start acting on now, the time is very much now. ”

“Banks and oil companies have a bad reputation. But that’s not why I or anybody else I think is doing this, we’re doing it because it’s the right thing to do and to what our owners and our other stakeholders demand.”

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