Evolving the Carbon Market from a Cottage Industry to an Investment Grade Market

The Present

In the last 18 months there has been a greater than ever focus on voluntary carbon markets as a vital tool in addressing the significant gap between the goals of the Paris Agreement, the commitments made by countries and climate science. Collectively we need to reduce emissions by 50%, from 50Gt to, at most, 25Gt annually by 2030, to be on track to limit warming to 1.5° Celsius by the end of the century. Current commitments will lead to an increase of 16% to 56GT, meaning we will reach 1.5° by 2030[16]. Voluntary action at scale can help close this gap in the short and medium term. However, to achieve this the Voluntary Carbon Market will have to evolve quickly, retaining its rigour whilst moving from a cottage industry to an investment grade market.
In 2020 Mark Carney, former Governor of the Bank of England and Bill Winters, CEO of Standard Chartered Bank, convened the Taskforce on Scaling Voluntary Carbon Markets to examine and address the pain points that would prevent the market growing by 15x to 100x to meet this gap.[17] That process has created a new governance body, launched in September 2021 to define Core Carbon Principles that projects can meet, setting a high benchmark for quality. But this has not addressed the challenges of the complex purchase process. JustCarbon can address this challenge, whilst leveraging the work of the taskforce.

Legislation and societal drivers

The Paris Agreement’s goal is to limit global warming to, preferably, 1.5° Celsius, compared to pre-industrial levels[18].
To achieve the emissions reductions targets and drive structural change in economies towards cleaner and sustainable operations, governments of the countries responsible for over 95% of global emissions have and continue to introduce an increasing range of mitigation and adaptation measures including:
  • Carbon Pricing
  • Technology and innovation subsidies
  • Performance standards
  • Public funding
  • Public procurement policies
  • International agreements
These are a mixture of economically incentive-based and prescriptive regulatory approaches. They have been the drivers behind the technological advancements that are making clean energy transition and other emissions reduction options feasible and affordable. Each policy introduced either creates a new, or affects an existing, market.
Despite this progress, at the world’s present CO2 emissions trajectory the Paris Agreement target looks, at minimum ambitious and, following COP26, the 2021 United Nations Climate Change Conference there is intensive and urgent pressure to go further. Achieving Carbon Neutrality, however, does not avoid nor reverse all the negative social and economic impacts of climate change. There is growing recognition that the world must move to net negative emissions to clean up past emissions that otherwise continue contributing to climate change.
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