Geneva, Switzerland, 25 January 2021 — In this critical year for the environment, government pledges to cut emissions are still falling well short of the Paris targets. The private sector has a major role to play in fighting climate change by scaling-up the voluntary trading of carbon credits and investment in natural climate solutions, such as reforestation and protection of peatlands.
The Taskforce on Scaling Voluntary Carbon Markets – convened in September 2020 and comprising more than 50 experts from 20 sectors and six continents – has released a set of 20 comprehensive actions to deliver such a carbon market, rapidly and at scale. Going further, they’ve also released a Roadmap for Implementation, focusing on nine areas of work building on the recommended actions.
To support them, a new consultation document published by the World Economic Forum in collaboration with McKinsey & Company, Nature and Net Zero, identifies the practical, cost-effective potential of natural climate solutions and six key actions to help scale these solutions.
As the International Organization for Public Private Cooperation, the Forum has taken on an Observer Status in the Taskforce on Scaling Voluntary Carbon Markets to build close working relationship with members and help spread key messages to its community of business and world leaders. The Forum also provides an impartial space for businesses, governments and civil society to come together to build trust and resolve some of the challenging issues that have held back progress.
Dominic Waughray, Managing Director of the World Economic Forum said: “This report suggests and indicates that natural climate solutions can deliver one-third of the emissions reductions required by 2030. The trading of carbon credits can play an important role and generate numerous benefits, such as directing private capital flows towards less developed countries where many emissions reduction projects are located. Clearly there are many important details to be worked out, but most of all, if delivered successfully, natural climate solutions can help reverse the destruction of nature and protect the planet’s biodiversity, on which over half the global economy depends.”
Mark Carney, UN Special Envoy for Climate Action and Finance and one of the Taskforce initiators, said: “Company net zero transition plans must primarily depend on absolute emissions reductions. In parallel, a large, high integrity market for carbon offsets is essential for three reasons. First, some companies are committed to ‘reducing' historic emissions, which can only be accomplished through offsets. Second, in hard-to-abate sectors, all the technologies do not yet exist to decarbonise completely, so companies will need to rely on offsets to limit their emissions while they transition to new, low emission operating models. Third, carbon offsets can be used to buy down the “green premium” on vital emerging technologies—such as hydrogen, direct air carbon capture and sustainable fuels—to accelerate their development and adoption. To conserve the world’s precious carbon budget and accelerate the transition to zero absolute emissions, we need a large, transparent, verifiable and robust voluntary carbon market. The Taskforce for Scaling Voluntary Carbon Markets blueprint sets out clearly how we can build this market. It is critical that we now move from blueprint to building as quickly as possible."
Bill Winters, Group Chief Executive of Standard Chartered and Taskforce Chair, said: ‘‘The need for climate action, and tools to mobilize finance for a low-carbon and resilient transition is growing more urgent by the day. While the primary focus must be on reducing direct emissions, achieving stretching net zero targets requires the use of all the tools at our disposal. The Taskforce’s roadmap ensures that the right market infrastructure and financial instruments are in place to facilitate the movement of tens of billions of dollars from those seeking to reduce their own carbon footprint to those who can reduce and remove carbon from the atmosphere.”
Tim Adams, President and CEO of the Institute of International Finance (IIF) and Taskforce sponsor, said: “A large, transparent, verifiable, and robust voluntary carbon market is a critical piece of the toolkit to reach net zero. The Taskforce has worked quickly to identify key challenges, and potential solutions, but this report is just the beginning. I look forward to continuing our work and moving towards implementation in the coming year.”
Solutions in the Nature and Net Zero report include measures to protect and enhance forests, peatlands and mangroves, as well as soil sequestration through, for example, cover cropping. Nature-based solutions are more economically attractive than other forms of CO2 removal, can be deployed immediately without waiting for technological breakthroughs. With close to 7Gt CO2 in annual potential by 2030, assuming an illustrative price per ton of $20 would suggest potential capital flows greater than $100 billion.
The global South is home to almost 90% of estimated cost-effective natural climate solution potential. But this does not exempt the global North from direct action of its own. Apart from attracting investment, these solutions bring many additional benefits, including improved soil health and water quality, health benefits from reduced pollution and new livelihoods.
As more private sector actors pledge to reduce their emissions, investors are demanding credible transition plans. A large, transparent, verifiable and robust voluntary carbon market is critical in enabling companies to turn their net-zero commitments into action by investing into emission reductions and compensating for their remaining footprint.
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