Government Acknowledges Bad Reputation Of Carbon Markets, But Highlights Opportunity | carbon credits

Credibility is fundamental for the future Voluntary Market of Carbon Portuguese and the Government says it is well aware of this – and wants contributions to ensure that it does not fail. This perception was evident in the presentation that took place this Friday in Lisbon, which included interventions by the Minister of the Environment and Climate Action, Duarte Cordeiro, and the president of the Portuguese Environment Agency (APA), Nuno Lacasta, as well as a debate between representatives of strategic entities.

“The carbon market, not being a silver bullet – and we don’t want it to be – is an opportunity”, said the Minister of the Environment, guaranteeing that this is just one of several solutions in the long journey of combating climate change.

With a view to achieving carbon neutrality in 2050 – an objective that Portugal intends to anticipate in five years, recalled Duarte Cordeiro -, the State has to work not only in terms of reducing emissions – “even today we still have not financed our entire transformative agenda to reduce emissions”, noted the minister-, but also “in strengthening the country’s sink capacity”.

“Carbon neutrality”, recalled Duarte Cordeiro, does not mean zero emissions: “it means that we compensate our emissions with sink capacity”. It is estimated that it is necessary to guarantee compensation of around 13 thousand tons of CO2 through natural carbon capture (mostly in forest areas). Duarte Cordeiro states that the Government’s “main political objective” with this proposal is to “add value to the forest”, seeking to “help the forest increase its natural sink capacity”.

The Minister for Climate Action recognized that the reputation of voluntary carbon markets “has a very variable degree”, being currently a type of mechanism “permeable to the greenwashing”, but underlined the Government’s proposal to have environmental verifiers. “This is what is new about our project: there are no other carbon markets with this level of accountability”, said Duarte Cordeiro.

The public consultation of the Government’s proposal ends on 11 April and there is no prediction of when the future Voluntary Carbon Market will be operational, but Duarte Cordeiro revealed that several entities have already expressed their interest in boarding. “We immediately want this regulation to contribute to increasing the degree of investor confidence”, said the minister.

“Whoever starts first here has a duty to explain where the process is complicated”, he also said, winking at possible contributions that could be presented during the next month of public consultation. “Let’s all know how to build levels of this voluntary market and show that we can carry out the proper certification of these projects”, appealed the minister. “We want this to be a market for programs and projects and not just a carbon market”, he concluded.

“We have to have a credible system”

The presentation of the Voluntary Carbon Market proposal in Portugal fell to the president of the Portuguese Environment Agency, Nuno Lacasta, who made it clear that the Government is fully aware of the various criticisms of this type of markets, but remains resolute in moving forward with this solution.

“We have to have a credible system”, underlined Nuno Lacasta, acknowledging that “the reputational effect of a poorly designed carbon market can be killer”. To this end, attention has been paid to the issue of certifying entities, which will be essential to verify that projects comply with the guidelines defined by the APA, based on the international reference rules for these markets.

As Portugal is a country vulnerable to forest fires, Nuno Lacasta underlined that the incentive that this Voluntary Carbon Market will bring to the protection of forest areas will be essential to face the challenge of ensuring the capture of “10 to 13 million tons of carbon in the biomass in the horizon of 2050”, in order to compensate the emissions foreseen for that time (about 10 million tons).

In addition to the market’s essential transparency, the president of the APA noted that one of the focuses of attention has been on guaranteeing “additionality”, that is, that the projects that generate “carbon credits” (which are purchased in this voluntary market by companies that want to “compensate” their emissions) can only be carried out due to this funding. This implies that the projects cannot have another type of funding (such as PRR support or municipal funding) or, on the other hand, that they are not interventions that would occur in one way or another.

Nuno Lacasta underlined, however, the need to find a balance in bureaucratic terms so as to “not make the market too rigid, not very liquid”, making it difficult for it to function.

The question of permanence, that is, guaranteeing that the projects continue to function even after the period covered by the carbon credit has ended, as well as verifying compliance with it (“a carbon credit from a forest that burned two years later is not acceptable”, exemplified Lacasta) has also been raised since the Government’s proposal was presented.

Greenwashing and integrity of markets

The credibility of voluntary carbon markets – or the lack thereof – was bluntly addressed by Pedro Martins Barata, associate vice president of the international entity Environmental Defense Fund for the area of ​​carbon markets.

Voluntary carbon markets have seen “near exponential growth” which “at this point exceeded nearly two trillion dollars”. “It is still a pygmy among giants”, Martins Barata noted, in comparison with official regulated markets such as the European Union’s License Trade, but some projections indicate that it could grow to “100 billion dollars in 2030”.

Currently, however, there has been a great “hustle” in these international markets, he explained, due to the allegations associated with the use of carbon credits. “The most used is the claim of carbon neutrality without specifying what it means to be carbon neutral”, explains Pedro Martins Barata, giving the example of oil companies that, through the “compensation” of emissions (that is, the purchase of “carbon credits” that offset emissions from their activity), declare themselves to be “carbon neutral”.

In addition to the contradictions implicit in this type of carbon neutrality claim, in recent months several reports and major journalistic investigations have been published that show serious flaws in the management of these international voluntary markets, in the mediation between buyers and projects and, in particular, in the verification of these “credits”. of carbon” (that is, the projects that “guarantee” the capture of carbon that the companies are not able to reduce).

Pedro Martins Barata explained that part of EDF’s work has to do with initiatives such as the science-based objectives (Science Based Targets initiative), which advises companies on “when and how the use of carbon credits is advisable and credible”, and the Voluntary Carbon Market Integrity Initiative, which seeks to typify these types of claims to avoid the so-called greenwashing – when this publicity hides what are, in reality, bad environmental practices – and for consumers to know for sure what was done to mitigate or compensate the carbon footprint of each company.

Incidentally, the allegations about failures in international markets have had consequences for the credibility of demand for credit, this previously “exponential” demand for these markets has stabilized over the last six months. It is necessary, summarized Pedro Martins Barata. “solve the fundamental problem of the credibility of the carbon market”.

Leave a Comment

I want to Sell this domain contact at [email protected]