The coming year for the carbon market will be uncertain: if it can avoid more scandals, carbon credits will look like a legitimate corporate net zero strategy, and a reliable asset that can be traded more legitimately among investors in the secondary market. , which would increase prices and increase pressure on high-carbon companies to reduce their footprint rather than actually buying credits. If more scams emerge, restrictive government regulation will not be far behind.Thank you for reading this post, don't forget to subscribe!
,“The main element missing from the market is confidence,” said Mark Kenber, executive director of the industry group Voluntary Carbon Markets Integrity Initiative.
Negotiators at the COP28 summit hit a wall in negotiations for a UN-administered carbon market, something that has been in the works since the Paris Agreement but has failed to trigger disagreements about its rules. However, high-emitting companies are still struggling to offset offsets, and many developing countries see carbon markets as an inevitable track to put climate finance into their own pockets.
The absence of a U.N. market puts more pressure on the existing voluntary market, which this year is experimenting with its first industry-wide standards for what counts as “good” carbon credits, and what types of green credits buyers can afford. Can make claims. Nothing can stop governments from signing bilateral carbon trade deals, even if global rules for these also failed to materialize at COP28.
But more rules are coming. The European Union is preparing to ban companies from calling products “carbon neutral” if the claim is based on offset purchases. US financial regulators are planning rules for trading carbon credit futures and other derivatives. And within a few months, an independent monitoring group of carbon market experts plans to release its first rating label for specific carbon projects, which will give buyers more clarity on where to find high-quality projects.
“For the market to fully develop over the next two years, as the United Nations and governments have called for, regulation needs to happen quickly,” Kneber said. “It’s overdue.”