The HP5 workstream held a workshop on 17 September 2024 to unpack the role of Ministries of Finance in supporting robust country frameworks that ensure high integrity in the generation and use of carbon credits, driving climate finance with significant development impact and supporting ambitious decarbonization pathways.
Background
Limiting global warming to 1.5°C above pre-industrial levels requires significant carbon reductions and 6 to 10 billion tonnes of carbon dioxide removal per year by 2050. Carbon credits have the potential to support decarbonization efforts globally, accelerating net emissions reductions while reducing their cost, provided that they satisfy high standards of additionality, permanence, and absence of double-counting. High integrity carbon credits could fulfil these conditions by further unlocking capital for real, additional, lasting and independently verified emissions reductions and removals through investments that have high impact for economic development, livelihoods and nature. They could be used in Voluntary Carbon Markets (VCM), where offsets are governed by private organizations, but also in international crediting schemes, where offsets either are governed by organizations (e.g. CORSIA) or are traded between countries under Article 6, and some domestic compliance markets.
Such carbon credits require markets with strong governance, oversight, transparency and integrity to grow further. They must also be embedded in governments’ wider strategies to ensure they align with development priorities and reach front line communities. Governments should also make sure that the use of internationally traded offsets does not undermine ambition enhancement efforts given the large gap between current NDCs and what countries have agreed is needed for the 1.5-degree objective. Ministries of Finance play a critical role in enabling transparent, credible, and sustainable carbon credit markets by supporting the development of robust policies underpinning the generation and use of carbon credits, establishing reliable market infrastructure, managing revenue fairly and efficiently, coordinating with other ministries and stakeholders, and engaging in international cooperation.
Agenda
- Coalition’s Co-Chair Deputy from The Netherlands, Leandro Rossi, opened the workshop.
- Building Robust Country Frameworks for High Integrity Carbon Credit Markets
State and trends in carbon credit markets: Pierre Guigon, Senior Climate Change Specialist, World Bank - presented on the state of play of carbon markets, challenges and bottlenecks, and available support to countries.
Updates and feedback from members: Finland, Philippines, Indonesia and Uganda shared their experiences in developing carbon credit markets.
- Key developments towards high integrity Carbon Credit Markets
Supply side: Amy Merrill, Chief Executive Officer of the Integrity Council for the Voluntary Carbon Market (ICVCM) – presented ICVCM and its role in the implementation of the end-to-end integrity framework for the procurement of high-integrity carbon credits, as well as the role of governments and regulators in VCM.
Demand side: Mark Kenber, Executive Director, Voluntary Carbon Markets Integrity Initiative (VCMI) – presented VCMI and its Claims Code (which provides guidance to companies on how to use high-quality carbon credits) and how VCMI supports host countries ensure VCMs deliver real transformational benefits; as well as the role of Ministries of Finance.
- Updates on Article 6 negotiations: Perumal Arumugam, Manager, Mitigation division at UNFCCC.
- Private sector perspective: Julia Strong, Executive Director, Symbiosis Coalition (Google, Meta, Microsoft, and Salesforce) – presented on private sector demand and need for in country frameworks.
- Updates from members:
Ethan Zindler, Climate Counselor, US Treasury – introduced the recent Voluntary Carbon Markets Joint Policy Statement and Principles
Sweden, Ecuador, Ghana, France, Columbia, and the OECD shared their experiences and provided feedback to presenters.
- Olha Krushelnytska, World Bank, Coalition Secretariat, moderated and closed the workshop.
View the recording here