The 1997 Kyoto Protocol implemented the objective of the United Nations Framework Convention on Climate Change (UNFCCC). The intent was to reduce the onset of global warming. This would be done by reducing greenhouse gas concentrations in the atmosphere to "a level that would prevent dangerous anthropogenic interference with the climate system."
However, the past 25 years of progress (or lack thereof) is sharply brought into view in the IPCC’s Sixth Assessment Report on the Mitigation of Climate Change (released on April 4, 2022). It is unequivocal in its conclusions: many of the impacts of climate change are now irreversible. The consolation is that some of the most severe impacts may still be avoided, if we can improve our performance.
Since the signing of the Kyoto Protocol in 1997, there have been attempts to mitigate climate impacts. These have ranged from multilateral climate policy at the international level to highly localized community group action. Solutions have had mixed success; they are often deployed slowly and piecemeal.
As we look forward to 2050 — our cut-off date for achieving Net Zero carbon emissions at the global level (against the pre-industrial baseline) — it is clear that action at scale must be the priority.
Mechanisms that leverage the market for climate action are of particular interest when the question of scalability is in focus. The Voluntary Carbon Market (VCM) is one such solution. The VCM looks to maximize the flow of finance to pro-climate projects across the globe. This will be achieved by using capital allocated by individuals and organizations who aim to compensate financially for their unavoidable carbon emissions.
The VCM issues carbon credits. These are tied to specific activities and projects that can demonstrably and verifiably mitigate carbon emissions or remove carbon from the atmosphere. At the point where a carbon credit is allocated to an end-consumer, the emissions are considered offset. They are removed from the market and the credit for the investment into the planet is allocated to the actor that purchased it.
However, even with the VCM’s objective of tapping into market mechanisms (arguably our most efficient way of allocating resources), the incentives for companies, governments and individuals to participate have remained misaligned with economic realities. In large part this is due to clear market failures associated with expensive and opaque administrative requirements. According to McKinsey, today’s carbon credit market is fragmented and complex. There are questionable credit sale practices and limited pricing data that “make it challenging for buyers to know whether they are paying a fair price, and for suppliers to manage the risk they take on.”
Growth has continued in our global consumption of hydrocarbons for energy, manufacturing and materials. In turn, with global emissions continuing on a steep upward trend, the shortcomings of the VCM are particularly acute in 2022.
Continue reading: https://www.entrepreneur.com/article/425205
However, the past 25 years of progress (or lack thereof) is sharply brought into view in the IPCC’s Sixth Assessment Report on the Mitigation of Climate Change (released on April 4, 2022). It is unequivocal in its conclusions: many of the impacts of climate change are now irreversible. The consolation is that some of the most severe impacts may still be avoided, if we can improve our performance.
Since the signing of the Kyoto Protocol in 1997, there have been attempts to mitigate climate impacts. These have ranged from multilateral climate policy at the international level to highly localized community group action. Solutions have had mixed success; they are often deployed slowly and piecemeal.
As we look forward to 2050 — our cut-off date for achieving Net Zero carbon emissions at the global level (against the pre-industrial baseline) — it is clear that action at scale must be the priority.
Mechanisms that leverage the market for climate action are of particular interest when the question of scalability is in focus. The Voluntary Carbon Market (VCM) is one such solution. The VCM looks to maximize the flow of finance to pro-climate projects across the globe. This will be achieved by using capital allocated by individuals and organizations who aim to compensate financially for their unavoidable carbon emissions.
The VCM issues carbon credits. These are tied to specific activities and projects that can demonstrably and verifiably mitigate carbon emissions or remove carbon from the atmosphere. At the point where a carbon credit is allocated to an end-consumer, the emissions are considered offset. They are removed from the market and the credit for the investment into the planet is allocated to the actor that purchased it.
However, even with the VCM’s objective of tapping into market mechanisms (arguably our most efficient way of allocating resources), the incentives for companies, governments and individuals to participate have remained misaligned with economic realities. In large part this is due to clear market failures associated with expensive and opaque administrative requirements. According to McKinsey, today’s carbon credit market is fragmented and complex. There are questionable credit sale practices and limited pricing data that “make it challenging for buyers to know whether they are paying a fair price, and for suppliers to manage the risk they take on.”
Growth has continued in our global consumption of hydrocarbons for energy, manufacturing and materials. In turn, with global emissions continuing on a steep upward trend, the shortcomings of the VCM are particularly acute in 2022.
Continue reading: https://www.entrepreneur.com/article/425205
