Carney Says Carbon Market Should Grow 15-Fold to Curb Pollution
The market for voluntary carbon credits needs to grow by a factor of 15 or more in the next decade if government targets for limiting global temperature increases are to have any chance of being realized.
That’s the finding of a consultation report published Tuesday by the Taskforce on Scaling Voluntary Carbon Markets, which was initiated in September by former Bank of England governor and United Nations special envoy for climate action Mark Carney, to study how to harness market forces for limiting greenhouse gas pollution. The group, which is chaired by Standard Chartered Plc Chief Executive Officer Bill Winters, said the voluntary part of the carbon market should play a vital role in persuading companies to limit emissions.
“This is a market that’s $300 million right now -- it’s a joke,” Carney said in a Bloomberg Television interview on Monday before the report’s release. “It should be measured in the tens of billions if not the hundreds of billions.”
The voluntary part of the carbon market is a $44 billion a year part of a patchwork of global systems where carbon emissions that come from burning fossil fuels are given a price. The hope is that by forcing companies to evaluate the cost of their emissions, they will cut back on gases damaging the atmosphere.
While the European Union requires that thousands of industrial sites and power plants buy allowances to cover their carbon dioxide emissions, voluntary systems allow companies to pay to “offset” what they produce. Carney’s group said demand for those credits will surge as companies become more aware of tightening environmental restrictions -- and as societal pressures force them to clean up their business.
Carbon markets came out of the 1997 Kyoto Protocol calling on industrial nations to cut back emissions. They got a boost from the Paris Agreement on climate change in 2015, where almost 200 nations agreed to limit fossil-fuel pollution. The target of that accord is to limit global warming to as little as 1.5 degrees Celsius from pre-industrial times, a goal that would require cutting in half global emissions by 2030 and reaching zero by 2050.
“As the decarbonization of the global economy accelerates in the coming years, demand for voluntary offsetting will likely increase,” according to the report. “That demand is more likely to be met if a large-scale, voluntary carbon market takes shape, which is able to help companies achieve net-zero and net-negative goals. The scale up will need to be significant.”
The group said organizations that voluntarily purchase carbon credits can compensate for emissions that haven’t yet been eliminated by buying offsets in the voluntary market. Those securities finance projects that cut emissions in other places or spur renewable forms of energy.
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