US climate envoy John Kerry has announced a new global carbon credit trading initiative which he predicted would be “critical” in helping developing countries transition to cleaner forms of energy.
The Energy Transition Accelerator (ETA) is intended as a mechanism to scale up climate finance, by acting as a catalyst for private capital to accelerate the clean energy transition in developing countries.
It will use carbon credits to help decommission coal and to roll out wind, solar and geothermal energy, Mr Kerry said.
The proposal is a US attempt to scale up large quantities of finance for climate-vulnerable countries, but it has met with mixed reaction from some developing countries and climate campaigners.
Your top stories on Wednesday
Q&A: Will we have a tax liability if Dad gives us his home while he is alive?
How does VAT in Ireland compare with countries across Europe? A guide to a contentious tax
Humphrey Bogart and Lauren Bacall’s son on his parents: ‘Kids were second to their drinking and partying’
Mr Kerry confirmed the US would develop the programme with the Bezos Earth Fund and Rockefeller Foundation, with input from the public and private sectors. It will operate up to 2030, possibly being extended to 2035.
“We need to break the mould on this,” Mr Kerry said during an event at the US pavilion of the Cop27 climate change conference in Sharm El Sheik, Egypt.
While the details of the programme have yet to be fully fleshed out, he said it was important to mobilise private capital to help deliver trillions of dollars in investment to boost renewable energy in developing countries that often struggle to secure funding for such projects.
Mr Kerry said that Chile and Nigeria were among the developing countries expressing early interest in the ETA, and that Bank of America, Microsoft, PepsiCo and Standard Chartered Bank indicating interest in “informing the ETA’s development”.
He noted that UN secretary-general António Guterres was supportive of a US-led carbon market initiative, provided there were safeguards to it.
Allowing the dirtiest industries to pay their way out of decarbonisation is a disaster for the world
Seeking to tap private money for a transition that wealthy governments have refused to finance, the group hopes to lure more than $100 billion by the end of the decade, cutting as much as 1.3 billion to 2.3 billion tons of climate pollution, according to consulting firm Climate Advisers.
However, Mohamed Adow, director of climate and energy think tank, Power Shift Africa, said Mr Kerry “wants to monetise the global commons” with the plan.
“We need to see deep emissions reductions in both the global north and south, not rich polluting companies in the north paying for the privilege of continuing to destroy the planet,” Mr Adow said.
“Allowing the dirtiest industries to pay their way out of decarbonisation is a disaster for the world.”
Research manager at E3G clean energy think-tank Leo Roberts said there was a clear need for significantly scaled up energy transition finance, “but it’s hard to see how voluntary carbon credits fit into this”.
Meanwhile Mr Kerry confirmed he has spoken with his Chinese counterpart Xie Zhenhua, rekindling contact between countries that are pivotal in the global effort to limit greenhouse gas emissions.
“We need to be talking to each other because we’re the two biggest economies in the world and the two biggest emitters,” he said.
Mr Xie said that although China and the US had not started official talks, he met with Mr Kerry for promoting Cop27 goals as a joint effort.
What are carbon offsets?
Carbon offsets are actions intended to compensate for the emissions of carbon dioxide into the atmosphere as a result of industrial or other human activity – especially when quantified and traded as part of a commercial scheme.
They are a mechanism to channel funds to sustainable development and conservation while reducing climate emissions. But, if done badly, detractors say they are a greenwashing tool. They are increasingly controversial because of lack of transparency.
With offsetting, you are paying someone else to undo the damage done by carbon-intensive products and services such as air travel, manufacturing or burning fossil fuels.
Credits are generated by projects such as tree-planting, bog and forest restoration, renewable energy or carbon capture and storage. Projects are evaluated to work out how much emission savings they are able to generate, and these savings are certified as saleable commodities known as carbon credits.
