Kerry presents at COP27 a carbon credit plan that is already born under criticism

The US special envoy for the climate, John Kerry, announced at COP27 (UN climate conference), this Wednesday (9), a date classified as the “day of finance”, a plan – which has been criticized – to carbon offset. The initiative would link US private companies to energy transition actions in developing countries.

Kerry launched an idea to those present in the American space at COP27, in Sharm el-Sheik, and to the rest of the conference, but without much detail. He himself made a point of making this clear by stating that there is an openness to listen to the various actors that may be affected by the project.

“The intention is to have the strategy up and running at COP28,” said the envoy, who called the plan the Energy Transition Accelerator.

The idea is basically the following. Imagine a power plant based on fossil fuels. It will have a quantifiable amount of emissions in a given period. But if that plant ceases to exist and a sustainable energy source — such as solar, for example — replaces it, such emissions will cease to be made. That’s where the carbon credit is created.

In the case of Kerry’s idea, the money from the purchase of high-quality carbon credits, he explained, would go directly to finance the energy transition in developing countries. The US representative also pointed out that the credits could not be purchased by companies in the fossil fuel sector.

Although the proposal has not yet been made official, it has been widely criticized by experts from different countries and organizations.

One of the criticisms refers to the intention to propose a fixed price for the advance purchases of carbon credits from energy transition plans. If the fixed price is too low, it creates a harmful consequence: the cheapest credits in the carbon market are, in general, the least reliable.

“The US has us on its climate distraction carousel. One minute they’re insisting they won’t ‘obstruct’ progress on key issues at COP27, and the next minute they’re launching risky, unproven and scientifically unfounded schemes that could not even lead to real emission reductions, let alone provide the type and form of funding that will actually be needed to tackle the climate crisis,” said Rachel Rose Jackson, Director of Climate and Public Policy at Corporate Accountability.

For the climate director of the WRI (World Resources Institute) in India, Ulka Kelkar, “what developing countries need is funding forecast, not compensation markets”.

“The proposed initiative cannot compensate for the United States’ failure to provide its fair share of climate finance — estimated at $40 billion of the unachieved global target of $100 billion a year,” she says, citing the annual amount pledged by countries. rich since 2009.

Researcher Navroz Dubash, one of the authors who coordinated the latest UN climate panel report, reckons that “Kerry’s announcement may solve a problem of political narrative — telling a story about unlocking finance — but it is highly unlikely that it actually achieve a sufficient and predictable financial movement”.

“At best, it will lead to limited and unpredictable flows; at worst, it could undermine the Paris machine.”

Furthermore, while the proposal suggests that the remuneration of carbon credits can encourage the energy transition, the US climate target in the Paris Agreement (the so-called NDC, for nationally determined contribution) states that the country does not intend to buy credits.

“At this time, the United States does not intend to use voluntary cooperation using the cooperative approaches mentioned in Article 6.2 or the mechanism referred to in Article 6.4 to achieve its goal”, says the American document submitted to the UN, referring to Article 6, which deals with the carbon market.

The US may, however, be interested in selling carbon credits from its energy transition, rather than buying from developing countries, suggest analyzes by developing country negotiators.

“That’s not your grandmother’s and grandfather’s credit,” Kerry defended on Wednesday. “We must not let past mistakes prevent us from applying a powerful tool to guide private capital where it is most needed,” she said, referring especially to greenwashing practices.

According to the American envoy, the credits would only be a supplementary tool to the emission reduction policies of American companies to achieve climate neutrality by 2050.

He said, however, that there could be a possibility (which he highlighted as limited) for companies to use parts of these credits for their short-term goals — he cited the years 2030 and 2035.

In other words, the idea points to a scenario in which companies would buy credits that would leave them above their goals.

During his presentation, Kerry highlighted that investments of US$ 2.5 trillion to 4.6 trillion a year, from now until 2050, are needed to keep the 1.5°C alive – which was the motto of COP26.

“No government in the world has enough money to do this work. So why do we keep pretending?”, he asked.

Countries and companies already interested in the idea were also presented at the event — the companies are Bank of America, Microsoft, PepsiCo, and Standard Chartered Bank. Chile and Nigeria are the nations that show encouragement.

_{The Planeta em Transe project is supported by the Open Society Foundations.}