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Calls for Carbon Market Regulation Grow Amid Climate Disasters
With the 29th “Conference of the Parties” - (COP29, the global climate confab) - just around the corner, countries are planning to leverage the event to revive the beleaguered Voluntary Carbon Market (VCM).
Consensus is building that the VCM must be regulated at the national and international levels to ensure carbon credits actually do what they claim to.
The VCM has seen its fair share of controversy. In the last couple of weeks, one of the biggest names in the VCM, Kenneth Newcombe, formerly CEO of C-Quest Capital and board member of carbon verifier Verra, was indicted over claims he manipulated data to attract more than $100 million in carbon offset investments to C-Quest. He could face up to 20 years in prison if found guilty. Verra claims they suspended all 27 of the affiliated projects and are working with the new executive team at C-Quest to cancel all of the credits.
As the punishments for malfeasance in the VCM get more serious, the call for more regulation is growing. Andrew Steer, CEO of the Bezos Earth Fund, an environmental charity, said, “It's now time to get truly professional and regulated in the best sense."
Thankfully, there is work being done to do just that. Last month, the Commodity Futures Trading Commission (CFTC) (one of the groups involved in prosecuting C-Quest Capital) released new guidelines for trading derivative contracts in the US to reduce price manipulation, following a May release from the Biden administration on principles for a high-integrity VCM. The guidelines and principles are part of a broader plan from Treasury Secretary Janet Yellen and the Biden administration to bring more integrity to the VCM, which they plan to pitch internationally at COP29 next month.
The plan involves using the carbon offset market to mobilize private financing for developing nations to help them mitigate and adapt to climate change. Curtis Ravenel of the Glasgow Financial Alliance for Net Zero (GFANZ) said, “Getting money into emerging economies is very difficult. But if done the right way, a high-integrity carbon credit could help catalyze further deployment.”
Hurricane Milton Reaps Devastation
Weather Broadcaster John Morales Chokes Up Describing Hurricane Milton
Getting the VCM and other decarbonization tools right has never been more important. The unprecedented warm waters in the Gulf of Mexico lead to rapidly intensifying hurricanes, leaving little time for evacuations. In the case of Hurricane Milton, which made landfall in Florida on Wednesday night, it intensified from a Category 1 storm to a Category 5 hurricane in less than 12 hours. And it didn’t stop there. By 8 p.m. on Monday, the storm’s maximum sustained wind speeds had increased to 180 miles per hour, making Milton one of the strongest Atlantic hurricanes ever.
“I am stunned by how quickly this storm has intensified,” said Rachel Cleetus of the Union of Concerned Scientists. “This is the unmistakable fingerprints of climate change that we are seeing here.” Scientists are increasingly worried about compounding disasters, with Floridians still reeling from Hurricane Helene just two weeks ago, giving them little time or resources to prepare for Milton.
Attribution studies from World Weather Attribution and Climate Central have already linked the extremes of both storms to climate change. Climate Central said climate change made the rapid intensification of Milton at least 400 times more likely and World Weather Attribution claimed climate change made Helene two and a half times more likely and increased its precipitation by at least 10%.
Global Weirding
Hurricanes are just the tip of the (melting) iceberg in the ways that global warming, or what scientists are increasingly calling “global weirding,” is impacting communities and ecology. Just this week, we saw extremely rare floods in the Sahara, the Amazon River fell to its lowest levels ever, and a new WMO report, the “State of Global Water Resources 2023,” revealed that global water systems are under severe stress.
As this NYT article shows, it is not just the warming climate contributing to these issues. In the case of the Amazon drought, widespread deforestation has led to reduced precipitation. This points to something that governments have been slow to understand: all environmental issues are linked, and any environmental degradation will have some sort of unforeseen circumstance in the long run. These issues will be central to the discussion at the UN Biodiversity Conference (COP16) in Colombia next week.
Canada To Introduce Mandatory Climate Disclosures
Canada announced that it would expand its mandatory climate reporting rules to include large private companies. The timeline and content of these new regulations are still to be determined. However, it is expected that Canada will use the proposed ISSB-aligned standards released by the Canadian Sustainability Standards Board (CSSB) earlier in the year.
“US Must Avoid EuroSclerosis”
Mario Draghi, author of the EU’s Competitiveness report Simon Wohlfahrt/Bloomberg
In an op-ed from Suzanne Clark, chief executive of the US Chamber of Commerce (the group suing the SEC and California Rule over climate disclosure policies), she claims that the US must avoid overregulating to steer away from the economic stagnation the EU has suffered. She used Mario Draghi’s recent report, “The Future of EU Competitiveness,” to claim that overregulation has killed EU growth.
The op-ed follows a letter from 65 Congressional Republicans asking Treasury Secretary Janet Yellen to push back on the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), which they call “a serious breach of U.S. sovereignty.”
However, it is very unlikely that the EU will change its regulations for US companies. Whether ESG or any other issue, the EU has long maintained that companies doing business in its markets must apply its standards. To do otherwise would disadvantage its domestic industries.
Energy Emissions To Peak This Year
A new International Energy Association (IEA) report finds that we won't meet the goal of tripling renewable energy but will come close, resulting in a whopping 50% share of renewables by 2030. Another report from a Norwegian risk analysis firm, DNV, revealed that emissions from energy will peak this year and steadily decline thereafter. Unfortunately, that rate of decline will still lock in a temperature rise of 2.2°C by 2100.
The views expressed on this website/weblog are mine alone and do not necessarily reflect the views of my employer.
Other Notable News:
A UN trade agency has created an online platform to help small companies comply with the EU’s Deforestation Regulation (EUDR). The EU Commission announced last week that the EUDR will be delayed for a year. This additional tool will help small-scale farmers in developing countries comply when the time comes.
New York Governor Kathy Hochul was given a ‘D-minus' on a climate progress scorecard. The grade was given by Climate Can’t Wait, a collaborative of several climate groups who claim she should be doing a lot more on climate action.
This new article, which I co-authored with my colleagues at BCG, gives companies everything they need to know about the SEC Rule - currently on hold during litigation.
New research finds that the number of companies greenwashing is down for the first time in 6 years. However, the number of extreme greenwashing cases (cases with the most intention and biggest impact) increased by 30%.
A new agreement between Germany and Colombia is set to swap some of Colombia’s nature for debt. The move would contribute to the $40 billion Colombia needs for its energy transition.
Notable Podcasts:
In this week’s Outrage and Optimism, the podcast team has released a new series, How To Live A Good Life in a Climate Crisis. This week’s edition asked whether it is okay to use air travel during a climate crisis. They look at the cases for and against flying and the potential for new tech, like sustainable aviation fuels, to make it less carbon-intensive.
This week’s episode of the Harvard Business Review’s The Climate Rising podcast, the fourth edition of their series on climate change and storytelling, features an interview with co-founder and Chair of Trellis (formerly GreenBiz) Joel Makower. Joel shares his insights into climate-focused media and the critical role of a media platform in advancing climate action.
Notable Jobs:
Senior Associate, Client Solutions, Re:Co Insights, London, UK
Senior Associate, Climate & Nature, J. Crew, New York, Hybrid
Sustainability Account Executive, Watch Wire by Tango, Dallas, TX, Hybrid
Decarbonization/Sustainability Consultant, Ramboll, San Francisco, CA
Sustainability Programs ManagerSustainability Programs Manager, RE Tech Advisors, Dallas Tx, Hybrid
Sustainability Platform Analyst, Postion Green, Buffalo New York
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