US climate envoy John Kerry announced on Friday the launch of a new carbon offset plan that will allow companies to fund clean energy projects in developing countries and gain carbon credits that they can then use to meet their own climate goals, at least partly.
Kerry said the plan, called the Energy Transition Accelerator (ETA) will be developed by the US along with the Bezos Earth Fund and the Rockefeller Foundation and receive inputs from public and private sectors.
“This concept holds enormous promise. We are working closely with governments, companies and NGOs on this. We can ensure it delivers finance at scale…delivers a just energy transition, with environmental integrity…by no later than COP28,” Kerry said in his speech during ‘Finance Day’ at this year’s UN Climate Conference (COP27) being held at Egypt’s Sharm El Sheikh.
The concept according to Kerry is to put the carbon market to work, deploy capital otherwise undeployable, and speed up the transition from dirty to clean power.
Experts said the proposed initiative would be insufficient to make up for the lack of funding from rich countries.
“What developing countries need is predictable finance - not offset markets. The proposed initiative cannot make up for the US’s failure to provide its fair share of climate finance - an estimated $40 billion of the unmet goal of $100 billion a year. It also should not substitute for deep decarbonization needed within the US and other industrialised countries. For developing countries like India, the first priority would be to meet their own targets and not provide offsets for reductions in developed nations,” said Ulka Kelkar, director, Climate Change Programme, World Resources Institute (India) said in a statement.
{{/usCountry}}“What developing countries need is predictable finance - not offset markets. The proposed initiative cannot make up for the US’s failure to provide its fair share of climate finance - an estimated $40 billion of the unmet goal of $100 billion a year. It also should not substitute for deep decarbonization needed within the US and other industrialised countries. For developing countries like India, the first priority would be to meet their own targets and not provide offsets for reductions in developed nations,” said Ulka Kelkar, director, Climate Change Programme, World Resources Institute (India) said in a statement.
{{/usCountry}}“Kerry’s announcement may solve a political narrative problem -- telling a story about unlocking finance - but is highly unlikely to actually get sufficient, predictable finance moving,” said Navroz Dubash, professor, Centre for Policy Research in a statement.
A third expert added that how the scheme pans out will be key. “The US’s Energy Transition Accelerator is arguably the first large scale structured programme that will demonstrate how Article 6.2 will look in practice,” said Vaibhav Chaturvedi, fellow, Council for Energy Environment and Water in a statement. A senior official part of the Indian delegation at COP27 took a similar position. “The scheme needs to be examined very carefully. It may be good for renewable energy projects for sure and for those coal plants that are very old and unviable and which India wishes to shut down. Too early to say,” this person said, asking not to be named.
Kerry’s announcement of a carbon market scheme comes at a time when there is growing mistrust among developing countries about developed nations failing to deliver on climate finance commitments. India’s environment minister Bhupender Yadav on Tuesday said the 100 billion dollar commitment made by developed countries is a “mirage.”