In early November, global leaders gathered in Glasgow, Scotland, for the United Nations Climate Change Conference (COP26) in an effort to build strategies for the daunting challenge of meeting the targets of the 2015 Paris Agreement.
Nearly every country in the world has committed to the massive greenhouse gas emissions reductions needed to limit the increase in the Earth’s temperature to a maximum of 2 degrees Celsius above the Earth’s pre-industrial climate, with the ultimate goal ofas just a 1.5 degree increase this century.
Widespread decarbonization is an expensive endeavour — according to a 2019 report from the World Bank, the public and private sector will need to contribute US$90 trillion in green infrastructure investment by 2030.
While the transition to a post-carbon economy has been found to boost jobs and reap $4 in measurable economic benefits for every dollar spent, the up-front capital costs for this tremendous shift need creative financial solutions — and fast.
Kate Levick, the Associate Director of Sustainable Finance at the Third Generation Environmentalism think-tank, wrote in a recent statement that the latest IPC data shows that the time window for effective action is shrinking.
“Recent shifts towards net-zero, resilient investment by private sector firms and governments must now be rapidly accelerated, now that we have an updated understanding both of the risks involved and of the limited time window to address them,” she wrote.
While absolute emissions reductions through renewable energy sources and cleantech are expected to make up the majority of temperature reductions, carbon capture, utilization and storage (CCUS), which stores or uses carbon that would otherwise be emitted, could support up to 20 per cent of the necessary global emissions reductions by 2030.
Climate change is not yet consistently measured, although the private sector has moved in this direction since Paris. We now need to make measurement and disclosure mandatory.
Credits generated from each tonne of captured CO2 are already building a low-carbon economy, and trade in private transactions, as government ITMO credits, and on new international markets as offsets to apply against emissions and as carbon-based commodities.
However, the obstacle to carbon credits for climate action is that they consistently fail to represent a tonne of sequestered or otherwise-reduced carbon emissions, with some studies demonstrating that 90 per cent of examined credit projects fall short of meeting accepted criteria for data verification and offset calculation.
According to former Bank of England Governor Mark Carney, who is spearheading carbon credit validation and scaling as an essential part of climate mitigation, legislating the quantification and proof of CO2 impact and reductions is a critical part of the COP26 agenda.