US Envoy Launches Carbon Offset Plan, Faces Flak at COP27

What is the newly launched plan? What are the concerns? Here's all you need to know.

United States Special Presidential Envoy for Climate John Kerry.

(Photo: Twitter/@ClimateEnvoy)

With climate finance in the limelight at the 27^th Conference of Parties (COP27), United States Special Presidential Envoy for Climate John Kerry on Wednesday, 9 November, marked the day by announcing the creation of a carbon offset plan - the new Energy Transition Accelerator (ETA) - in order to help developing countries speed their transition away from fossil fuels.

What is it: The ETA will finance the decommissioning of coal and accelerate clean energy deployment in developing countries. It also plans to unlock new private capital to help developing nations invest in renewable and low-carbon technologies in exchange for carbon credits.

To understand the concept of carbon markets, you can watch our exlplainer here:

Concerns

• Amid persisting concerns of lack of clarity on the scheme, Kerry stated that carbon credits through the scheme will only be open to companies that have committed to net-zero and have science-based targets matching that trajectory in place. However, concerns around the issuance and pricing of credits still persist.

• Since there is currently no definition on how much of a company’s carbon emissions these credits can be used for, green groups are concerned that this will enable companies to offset their emissions.

The lack of a definition is despite the Science Based Targets initiative’s Net-Zero Standard stating that high quality credits and removals can only be used to cover 10 percent of emissions.

'Holds Enormous Promise': Kerry

Speaking at COP27, Kerry said that companies including Microsoft and PepsiCo were involved in the plans, while countries and environmental groups were also supportive. Fossil fuel companies will be, however, excluded, he added.

He said:

“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."

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.

‘Can’t Make Up for Failure To Provide Climate Finance'

Meanwhile, Ulka Kelkar, director, Climate Change Programme, World Resources Institute (India) said in a statement:

“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 USD 40 billion of the unmet goal of USD 100 billion a year. It also should not substitute for deep decarbonisation needed within the US and other industrialised countries."

Kelkar added, "For developing countries like India, the first priority would be to meet their own targets and not provide offsets for reductions in developed nations."

Furthermore, Navroz Dubash, professor, Centre for Policy Research, said, “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."

(Our on-ground climate journalism needs your insights, ideas, and financial support - as we cover the biggest crisis of our times. Become a Q-Insider so we can bring more such stories to light.)