The development of a $100bn global carbon offset market in place was ‘imperative’ if the private and public sectors in developed economies around the world were serious about reducing carbon emissions, the UN’s special envoy on climate action and finance Mark Carney said this week. Speaking at the FT Energy Transition Strategies Summit yesterday, the former Bank of England governor effectively challenged government and captains of industry to get their act together before the UN’s COP26 climate change summit convenes in Glasgow next November. The global voluntary carbon offset market was worth just $6bn, in 2019, according to a report published by HSBC Centre of Sustainable Finance this September.
Carbon offsetting allows companies and countries to compensate for their carbon emissions which are either unpreventable or simply contribute too much to their bottom lines by funding sustainable projects around the world that help to reduce or absorb equivalent CO2 emissions. Some freight operators mitigate part of their transportation emissions by investing in forestry projects, for example, while Qatar Airways give its passengers the opportunity to voluntarily offset the carbon emissions associated with their journey by paying around $20 at the point of booking. All donations currently go to the Fatanpur Wind Farm project in India.
Carbon offsets can also currently be bought and sold through several compliance schemes including the the United Nations Framework Convention on Climate Change (UNFCCC) and the European Union Emission Trading Scheme (EU ETS). All schemes are currently voluntary, however and have come in from some environmental groups, who say the practice encourages ‘greenwashing’ by companies that are not serious about cutting emissions and want to appear to be taking action.
Carney recently teamed up with Standard Chartered chief executive Bill Winter to co-found a Task Force on Scaling Voluntary Carbon Markets, a private sector initiative backed by more than 40 companies and organisations, which is working on a blueprint for the new carbon offset market. “This is a necessary market in the transition to net zero,” he told the summit.