Could businesses rescue the UN's carbon offset scheme?

Could businesses rescue the UN's carbon offset scheme?

Businesses must lead calls for governments to adopt more ambitious national carbon emission reduction targets, according to an overview board appointed to address the crisis afflicting the UN's flagship carbon offsetting scheme.

Panel members told reporters that "confidence in the carbon markets has already evaporated considerably" and as such the UN's Clean Development Mechanism (CDM) "could collapse" if urgent action is not taken.

The CDM allows low-carbon projects in developing countries to generate saleable credits, known as Certified Emissions Reductions (CERs), improving the investment case for emission reduction projects while allowing companies in richer countries to offset their emissions. But an oversupply of credits, doubts about the extension of the Kyoto Protocol that provides the legal foundations for the CDM and controversy over whether projects are achieving genuine emissions reductions has seen prices tumble well below the level analysts say is necessary to drive green investment.

The high-level panel this week published recommendations to bolster the market, which included calls for tougher national emissions targets that would increase demand for CERs and help provide investors with the confidence they need to return to the carbon market.

Image of United Nations conference table provided by koya979 via Shutterstock.

However, Joan MacNaughton, vice chair of the high-level panel, said it was up to the private sector to prove to government that higher emission-cutting ambitions are good for business.

"Unless mitigation ambitions are strengthened, the [carbon] market is not going to thrive," she told a press briefing. "The private sector needs to convey to government more strongly than it does now that it needs this long-term view and vision on mitigation.

"While this is difficult for some in the private sector and they will not join in this call, many private sector companies actually want early and clear notice of what needs to be done so that they can transform how they use energy [and] how they do business in ways that are going to be more sustainable. That message to governments would help give them the confidence to respond more quickly and more vigorously to what we say about mitigation ambition."

Her views were echoed by Paul Simpson, panel member and chief executive of the Carbon Disclosure Project (CDP), who added that businesses could help support carbon markets while international climate talks remain deadlocked by becoming more active in the $576M voluntary offset market.

"The private sector does many things voluntarily," he said. "There is a relatively small voluntary carbon market... and I think there is a role in the short term for the private sector to take more voluntary action to help shore up the carbon market [and] to purchase CERs to attain carbon neutral status until we see further action from governments."

This article originally appeared on Business Green and is reprinted here with permission.