The voluntary carbon market (VCM) should align with the Paris climate agreement as quickly as possible to ensure that certificates issued in the VCM continue to be accepted, according to an adviser to Germany's ministry of economic affairs and climate action.
There is no time for the "self-healing" approach experienced with the flexible mechanisms of the Kyoto protocol, argues climate policy expert Thomas Forth in a contribution to a paper by research body the Wuppertal Institute published this week.
Time for alignment is running out, Forth warns. VCM standards and initiatives must ensure that designs, rules and operations are quickly moved in the right direction.
Forth recommends that VCM actors heed the "Call to Action for Paris-Aligned Carbon Markets" passed at the Summit for a New Global Financing Pact held in Paris in June. The call to action suggests that VCM governing bodies issue a definitive position on corresponding adjustments, highlight the importance of the VCM in achieving the objectives of the Paris agreement, and work closely with the UN and other regulatory bodies to ensure that work done on VCM integrity standards can be adopted into compliance markets.
An important part of this alignment is respecting the roles of host countries, their nationally determined contributions (NDC) to the Paris deal, and their long-term low greenhouse gas emission development strategies, Forth says.
This means that before project managers decide where to invest, they must go along with a host country's "co-operation vision". Forth rejects suggestions that it could take years for host countries to be sufficiently prepared. "Many host countries have started this journey and should be expected to be ready by 2024," Forth says.
Host countries nonetheless need support on how to organise their transformation, and on the basis of what project types, Forth says, adding that this support is the responsibility of all market participants, including the VCM.
Criticism of the VCM's integrity, or lack thereof, will not go away, Forth warns. It is therefore necessary to separate criticism of the integrity of the VCM design from criticism of the integrity of certain activities or types of activities.
VCM methodologies that overestimate certificates and fail to clarify transparently the question of additionality — whether the NDC ambition of the host country is reflected in the baseline setting — must go, and certificates that have been issued on that basis must be retracted, Forth says.
A "real assessment" of the status of emerging carbon markets would be helpful for all stakeholders in the carbon market, Forth says, but the forthcoming UN Cop 28 climate summit, taking place in November-December in Dubai, "might be too early for this".
