More than 50 influential climate organizations have come together to promote a vision for a next-generation carbon market. The group, known as the Verified Carbon Market (VCM+) Coalition, aims to mobilize $100 billion in climate finance, which will be used to avoid or remove 5 billion tons of carbon dioxide equivalent emissions by 2035.
At the heart of the coalition’s vision is a market that’s larger and more unified than today’s. Rules for what constitutes high-quality credits in the current market are still emerging, for example. Companies and standard-setters are debating the role of credits in corporate net-zero strategies. The market is also divided between compliance schemes, such as the European Union’s Emissions Trading Scheme, which allow use of credits as part of mandated emissions limits, and the voluntary use of credits by companies.
The coalition will provide “connective tissue” in the form of funding and expertise to organizations working to overcome these and other barriers to scaling the market, said Alexia Kelly, managing director of the Carbon Policy and Markets Initiative at the High Tide Foundation, a coalition member. Others include the Integrity Council for the Voluntary Carbon Market (ICVCM), a leading standard-setter for credits, environmental organizations such as RMI and The Nature Conservancy, and for-profit partners including BeZero, a carbon credit rating agency.
Market-based mechanisms
Some members are known for advocating for greater use of credits to hit net-zero goals. The Science Based Targets initiative (SBTi), which maintains the most widely used corporate net-zero standard, only allows credits to be counted against the small fraction of emissions that remain at the end of a company’s journey to net zero. The initiative, which is consulting on a revision to its standard, is facing calls to relax the rules. Advocates for change say companies should be allowed more freedom to use market-based mechanisms to hit goals.
“You cannot have a target accounting standard that does not include market-based accounting,” said Kelly. “What that means is it’s really expensive and really hard, and you miss out on opportunities to help make a whole bunch of other good stuff happen.”
The coalition will also support work aimed at raising the quality of credits. Confidence in the voluntary market has been undermined in recent years by academic research and investigative journalism that exposed sometimes widespread use of credits that delivered little climate benefit. Newer initiatives, including the ICVCM, which Kelly described as providing “the global threshold benchmark for high integrity,” appear to be helping to rebuild trust.
Absent from the list of coalition members are Verra, Gold Standard and other major credit registries. Kelly said conversations with other potential partners are ongoing: “We anticipate that we’ll have additional folks joining the coalition down the road.”
