Carbon markets stakeholders launch rulebook

Green economy abstract concept vector illustration. [Getty Images]

The Voluntary Carbon Market Integrity Initiative has published its Claims Code of Practice, a rulebook which will give companies guidelines to follow when making credible climate claims.

The Claims Code was developed through a global, multi-stakeholder collaborative process. It is aimed at establishing integrity on the demand of Voluntary Carbon Markets and build confidence between sellers and buyers of carbon credits.

Carbon markets are trading systems in which companies, mostly those in developed countries who emit large amount of carbon, seek to offset their emissions by purchasing carbon credits from projects that are reducing or reducing greenhouse gases from the atmosphere.

The new rulebook now breaks down the complex landscape of voluntary carbon markets by providing companies guidance for voluntary use of carbon credits and claims on the pathway to net zero.

Kenya Climate Change Envoy Ali Mohamed said that the claims code is a crucial document that will benefit countries like Kenya, who is among leading countries the supply of carbon credits in the continent.

“Kenya welcomes VCMI’s Claims Code of Practice and its clear guidance to organizations on credible use of high-quality carbon credits, towards net-zero commitments. As we aim to lead in the supply of these quality units, high demand-side integrity will accelerate the flow of carbon finance to all our local communities and foster green economic growth,” Mohamed said.

He said Kenya’s upcoming carbon market regulations will inspire significant investments into impactful voluntary carbon market activities, while ensuring strong governance and transparency.

Carbon trading has over the years been riddled with criticism over lack of transparency stemming from large chunk of certified carbon offset projects that do not exist or does not represent the actual reduction of carbon they claim to.

Investigations also revealed that loopholes in the regulation in the carbon markets has seen carbon credits in developing countries being bought at lower prices compared to those in developed countries.

While carbon markets have been riddled with these claims, experts say that when transparent, voluntary carbon markets can accelerate climate mitigation and capital flows to emerging economies and contribute meaningfully to the Paris Agreement goals.

Annette Nazareth, Chair of the Integrity Council for the Voluntary Carbon Markets, said that the guidance on credible claims is a global benchmark for high-integrity carbon credits that will give buyers confidence that the projects they are funding are making a genuine impact on emissions. “By creating end-to-end high integrity throughout the voluntary carbon market, from the supply of credits, to the markets they trade in, and ultimately how they are used, we can unlock investment at speed and scale for climate solutions that would not otherwise be viable,” she said.

The launch of Claims code is expected to streamline the sector and build market confidence in the voluntary carbon markets.

Tariye Gbadegesin, Co-Chair of VCMI’s Steering Committee, added that the integrity is what will make the voluntary carbon markets a powerful tool to meet the net-zero world targets while mobilising much-needed finance to low- and middle income-countries.

“Clear and transparent guidance about the voluntary use of carbon credits has been missing. Now that the Claims Code is available to guide corporate claims made with the use of voluntary carbon markets and eventually when paired with Core Carbon Principles guiding supply, market participants have the key ingredients of what we call ‘end to end’ integrity which will enable this crucial market development.” Gbadegesin said.

UN Climate Change High-Level Champion for COP28 Razan Al Mubarak said that the voluntary carbon market is one tool that can mobilize the much-needed finance to low and middle-income countries towards climate solutions that will accelerate the net-zero transition.

“This is a decisive decade and a decisive year for tackling climate change. We are woefully off-track from where we need to be, and we need to use all the tools in the box, working at full pace,” Al Mubarak said.