Carbon offsets bearing the seal of approval from a new standard-setting body are expected to be for sale this year, as the group that superseded former Bank of England governor Mark Carney’s task force attempts to bring credibility to a ballooning market.
Guidelines for determining a “good” carbon offset will be released in the third quarter by the Integrity Council for Voluntary Carbon Markets, the successor group to the Carney task force that disbanded last year.
Carney remains on the body’s “distinguished advisory group,” which has no decision-making functions — a change from the original plan, said one person familiar with the process.
Companies compensate for carbon emissions that they cannot eliminate by buying offsets, typically generated by projects such as forests. Each unit is expected to represent a tonne of carbon that has been permanently avoided or removed from the atmosphere. However, the market is unregulated and concerns about quality are rife.
The Council said offsets that it endorsed would start to be sold this year. The standards they would conform to, known as core carbon principles, are being developed by the group’s expert panel, made up of a team of 23 scientists and carbon market experts. It has received seed funding from HM Treasury and the Government of Singapore.
Carney launched the task force for voluntary carbon markets in 2020 in an attempt to build confidence in the market, as companies came under increasing pressure to reduce their emissions which accelerated interest in the credits as a way of addressing the problem.
But the venture attracted criticism from climate experts who said it prioritised scaling up the market over ensuring that offsets were of a high quality. Last year the group published its recommendations and established the Council as an independent governance body to take the work forward.
Speaking to the FT, the Council’s chief operating officer William McDonnell, the former chief risk officer at RSA Insurance, said it would be “revising [the task force’s work] quite extensively.”
“Integrity has to come first . . . If we get the integrity right the scaling will naturally happen,” he said. The Council will launch a public consultation about the principles governing the offsets in May.
McDonnell said the Council would not launch a pilot market, as the task force had planned to do, since it would be “counterproductive” to scale up a market of bad credits. The group may decide to “rule out” certain types of offsets from being eligible for approval, he added.
The task force also attracted criticism about its membership, which green groups said was skewed towards corporates with an interest in prolonging the use of carbon- emitting fossil fuels. Standard Chartered chief executive Bill Winters chaired the private sector initiative, while consultant McKinsey played a key research and advisory role.
That criticism was front of mind during the creation of the Council’s governing board, a group of 22 people chosen by the academics and non-profit groups that advised the task force, people familiar with the process said. The selection process was a “rebalance,” said one.
Kelley Kizzier, a Council board member and vice-president for global climate at the Environmental Defense Fund, said the board composition was “very carefully considered in order [to ensure] that it was different and could stand up more strongly to the criticism that task force was getting . . . This is now absolutely a different creature from the task force.”
Other board members include Michael Hugman, director of climate finance at Sir Christopher Hohn’s Children’s Investment Fund Foundation, and three representatives of indigenous peoples who have not yet been appointed.
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Source: Financial Times