The U.S. pushes behind the scenes to approve corporate carbon offset plans

Advisers to former U.S. climate envoy John Kerry are lobbying a panel overseeing the world’s top corporate climate targets to reverse its opposition to the use of controversial carbon credits, people familiar with the matter said.

For more than two years, officials involved in developing a U.S. clean energy plan to provide funding to developing countries made repeated requests to the leadership of the Science-Based Targets initiative.

The measure follows a policy decision announced by SBTi last week to allow companies to use carbon credits to offset pollution.

In the absence of other agencies or regulators, SBTi has grown into a certifying organization for corporate climate plans, with support from nonprofits.

Kerry retired as U.S. climate envoy earlier this year, but he played a key role in a plan to have poorer countries issue carbon credits to companies in exchange for funds to help countries transition away from fossil fuels. Shift to clean energy.

The program is called the Energy Transition Accelerator and is backed by Andrew Steele, president of the Bezos Earth Fund, a major financial backer of SBTi, as well as the Rockefeller Foundation.

Kerry said at a State Department event on Friday that he was encouraged to hear SBTi leaders express an openness to companies using carbon credits to address some of their indirect emissions.

The event highlighted the U.S. program, which has attracted interest from Amazon, Mastercard and Bank of America but is still seeking corporate buyers for its credit.

The SBTi board’s move to support carbon credits as an alternative to reducing emissions would give a green light for companies to pursue climate goals by purchasing credits at scale rather than focusing on actual emissions reductions, thereby boosting U.S.-driven projects to emissions.

Developers have invested billions of dollars in the global market for voluntary carbon credits, which would mean removing or retaining a ton of carbon dioxide from the atmosphere.

But critics argue that these unregulated tools often exaggerate the greenhouse gas emissions stopped and provide polluters with a reason to emit further emissions.

One aggrieved SBTi employee said trillions of dollars could be made by talking out of thin air.

Staff anger over the decision-making process and the influence exerted by the growing political, corporate and philanthropic backers of the carbon credits industry led SBTi to back down last week in supporting the use of carbon credits.

Typically, SBTi requires companies to commit to reducing emissions by at least 90% by 2050, leaving room to invest in permanent carbon removal and sequestration for the remaining tenth or carbon emissions that cannot be reduced through technology.

The ongoing pressure on the organization to support carbon offsets is an attempt to create a demand-side signal at all costs, [even by] Ruining SBTi’s reputation may be the last chance to close the gap to 1.5 [degrees Celsius]this person said.

Thousands of technology, consumer goods and utility companies, including Apple, Nestlé and Engie, have received SBTi approval for their climate plans. The agency is also developing standards to examine the targets of oil and gas companies and financial institutions.

The U.S. government began pushing SBTi to soften its stance on carbon credits ahead of the U.N. COP27 climate summit in Sharm el-Sheikh in November 2022, where Kerry launched the plan, according to people familiar with SBTi’s senior thinking. lead.

SBTi CEO Luiz Amaral told employees in October 2022 that Kerry’s office at the time asked the organization to allow companies to offset some of their emissions by purchasing carbon credits.

U.S. officials said companies including General Motors have raised SBTis’ objections to the credit in conversations about joining the Energy Transition Accelerator.

But Amaral also expressed concern that incentivizing companies to buy carbon credits en masse rather than reduce emissions could starve companies of billions of dollars in financing for their own climate plans.

The U.S. State Department also asked SBTi last year to mandate that companies participating in the net-zero verification process purchase carbon credits, even if the credits are not used to offset a company’s emissions, people familiar with the matter said.

Amaral said on Friday that the SBT’s dedication to science-based decarbonization, public consultation and standard-setting governance was unwavering. The SBTi standards have not changed, it said in a statement.

In a governance shake-up designed to demonstrate independence and reflect its growth, SBTi registered as a limited company last year and added independent trustees to its board.

Many board members maintain relationships with companies and philanthropists interested in the development of a carbon credit market.

Former Colombian President Ivn Duque, an independent trustee, also holds an unpaid position on the Steering Committee of the African Carbon Markets Initiative, an initiative to expand carbon credit markets on the continent.

Another important supporter of carbon offsets is SBTi board member Mara Mendiluce, CEO of We Mean Business, a founding partner of SBTi, people familiar with the matter said.

Representatives for Duque and WMB had no comment.

Major funders of climate-oriented WMB include Amazon and UAE renewable energy company Masdar, both of which have significant investments in carbon markets.

A paper drafted in October by Nigel Topping, former WMB chief executive and high-level UN climate action advocate at COP26, lays out a counter-narrative campaign to build confidence in global carbon markets.

These include the need for SBTi to provide clear, simple and legal recognition of credits in corporate schemes, which the document seen by the Financial Times suggests could be pushed for by industry groups, commodities traders, airlines and investigative journalists.

Topping is a shareholder of Xpansiv, which operates the global carbon trading exchange, and is a director of ICE Benchmark Administration, which provides index services and is affiliated with the Intercontinental Exchange in New York.

Topping told the Financial Times that after the proposal was made, the event was never officially established.

He said people with puritanical views on carbon credits should come up with other ways to raise the trillions of dollars needed to help the global South adapt to climate change.

The State Department said the perspectives of SBTi and other organizations are critical to ensuring that carbon credit programs can mobilize significant capital while maintaining high standards of integrity.

The report says the United States is deeply committed to high-integrity carbon markets as a mechanism to unlock the finances developing countries and emerging economies need to transition from fossil fuels to clean energy and halt deforestation.

Additional reporting by Aimee Williams in Washington