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There’s a growing consensus building at COP28 talks that the voluntary carbon offset market is ripe for a meaningful overhaul to fight greenwashing and restore credibility.
Rostin Behnam, chairman of the Commodity Futures Trading Commission, said the CFTC will later today announce proposed voluntary carbon markets guidance. Behnam stressed the plan was consistent with voluntary efforts to improve the integrity and credibility of carbon markets.
“The proposal does represent, in my view, the most significant step of the US financial regulator to support widespread adoption of principles for high integrity markets,” he said.
Figuring out how to tackle weaknesses in the voluntary carbon market is a key goal of this year’s COP summit. The VCM has been hit by a string of scandals that have raised serious questions as to the validity of the offsetting claims made by those buying carbon credits.
Read More: World’s Biggest Carbon-Offset Seller Says CEO Steps Down
Discussions on how to overhaul the voluntary carbon market come as executives from the world’s biggest banks and investment firms explore new funding structures and partnerships, as they use finance day at the COP28 climate summit in Dubai to devise viable pathways to a low-carbon economy.
Never before has the finance industry attended a United Nations Conference of the Parties in such vast numbers. They’ll be rubbing shoulders with numerous oil executives, which is another notable feature of this year’s talks.
Sultan Al Jaber, president of the COP28 summit and head of the Abu Dhabi national oil company, Adnoc, has said he wants as many interests as possible represented to ensure a “successful” outcome. Against that backdrop, Darren Woods just became the first ever Exxon Mobil Corp. CEO to attend a COP since the summits started in the 1990s.
Meanwhile, Al Jaber has had to defend himself following a report that he questioned the science around the link between phasing out fossil fuels and hitting the Paris Agreement target of 1.5C. Tina Stege, climate envoy for the Marshall Islands, reminded Al Jaber of his commitment to making the temperature target the “north star” of the summit’s negotiated outcome.
“We’re here to hold him to that,” she said on a panel on Monday. “It has to include a phase out of fossil fuels. That is what the science has said.”
Fossil Fuels Have ‘Role to Play,’ UAE Climate Minister Says (11:55 a.m.)
“Fossil fuels have a role to play, a much smaller role to play,” UAE Minister of Climate Change and Environment Mariam Almheiri said in an interview on Bloomberg Television on Monday. The “phasing up” of renewables should be the focus, she said, adding that the building of renewable energy systems itself required energy.
Her comments addressed controversy surrounding COP28 President Sultan Al Jaber’s statements that there were no indications “that the phase out of fossil fuel is what’s going to achieve 1.5.”
Russia Can No Longer Manipulate EU’s Energy Market, Simson Says (11:50 a.m.)
Kadri Simson, EU energy commissioner, said Russia no longer has the “leverage” to manipulate the bloc’s energy market after the region fast tracked the green transition in the wake of Moscow’s invasion of Ukraine. She said Europe was already seeing Russia attack Ukraine’s energy infrastructure going into the winter.
Talks at COP28 need to emphasize the urgency of hitting peak emissions as soon as possible; “business as usual is not possible,” Simson said on Bloomberg Television.
StanChart, Macquarie CEOs Calls for Better Data to Boost Green Investment (10:45 a.m.)
The bosses of Standard Chartered Plc and Macquaire Group Ltd. said better data around emissions and the viability of green projects — particularly in emerging markets — was essential to unlock more investment for green projects.
“It all starts with data,” Bill Winters said at the Bloomberg Green Festival from the COP28 climate summit in Dubai.
His comments were echoed by Macquarie’s Shemara Wikramanayake, who also underlined the need to tailor climate solutions to different parts of the world.
Both CEOs emphasized the importance of co-operation between governments, financiers and organizations like the World Bank to create projects that pension funds can invest in.
Citi Executive Warns of ‘Lack of Bankable’ Projects (9:46 a.m.)
Jason Channell, head of sustainable finance at Citi Global Insights, said a “lack of bankable projects” is holding private capital back from investing in climate projects in emerging markets. “The capital is there, the need is there, but the capital isn’t getting through,” he said. At the same time, the need for finance is six to seven times greater than is currently getting through, he said citing research published on Monday.
To date, talks around how to approach blended finance have been inefficient, Channell said. Governments must bring projects instead of concepts, and there’s a need for better, more transparent data to help investors price the risks they face, he said.
The finance industry also needs to explore innovative blended-finance structures and engage with sovereigns to ensure they‘re assessing risk in the right way, he said. It’s about “how they can get skin in the game,” Channell said.
IEA Wants 60% Emissions Reduction from Big Oil by 2030 (9:37 a.m.)
Fatih Birol, executive director of the International Energy Agency, wants oil companies to commit to reducing their Scope 1 and 2 emissions by 60% by 2030, he said in an interview on Bloomberg Television on Monday.
“I need a 2030 number, not a 2050 number,” Birol said. This is a “moment of truth.”
Increased investment in clean energy technologies should be another major commitment from fossil-fuel companies at COP28, Birol said, adding that the rhetoric from oil and gas executives around green energy pales in comparison to actual investments. They speak “80%-90% of the time about clean energy, but when you look at their numbers, which we do at the IEA, only 2.5% of their own investment goes into clean energy.”
Birol said he expects global oil demand to peak before 2030, driven by clean energy and slowing demand from China, without elaborating on relations between the IEA and OPEC.
Mia Mottley Pitches Overhaul of ‘Imperial’ Financial Order (9:05 a.m.)
Barbados Prime Minister Mia Mottley pitched her vision for overhauling the global financial system to provide more support for countries hit hardest by the climate crisis. Mottley said insurance is inadequate for citizens in Barbados, who were hit by a wave of extreme weather over the summer. Debt-pause clauses are needed to provide the fiscal leeway to recover, she said.
While she welcomed agreement on a loss and damage fund, Mottley said the total — around half a billion dollars — was nowhere near sufficient. By comparison, a 1% financial services tax would yield $420 billion, while a similar levy on global shipping could provide $70 billion. She also pitched an idea for a $5 dollar climate surcharge on domestic flights and a $10 for international transfers.
Existing international finance institutions were established in the “old imperial order” and are no longer fit for purpose, Mottley said during a keynote speech in Dubai on Monday. “The reality is unless we change our paradigm completely, we’re just going to be playing catch up.”
Attracting Private Finance Is Key Goal (8:35 a.m.)
Figuring out ways to attract more private finance for climate action is among the key goals of this year’s COP, according to Sonja Gibbs, head of sustainable finance at the Institute of International Finance, in an interview on Bloomberg Television on Monday.
Higher interest rates and record debt levels pose a challenge for capital flows, she said, adding that “the financial sector can’t do it on its own.” Governmental policy and regulation are crucial to address “hard to abate sectors,” she said.
When it comes to climate finance, the approach needs to be “pro-growth,” Gibbs said. And if climate policies fail to achieve a so-called just transition, it may lead to political backlash, she said. “That’s the risk in a year when we have something like 40 elections coming up,” she said.
CCS Could Come with a $30 Trillion Price Tag, Report Says (12:01 a.m.)
Researchers from the University of Oxford found that if carbon capture and storage is used to mitigate 50% of emissions on a pathway to net zero by mid-century, it would cost approximately $30 trillion more than a low-mitigation scenario. The estimate may even understate the ultimate cost, the scientists warned.
That said, CCS investment is necessary, with the researchers pointing to a 13-fold scale-up by 2030. The technology “will likely be needed for some industries and perhaps for negative emissions,” said Richard Black, one of the authors of the study. “But seeing it as a way to compensate for ongoing fossil fuel burning is economically illiterate.”
Bloomberg Philanthropies regularly partners with the COP Presidency to promote climate action. Michael R. Bloomberg, the founder and majority owner of Bloomberg LP, parent company of Bloomberg News, is the UN secretary general’s special envoy for climate ambition and solutions.
Bloomberg LP, the parent of Bloomberg News, partners with South Pole to purchase carbon credits to offset global travel emissions.
–With assistance from Tom Metcalf and Malaika Kanaaneh Tapper.
(Adds rolling commentary from COP28. A previous version corrected a typo in the spelling of the second reference of the name in the third paragraph.)
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