Carbon markets cut costs of climate action and can pay dividends for sustainable development
Carbon markets have proven their ability to reduce the costs of the low-carbon transition. According to World Bank’s report State and Trends of Carbon Pricing 2016, carbon markets are projected to reduce costs of climate action by 32% by 2030. So it’s clear that markets are one of the fundamental solutions to combatting climate change. But when carbon reduction projects also require contributions to sustainable development, as Gold Standard projects must, they also accelerate progress toward the Sustainable Development Goals (SDGs). Based on data from a 2014 report by consultancy Net Balance, Gold Standard projects deliver between $21 and $177 in additional value toward the SDGs for every ton of CO2 mitigated.[1]
With the right requirements and safeguards in place, these projects deliver benefits to vulnerable communities around the world that can be life-changing: empowering women and girls, providing new local jobs, improving health, protecting biodiversity – just to name a few.
So, in the absence of political will to level the playing field with a universal price on carbon, why aren’t we unanimously advocating for business to take voluntary action through carbon markets? Civil society and journalists are part of the problem. Critics and watch dog organisations are right to challenge shortcomings in the market—to keep the bar high. They are also right not to lose focus on reducing emissions within a company’s value chain. But not at the expense of gaining efficiencies that are so urgently needed. And NOT at the exclusion of helping developing countries on a sustainable pathway.
The solution is “Yes, and” not “Either/or.”
Those who categorically say “no” to carbon markets, those who aren’t using their influence to encourage companies to take full accountability of their climate impacts by offsetting through high quality standards, are slowing global decarbonisation. This lack of advocacy is potentially threatening any possibility of meeting a 1.5 degree target. And we’ll even say this to straight to Pope Francis.
We prefer President Obama’s “all of the above” approach to the low-carbon transition. For example, different carbon pricing instruments can be blended to take advantage of development benefits. New carbon taxes like the one being introduced in South Africa allow companies to reduce their exposure to the tax by purchasing carbon credits from voluntary standards. And why wouldn’t they if each dollar also contributes to South Africa’s own development priorities – helping their population access critical services like renewable energy, clean water, or education?
The voluntary carbon market, already offering a supply of high quality projects that pay dividends to both climate security and sustainable development, is at the ready to serve as a tool for the private sector to answer the call of the Paris Agreement to contribute to climate finance—and to reflect the 22 mentions of sustainable development within its text.
Robust principles of environmental integrity and sustainable development can and must be the backbone of all carbon markets that are formed to meet the Paris ambition. The efficiencies of markets, backed with this rigour, will help accelerate our pace on the ‘Twin Tracks’ of climate and development.
This is why Gold Standard has joined the Carbon Pricing Leadership Coalition. To help provide the tools and processes that give confidence to Parties and non-state actors who are in the process of defining and designing their contributions to global decarbonisation. And ultimately, to drive the transition not just to a low-carbon economy, but to an equitable and sustainable economy that serves us all.
[1]The Real Value of Robust Climate Action. A Net Balance report for Gold Standard, 2014.
