The Durban ‘Indaba’: How Governments are Encouraging Voluntary Action to …

December 12th, 201111:11 pm @


The Durban ‘Indaba’: How Governments are Encouraging Voluntary Action to …

On the first day of the second week of COP17, representatives from seven nations described how their governments support voluntary action ahead of, or beyond climate regulation. Jonathan chaired the event on behalf of IETA and CMIA, and offers a quick summary ahead of a comprehensive report by Ecosystem Marketplace due out in January 2012.

On the first day of the second week of COP17, representatives from seven nations described how their governments support voluntary action ahead of, or beyond climate regulation. This is of increasing importance as the Durban Climate Summit will at best leave a five year gap before a comprehensive global climate deal is struck and we’ll need all the help we can get along the way.

Monday evening’s event was the second in a series initiated in 2009 to open a dialogue and encourage closer collaboration between Government and Industry stakeholders in the Voluntary Carbon Market (VCM).

Therefore, we were able to start proceedings by reviewing challenges identified in the first, and the extent to which they have been overcome. Back in 2009, a number of barriers to greater deployment of voluntary action were identified, namely:

  • Lack of established standards;
  • Weak governance of offset standards and offsetting practices;
  • Lack of independent registries;
  • Perceived conflicting role with regulated markets; and,
  • Confusion amongst consumers on how the VCM works adds value.

The remarkable progress made since 2009 was evident when we reviewed these and found that all barriers have been removed or at least substantially reduced. In summary:

  • The ICROA Code of best practice for voluntary offsetting has established an international, third party audited self-regulatory system for the VCM, which accepts international offsets under recognised quality standards such as the VCS and Gold Standard which are supported by independent registries.
  • Aggregated demand in non-regulated corporates has become substantial – providing an opportunity for Governments to ‘get behind’ voluntary action at scale – while we wait for a broader compliance regime. We noted:
    • A substantial shift from consumer to business which is increasingly using offset-inclusive carbon management as part of overall business strategies;
    • Recognition of the voluntary market as a proving ground for new and pioneering methodologies – especially those with sustainable development benefits;
    • Voluntary market success (relative to the CDM) in providing carbon finance in least developed economies;
    • VERs do a better job at supporting ‘charismatic’ high sustainability projects because their prices are less volatile and higher than regulated instruments (CERs);
    • Rapidly increasing recognition amongst informed consumers and corporates that ICROA compliant offsetting makes a real contribution to both GHG reductions and sustainability.

Therefore, it was no surprise that the seven countries which presented their activities to leverage voluntary action showed substantial engagement in voluntary action as a valued complement to their regulatory regimes.

Australia supports voluntary offsetting under a government defined National Carbon Offset Scheme which includes domestic and international offset standards, favouring local forest and land-use projects currently outside newly approved tax to cap trade system.

Chile’s recently launched Santiago Climate Exchange has the support and interest of Government as a mechanism to pilot and engage business in early, pre-compliant action on GHG reductions using internationally recognised offset standards.

China has a government designed and developed voluntary offset scheme promoted to and used by Chinese businesses which draws credits from forest carbon projects developed to local standards.

France reported its support for voluntary action in the first event in 2009, and has now turned its attention to the Joint Implementation mechanism under the Kyoto Protocol to spur investment in domestic projects.

Japan’s extensive government support for voluntary action is reported in some detail in an earlier blog on developments in Japanese carbon markets, and we got an update on steady progress as well as a substantial premium for domestically generated offsets under the government supported J-VER scheme.

South Africa’s surprise insight was the provision within its proposed carbon tax regulations of the (possible) option of reducing carbon tax liabilities by offsetting through local projects.

United States has shut down the Federal EPA Climate Leaders program, which included domestic offsetting that was profiled in the first event, but reported that voluntary or pre-compliance offset standards and methodologies are being selectively included in emerging State and regional cap trade schemes like the one launching in California.

Costa Rica wasn’t able to join our panel as their representative was called into negotiations, but put on record the detailed plans that underpin that country’s voluntary commitment to be carbon neutral by 2021.

Across that sample of countries and beyond, governments have responded positively to developments in the voluntary carbon market and are embracing a variety of opportunities to utilise voluntary offsetting to accelerate and leverage their regulatory efforts. We noted that while the diversity of ‘home-grown’ initiatives are effective in engaging domestic consumers and businesses, they often have quite high transaction costs, and their related offsets can lack depth, liquidity, and scale. That issue will be solved when national initiatives increasingly turn to internationally recognised standards to promote linkages across national boundaries. Further, direct government incentives, such as those being discussed here in South Africa, will be critical to ensuring scale, and a steady progression from voluntary to regulated action.

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