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Podcast / Audio

82. The new Carbon Markets - Redefining Energy podcast

image credit: Credit: Redefining Energy / ICVCM
Laurent Segalen's picture
CEO Megawatt-X

Laurent is a Franco-British financier, founder of Megawatt-X, the London-based global platform for Renewable Energy Assets. For the past twenty years, Laurent has been trading and managing...

  • Member since 2019
  • 171 items added with 147,689 views
  • Sep 15, 2022
  • 658 views

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In the past two years, we’ve seen a remarkable renaissance of the carbon markets.

Some markets are of a “compliance” type - like in Europe - heavily regulated but limited in geography and scope; and there is limited prospect for an overall Cap & Trade worldwide as carbon markets were ignored in the US Inflation Reduction Act - the largest Climate bill ever.

So, what happens when a sector or a company is not covered by those compliance markets but still have pledged a net-zero or carbon-neutrality (whatever that means)? Well, that’s where the “voluntary market” steps in.

Re-born on the ashes of the Kyoto Protocol, projects such as forestry, carbon avoidance and removal are developed and get rewarded for their environmental benefits. That’s not THE solution to climate change, but that could be one of several.

The current voluntary market has quadrupled its size in the last 3 years to 2bnUSD and is expected to reach 50bnUSD by the end of the decade. Still small, compared to a 10bnUSD/day on the oil market… but we need all the help available on our road to a +1.5C world.

Unfortunately, we have immediately witnessed a lot of gaming and greenwashing around the issue of carbon credits. Only horror stories make it to the media, not the great projects (and there are a lot); the former must be banned, the latter promoted and rewarded.

Around Mark Carney, former governor of the central banks of Canada and England, a group of scientists, NGOs, Industries have coalesced into the Integrity Council for Voluntary Carbon Market to create a quality benchmark, and make sure that the carbon credits proposed to corporations on their way to net-zero are sound.

We bring Annette Nazareth, chair of the Integrity Council to discuss about the goal, talk about horror stories and how the ICVCM, in full openness, is establishing rules for a robust market.

(we’re sorry if sometimes the sound quality is not perfect)

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References:

https://icvcm.org/public-consultation/

https://vcmintegrity.org/

https://trove-research.com/

https://www.ieta.org/

https://verra.org/

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We thank our partner Aquila Capital

Discussions
Matt Chester's picture
Matt Chester on Sep 15, 2022

As with many things, it seems like the U.S. will be at least a few years behind Europe when it comes to carbon markets. While that's frustrating, at least we can observe how it's going and what works / doesn't work and then hopefully learn when it's our time to implement!

Laurent Segalen's picture
Thank Laurent for the Post!
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