Nov 09, 2022
The Biden administration faced sharp criticism from environmental justice champions on Wednesday after U.S. Special Presidential Envoy for Climate John Kerry unveiled a voluntary carbon offset scheme that he and philanthropic foundation partners say would unleash private investment to expedite a clean energy transition in low-income nations.
"A voluntary carbon credit program won't guarantee deep, real cuts in emissions."
"Carbon offsets are not an answer in a world already on fire, under water, and facing mounting climate losses and damage," Rachel Cleetus, policy director for the Climate and Energy Program at the Union of Concerned Scientists, said in a statement.
"While the exact details are still unclear, the outlines of the U.S. proposal are out of step with the science, which calls for steep, absolute emission reductions as soon as possible if we are to have any chance of meeting the goals of the Paris agreement," said Cleetus.
Two weeks ago, the United Nations warned that there is "no credible path to 1.5degC in place" and that only "urgent system-wide transformation" can prevent cataclysmic levels of global warming.
But during the U.N. COP27 summit in Egypt, Kerry announced a new public-private partnership between the U.S. government, the Rockefeller Foundation, and the Bezos Earth Fund that leaves intact the capitalist social relations propelling climate breakdown.
An Oxfam analysis published two days ago showed that a single billionaire's investments produce a million times more greenhouse gas pollution than an average person in the bottom 90% of the global income distribution. And yet the Biden administration has enrolled Amazon founder Jeff Bezos--currently the world's fourth-richest person with a net worth of nearly $110 billion--in a purported effort to slash planet-heating emissions.
The partnership plans to launch the so-called Energy Transition Accelerator (ETA) "as an innovative, independent initiative to drive private investment in comprehensive energy transition strategies that accelerate the deployment of renewable power and the retirement of fossil fuel assets in developing countries," according to the U.S. State Department. The ETA is expected to operate until the end of this decade and possibly through 2035.
"Chile and Nigeria are among the developing countries expressing early interest in exploring the ETA's potential benefits," said the State Department. "Bank of America, Microsoft, PepsiCo, and Standard Chartered Bank have also expressed interest in informing the ETA's development, with decisions on whether to formally participate pending the completion of its design. The ETA will also be open to sovereign government investments and engagement."
According to the State Department:
The goal of the partnership is to establish a high-integrity framework enabling developing countries to attract finance to support their clean energy transitions. Operating at the scale of national or subnational jurisdictions, the ETA will produce verified greenhouse gas emission reductions, which participating jurisdictions will have the option of issuing as marketable carbon credits.
The jurisdictional approach, similar to approaches currently employed in the forestry sector, will help avoid emissions leakage, ensure that emissions reductions are real and additional, and align a jurisdiction's power sector policies, investment priorities, and just transition strategies. While incentivizing system-wide transformation, jurisdictional arrangements can also help steer finance to discrete projects producing deep, rapid emission reductions.
Revenue raised through the ETA will supplement other sources of finance being mobilized by governments, donors, and multilateral and private financial institutions in support of developing countries' energy transition. It will also help catalyze additional investment. By providing jurisdictions with fixed-price advance purchase commitments for verified emission reductions, the ETA will create a predictable finance stream that can unlock upfront private finance at more favorable rates.
The forestry sector's carbon market mechanisms cited by the State Department have, according to experts, completely failed to halt deforestation and human rights violations.
Perhaps anticipating such criticisms, the State Department said that the partnership will establish social and environmental safeguards "to help promote an inclusive, just transition."
"To promote environmental integrity in the use of carbon credits, one idea for the ETA will be to open it only to companies committed to achieving net-zero no later than 2050 and science-based interim targets," said the State Department. "Other provisions will establish strong transparency requirements and address how companies' investments in verified emissions reductions through the ETA could be recognized."
Not only have corporate net-zero pledges routinely been exposed as empty exercises in greenwashing, but climate justice advocates have long argued that the entire idea of "net-zero" is based on the flawed premise of "canceling out emissions in the atmosphere rather than eliminating their causes."
Cleetus, for her part, said Wednesday that "the private sector can and must play an important role in tackling the climate crisis."
"However, a voluntary carbon credit program won't guarantee deep, real cuts in emissions," she stressed. "It's tantamount to rearranging the deck chairs as the climate ship is going down."
"Low- and middle-income countries need grants-based public finance from richer countries to help them quickly transition away from fossil fuels, alongside the rest of the world," said Cleetus. "That's what the U.S. must deliver, rather than questionable carbon offset schemes that risk allowing companies to pollute at the expense of the planet."
In a recent interview with The Wall Street Journal, Kerry argued that "no government in the world has enough money to affect the transition."
The International Energy Agency, which has made clear that new fossil fuel projects are incompatible with averting climate catastrophe, estimates that annual investment in clean energy must triple to $4.2 trillion by 2030, with more than half of those resources allocated to the developing world.
"The entity that could help the most," Kerry told the Journal, "is the private sector with the right structure."
However, Vera Songwe, the co-author of a new U.N.-backed report estimating that poor nations will need a combined total of $2.4 trillion per year by 2030 to fight the climate emergency--including funding for mitigation, adaptation, and loss and damage--said Tuesday that "countries must have access to affordable, sustainable low-cost financing from the multilateral development banks to help crowd in investments from the private sector and philanthropy."
In a Wednesday statement, Kelly Stone of ActionAid USA emphasized that "carbon markets are not climate finance."
"Secretary Kerry keeps repeating that public finance alone will not be enough to meet our climate goals, but no one is actually claiming this," said Stone. "It's exhausting to hear this talking point over and over again when the U.S. still owes money to the Green Climate Fund for a 2014-era pledge."
A Carbon Brief analysis published earlier this week revealed the extent of wealthy countries' failures to mobilize money for sustainable development.
Developing countries have been promised since 2009 that rich nations would provide at least $100 billion in climate aid each year by 2020. However, just over $83 billion was delivered in 2020--the most recent year for which data is available--and the Global North is not expected to hit its inadequate target until 2023.
The U.S. is most responsible for the shortfall, providing less than $8 billion toward the $100 billion figure in 2020. That represents just 19% of the country's approximately $40 billion "fair share," or what it should be paying based on its cumulative contribution to global greenhouse gas pollution.
U.S. President Joe Biden has promised to dish out $11.4 billion per year in climate aid by 2024--less than 2% of the annual Pentagon budget and still far less than Washington's fair share--but congressional lawmakers approved just $1 billion in a $1.5 trillion spending bill passed earlier this year.
"Climate finance is fundamental to meeting the goals of the Paris agreement and the U.S. has already repeatedly failed to meet their obligations," Stone said. "Now is the time for the U.S. to take responsibility for how much it has contributed towards climate injustices."
"Carbon markets have historically failed to fulfill climate goals and often profoundly harm communities and undermine human rights," she added. "The secretary's claims that this time will be different aren't enough. There is no space for offsets if we are to meet a 1.5degC goal."
The New Republic's Kate Aronoff wrote Wednesday that "as the developing world's demands for wealthy countries to deliver climate finance grow louder than ever at COP27, the market-driven plan Kerry and other U.S. officials are endorsing looks a lot like a distraction from the issue at hand."
"The plan Kerry has proposed is a clear stand-in for something else: adequate financial commitments from rich countries like the U.S. to poorer countries at particular risk from climate-related disasters," Aronoff continued. "A new carbon trading scheme would be a poor substitute for the kind of climate finance these parties are calling for."
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